starbucks, inc

STARBUCKS CORPORATION

By: Thomas Liquori MGT420: Professor O’Neill December 2, 2008

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Table of Contents

INTRODUCTION/BODY…………………………………………………………………………1-3

CONCLUSION………………………………………………………………………………………….4

COMPANY PROFILE..................................................................................5

ORGANIZATIONAL STRUCTURE GRAPH……………….………………………............6

MARKET CAPITALIZATION GRAPH.………………………………………………………….7

COMPANY OWNED STORES…………………..………………………………………………..8

BALANCE SHEET (2007) GRAPH.................................................................9

LAST 3 YEAR INCOME STATEMENT GRAPH...………………………………………….10

PRODUCT GRAPH………………………………………………………………………………….11

COMPETITOR GRAPH..............................................................................12

SWOT ANALYSIS GRAPH………………………………………………………………………..13

BIBLIOGRAPHY…………………………………………………………………………………14-15

FOOTNOTES………………………………………………………………………………………….16

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Starbucks Corporation 2008

T h o m a s L i q u o r i

Page 1

There was a moment, once upon a time, when you heard the name

“Starbucks”, only one thing came to mind; a delicious cup of coffee. During the

course over the past few years however, Starbucks has tried to cash in on

everything they could get their hands on and forgot about their original origin,

and most importantly, what Starbucks used to stand for. Starbucks has used it’s

trademarked brand name for almost anything and everything, from movie

advertisements, to beverage fullfillments, as they equipped most of their stores

with an increasing variety of choices for either brunch or luncheon affairs, to

books and music. Starbucks got back in the game when, CEO Howard Schultz,

started to reassure Starbucks customers, that the once popular coffee will return

and be stronger then ever. That one change would be a dramastic change

especially for their marketing structure, but will make the difference.

The Seattle based coffee company has been confronted with numerous

flaws and staggering stock prices at the beginning of the year, and in March

announced a series of big things to come, including numerous transitions. Some

of the big things to come with the transitions included, a new simmering

delicious coffee blend, improvements in their expresso making equipment, a

program club full of awards to thank customers, and even an interactive website

is in the works as well. Experts are skeptically envisioning, there is no doubt that

the coffee guru needs to step things up and get back to their coffee origins. They

also note that new innovations on a massive customer base can be also back fire

against the coffee titan. In all fairness to the company, I believe in my opinion,

that the aspect of doing so many things at once can be harmful if not executed

correctly, and if it is not done in the proper procedure, it could hurt the company

even more rather then trying to make it better. There is no question that over the

past few years Starbucks has become rather generic and there name has become

nothing special anymore. Starbucks really needs to step up their strategy in order

to bring back to life their brand name and quality to doubting consumers.

The query for Starbucks is, How do they do that, and get back to their

original origin? Well they are already on the right track by focusing on their

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Page 2

main product which would be coffee, but if the company doesn’t reinforce the

change procedures to the whole organization, the new marketing strategies might

plummet leaving confused customers in a daze of mocha. The unitization between

customers and Starbucks, is Starbucks most important aspect of their business. The

customer needs to feel happy and appreciated to purchase their products. They

must feel that sense of fullfillment when ordering and drinking a Starbucks

beverage, that in a nutshell is the most important piece of the puzzle that the

company needs to bring back to life. That could be easier said then done, in

January 2008, Howard Schultz reassumed CEO duties to a company that he

largely shaped, and who is also Chairman of the Board, quickly announced a

reorganization at the Executive level, as well as job cuts in the company. He

conveyed that the number of changes in the company could be a concern, but

would iron itself out over a period of time.

The new brew of coffee that came out in April of this past year 2008 is

called, a Pike Placed Roast that the company will have fusioned at every U.S

based operating facility across the country. At the same time, another change in

the marketing strategy that was mentioned earlier in this paper, was a program

club for registered customers to refill their cards and also receive free shots of

flavored syrups. In the equipment aspect of the big transition, Starbucks introduces

the new expresso makers that are designed to deliver a better, faster, and more

consistant latte, then previous models used. These models will be moved into

thirty percent of the U.S based stores by the end of this year, and seventy-five

percent of their stores by the year 2010. Another new piece of equipment that is

in the works for Starbucks is the machine called the “Clover”. This machine is

set out to make individual cups of premium drip coffee, but they are taking their

time rolling out this new machine, and Starbucks predicts, that this machine will

not necessarily make it to every U.S based store. The new interactive website that

is in the works for Starbucks will consist of executive blogs and calls for

consumer feedback to the company.

