OVERVIEW /FACTS OF THE CASE (present in bullet format-no essays)

Brief company background

● Starbucks is a specialty coffee retailer. It roasts, markets, and retails specialty

coffee. The company, through its stores, offers several blends of coffee,
handcrafted beverages, merchandise, and food items. It is the world’s largest
coffeehouse chain.
Registered business name :
● Starbucks Corporation
Identify the business industry
● Coffee Production, Tea Production, Accommodation and Food Services, and
Coffee & Snack Shops. Their largest market share is in the Coffee & Snack
Shops industry,
Year established
● 1971
Who are the main proponents (owners / incorporators)
● Laxman Narasimhan (CEO)
Complete list of products or services:
● Handcrafted Beverages
● Fresh-brewed coffee
● Hot and iced espresso beverages
● Frappuccino
● Coffee and non-coffee blended beverages
● Smoothies
● Tazo teas
● Coffee and tea brewing equipment
● Verismo system by Starbucks
● Whole bean coffee
● Ground coffee
● Pastries
● Sandwiches
● Mugs
● Gift items
● Ready to drink Starbucks products.
Location of central office / factory
● Central Office : Seattle Washington
Financial standing or current worth as of 2023
● $105.8B as of October 6, 2023
Number of employees as of 2022
 ● 402,000
Other information you group deem necessary
● As of 2022, there are 35,711 Starbucks stores in 84 countries.

POINT OF VIEW

POV : Chief Procurement Officer

We chose the viewpoint of the Chief Procurement Officer because we believe that
he/she has the expertise and power to improve and develop purchasing policies
and procedures in the organization. He/She leads the central procurement and
supply chain function within the organization. The procurement department ensures
that supplies are available when they are needed, with minimal cost while increasing
profit margin.

MISSION /VISION STATEMENTS

Starbucks has retained its vision statement, but recently changed its mission statement
on April 24, 2023.

Vision Statement:
"To establish Starbucks as the premier purveyor of the finest coffee in the world while
maintaining our uncompromising principles while we grow." Aiming to be the leading
purveyor means achieving leadership in ensuring its coffee and other products are of
the best qualities."

Mission Statement:
"WITH EVERY CUP, WITH EVERY CONVERSATION, WITH EVERY COMMUNITY–
WE NURTURE THE LIMITLESS POSSIBILITIES OF HUMAN CONNECTION."

GENERIC STRATEGIES

Determine if the organization is utilizing any or both strategies, and explain how:

· Cost Leadership Strategy

· Differentiation Strategy

A generic strategy is a general way of positioning a firm within an industry. Focusing

on one generic strategy allows executives to concentrate on the core elements of
 firms' business-level strategies and avoid competing in the markets better served by
other generic strategies.

Follow link for explanation -

https://digitalleadership.com/blog/porters-generic-strategies/#:~:text=Cost%20Leade
rship%20Strategy%3A%20striving%20to,than%20those%20offered%20by%20comp
etitors.

Starbucks is utilizing the differentiation strategy more rather than the cost leadership
strategy. However, they still incorporate such elements of this strategy into their
business model.

Cost Leadership Strategy

● This strategy is evident in Starbucks with the way they diversify their menu and
regularly sell special drinks at least every month. By doing so, they get to
manage their inventory, which could result in minimized costs.
● They find other ways to cut costs and get lower prices on coffee and other
ingredients they need.

Differentiation Strategy

● Starbucks primarily utilizes this strategy as they try to offer their customers a
unique experience every time they visit the store.
● This strategy is implemented through premium drink options ranging from
americanos, espresso beverages, frappes, seasonal drinks, and more.
● Customers are also allowed to create or customize their own drinks which other
competitors do not offer.
● All Starbucks branches' interiors are designed to create a welcoming atmosphere
● Their coffee beans are ethically sourced as they work directly with coffee
farmers. This practice could be appealing to those consumers who are socially
conscious.
● Starbucks also utilizes a loyalty program through the Starbucks card which gives
consumers points with every drink or food they buy. The accumulated points
could then be used for a free drink or food once the required amount of stars is
reached.
● They also invested their money on the Starbucks app where people could see
the menu and even do advance orders for pick-up.
STRATEGIC AREAS OF CONSIDERATION

The strategic variables for consideration as you make a plan for the future must be
related to the framework related to the case study and which are described in the
weekly MODULE topic. Use the framework in answering this area. Read the
module and do your research.

Present in table format. Essays are for your notes when presenting your
PowerPoint.

· Group 1 Amazon. Com: Business strategy links to its mission and vision
analysis

· Group 2 Craft Beer Brewery Industry: External Environment-PESTEL

analysis

· Group 3 Apple, Inc.: External Environment – Porter’s Five-Forces of

Competition analysis

· Group 4 Fitbit, Inc.: Internal Environment – SWOT analysis

· Group 5 Starbucks: Internal Environment – Value Chain analysis

· Group 6 Airbnb – Market segment, rivalry and strategic mapping

They indicate the factors that have influenced the problem that arises in the case
and must be considered in helping the group’s proposed solutions to the problem.