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Page 3

The conversions that Starbucks is going through are some really rough

times at the moment. From their stock price falling tremendously and consumer

dealings with their business failing, Starbucks, over the past year, has somewhat

slowed down their pace of new store openings. They had even closed numerous

stores, all this in an attempt to go with the new change that the company is

trying to implement. Although, Starbucks has made some aspect of change by

pulling off the shelves their morning eats, which made people complain that it

gave Starbucks stores a highly displeased aroma, Starbucks has not talked about

more simplifying methods that the company is going to be engaged in. In my

opinion, the company should cut back more on the food offerings, as well as the

little nick nacks that clutter up the store, such as books, music, coffee mugs, etc.,

and stay focused on what Starbucks is really supposed to be about, a nice

satisying fresh cup of brewed coffee.

Due to it’s costly prices, the current economic spill in today’s market,

really have customers holding on to their money, and it is taking it’s toll on

Starbucks customers like never before. While the economy is causing various

problems for everyone around the country, Starbucks should not use that as an

excuse for their mishaps which started way back before the economy started to

have a meltdown. In all reality, Starbucks needs to acknowledge it’s own role in

their weakening of their business. What’s even more surprising that just released

last week, CEO Howard Schultz stated, “The company expects to face an

extremely challenging fiscal 2009”.1 Schultz continued, “We appear to be more

resilient than many other premium brands. As we head into the holiday season

and Calendar ‘09, consumers are looking for value and we’ve been pleased with

the steady progress of our Starbucks Rewards program and the enthusiastic

reception to the Starbucks Gold Card. I am optimistic we are well positioned to

weather this challenging economic environment.”2

1 See page 16

2 See page 16

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Page 4

In conclusion, I believe that Starbucks has a lot of continuing challenges

ahead of them. They really need to see past what they have become and try to

get back some of the old goals that the company once longed for. Maybe these

old tactics will help the company become better in a more positive way, rather

than a negative way, like the way they have become recently.

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Page 5

Founded in 1971 by Gordon Bowker, Jerry Baldwin, and Ziv Siegl

Main Industry: Coffee and tea manufacture

Number of Employees: 172,000

Organizational Structure: See page 3 for graph

Headquarters: 2401 Utah Avenue South, Seattle, WA, USA

Market Capitalization, Stock Price, Shares Outstanding: See page 4 for graph

Other Locations: As of 2007 there were 8,505 company owned and 6,506 licensed,

for a total of 15,011 stores worldwide: See page 5 for graph

Recent Measures of total assets, total liabilities, and shareholder’s equity: See page 6 for

graph

Mission: To inspire and nurture the human spirit- one person, one cup, one

neighborhood at a time

CEO Howard Schultz’s vision for Starbucks is to become a national company

with values and guiding principles that employees could be proud of. He indicated

that he wanted to include these people in the decision making –process and that

we would be open and honest with them

Last 3 years revenue, gross profit, and net income: See page 7 for graph

Products: coffee, tea, mugs, music, books, stuffed animals, coffee makers, cookies,

pastries, etc.: See page 8 for graph

Main Competitors: Dunkin Donuts (Coffee and tea), McDonalds (Coffee and tea): See

page9 for graph

Significant Customers: Caters to all types of consumers worldwide

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Page 6

Howard SchultzCEO, President, Board Chairman

Deidra WagerExectutive VP

Jim AllingSenior VP

Troy AlsteadChief Financial

Officer

Wanda HerndonSVP, Public Relations

Terry DavenportSVP, Marketing

Eduardo GarciaExecutive VP

Brian CrynesEVP, CIO

Darren HustonSenior VP

Shelly LanzaEVP, Human Resources

Henry SuerthSenior VP

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Page 7

0%

50%

100%

Stock (As of 12/02/08)

(U.S.Dollars) Shares Outstanding (BILLIONS) Market

Capitalization (BILLIONS)

Stock (As of 12/02/08)

(U.S.Dollars), 8.1Shares Outstanding

(BILLIONS), 738.3

Market Capitalization (BILLIONS), 5980.23

Starbucks Market Capitalization

Starbucks Market Capitalization

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Page 8

Starbucks Licensed Stores

USA6,793

Canada596

UK580

China141

Germany104

Thailand103

Other188

Total Company & Licensed Stores

15,011

International2,615

USA3,891

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Page 9

50%

29%

21%

Starbucks Balance Sheet (2007)

Total Assets in Billions (5343.9)

Total Liabilities in Billions (3059.8)

Total Share Holder's Equity in Billions (2284.1)Tho

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Page 10

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2007 2006 2005

9411.5

7786.9

6369.35412.4

4608.1

3764.1

672.6 581.5 494.5

Last 3 Year Income Statment

Revenue (BILLIONS)

Gross Profit (BILLIONS)

Net Income (BILLIONS)

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Page 11

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Page 12

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Page 13

•New Markets•Hear Music Label•Growing Specialty

Coffee Market

•Intense Competition

•Volatile Coffee Prices

•The Forbidden City Controversy

•Weak Compliance Fuction

•Narrow Product Mix

•Low Employee Productivity

•Strong Brand Iamge•Robust Financial

Performance•Large Scale Of

Operations

Strengths Weaknesses

OpportunitiesThreats

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Page 14

BERKELEY COLLEGE LIBRARY

OR GAN IZA T IONA L C HA N GE: A BI BL IOGR A P HY

P R EP AR ED FOR MG T4 2 0

EBSCOhost Academic Search Premier:

Boyd, Clark. "Dogs Tags for Virtual Sniffing." Technology Review 110.4 (July 2007): 16-16. Academic Search Premier. EBSCO. 14 December 2007.

Hoover’s Online

“Starbucks Corporation” Hoover’s Company Profile. Hoover’s Online. Berkeley College Lib., New York, NY. <http//premium.hoovers.com.ezproxy.library.berkeley.org>

“Starbucks Corporation” Hoover’s Balance Sheet. Hoover’s Online. Berkeley College Lib., New York, NY. <http://premium.hoovers.com.ezproxy.library.berkeley.org/subscribe/co/fin/balance.xhtml?ID=ffffrhkchrhhyjjrfk&period=A>

“Starbucks Corporation” Hoover’s Income Statement. Hoover’s Online. Berkeley College Lib., New York, NY. <http://premium.hoovers.com.ezproxy.library.berkeley.org/subscribe/co/fin/income.xhtml?ID=ffffrhkchrhhyjjrfk&period=A>

“Starbucks Corporation” Hoover’s Products/Operations. Hoover’s Online. Berkeley College Lib., New York, NY. <http://premium.hoovers.com.ezproxy.library.berkeley.org/subscribe/co/ops.xhtml?ID=ffffrhkchrhhyjjrfk>

Novel NY Business & Company Resource Center

“Starbucks Corporation” Novel NY Company Profile. Berkeley College Lib., New York, NY. <http://galenet.galegroup.com.ezproxy.library.berkeley.org/servlet/BCRC?vrsn=unknown&locID=nysl_me_berk&srchtp=glbc&cc=1&c=1&mode=c&ste=60&tbst=tsCM&tab=1&ccmp=Starbucks+Corp.&mst=starbucks+corp.&n=25&bConts=13247&ses=1>

World Wide Web Sources

<http://www.starbucks.com/mission/default.asp> <http://www.msnbc.msn.com> <http://blogs.bnet.com>

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Page 15

P AR T 2 : OR GAN I ZAT IO NA L C HANG E: A B IBL IOG R A P HY

Books

Book with one author

David, Fred. Strategic Management, Concepts and Cases, 11th Edition. Francis Marion University, 2006.

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Page 16

BERKELEY COLLEGE LIBRARY

OR GAN IZA T IONA L C HA N GE: F OO TNO T E R EF ER E N CE S

P R EP AR ED FOR MG T4 2 0

FOOTNOTES

WORLDWIDE WEB SOURCES

<http://blogs.bnet.com/ceo/?p=1534>

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starbucks, inc

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