Note:

To determine the next content requirements, let us use as an example Module #5

Value Chain analysis framework related to the Starbucks case study.
INFRASTRUCTURE

- On site store management

- Business Management

- Financial Department

- Legal Department

HR MANAGEMENT

- Compensation, Benefits, and incentives to employees

- Training Programs for employee efficiency

TECH/DEVELOPMENT

- Convenience via free WiFi

- Starbucks internet platforms, iBeacon

- Coffee related Machines

PROCUREMENT

- Strategic relationship and partners with suppliers of ingredients (Asia, Africa, Latin
America)

- Ingredients are chosen based on on quality

INBOUND LOG

- Simplification of supply chain management

- single global logistics system

- Coffee beans are transported to distribution centers all over the globe.

OPERATIONS

- Starbucks operates in more than 80 markets

- Company operated stores and licensed stores.
- Starbucks positions themselves in high traffic areas

OUTBOUND LOGISTICS

- Usage of Online sale channels for certain products

- Absence of intermediaries (resellers & wholesale)

MARKETING AND SALES

- Word of Mouth Advertisement

- Print and media advertisement
- Events
- Public relations
- Social Media and Technology advertising

SERVICE

- Quality customer service

- Actions affecting great customer impression.

GENERAL OBJECTIVE

To reduce the cost of coffee bean sourcing of Starbucks by 10% while

maintaining their quality standards within the next 12 months

The objective summarizes what your group expect to achieve in general terms in
analyzing the case study. Should be closely related to the above STRATEGIC
AREAS OF CONSIDERATION analysis.

How to write a S.M.A.R.T. general objective?

· Start with “To”, always.

 · Be very specific – root cause issue related

· Detailed – in amount, or number, or measurement.

· Time-bound – What year or month coverage to be accomplished or

solved.

Example of a SMART General Objective statement to be typed in your PowerPoint

slide.

To reduce Starbucks’ human resource attrition rate from 5% to 2% from

January to December 2024 after return-to-work order, post-Covid/pandemic
economy.”

STATEMENT OF THE PROBLEM

How can Starbucks reduce the cost of coffee bean sourcing by 10% while
maintaining their quality standards within the next 12 months?

Explanation:

STRATEGIC ALTERNATIVE COURSES OF ACTION (ACAS)

Alternative Courses of Action (ACA) are the possible actions that can be
implemented to address the STATEMENT OF THE PROBLEM your group has
identified. This portion doesn’t provide the actual and optimal solution yet. Rather, it
contains proposed alternatives that will still undergo an evaluation of their respective
advantages and disadvantages to help you come up with the best solution.

ACA #1: Acquire/purchase added (x) number of hectares of land for the expansion of its
own coffee farm in PoasVolacno, Costa Rica or somewhere else strategic.

Trade-Offs
Pros Cons

1. It will increase its own coffee production, 1. Added capital expenses for acquiring
thereby reducing coffee bean sourcing the land property and necessary
2. It will increase the effectiveness of new equipment
product development initiatives for the 2. Added operating expenses for hiring
business manpower
3. Provides opportunity to experiment with 3. Added load for monitoring and
developing new sorts of coffee, thereby maintenance activities
improving coffee quality and yields Etc.
Etc.

ACA #2: Expand company-operated farmer support centers from 10 to 20 or more

through its strategic relationships with suppliers

Pros Cons
1. It will strengthen their strategic 1. Added capital expenses for
relationships, thereby mutually benefitting company-operated farmer support centers
from this expansion expansion
2. It will increase its coffee production, 2. Added operating expenses for hiring
thereby reducing coffee bean sourcing manpower
3. Provides greater opportunity to 3. Added load for monitoring and
experiment with developing new sorts of maintenance activities
coffee, thereby improving coffee quality
and yields

STRATEGIC RECOMMENDATIONS

Indicate in your PowerPoint slide which of proposed ACAs is the best to address the
statement of the problem. Here are some factors to consider when choosing.

· Realistic: The organization must have sufficient knowledge, expertise,

resources, and manpower to execute the recommended solution.

· Economical: The recommended solution is cost-effective.

· Legal: The recommended solution must adhere to applicable laws.

· Ethical: The recommended solution must not have moral repercussions.

· Timely: The recommended solution can be executed within the expected

timeframe.

ACA #2: Expand company-operated farmer support centers from 10 to 20 or

more through its strategic relationships with suppliers
Explanation: With more farmer support centers, Starbucks can exert greater control
over the quality of coffee beans. These centers can educate and train farmers on best
practices, ensuring consistency in the quality of the beans supplied to Starbucks.

Buying land and establishing coffee farms can be a capital-intensive endeavor. It

requires substantial upfront investments in land acquisition, infrastructure development,
and ongoing operational expenses. In contrast, expanding farmer support centers is
typically more cost-effective and can deliver faster results.

Farmer support centers offer flexibility in sourcing. They allow Starbucks to work with a
network of local farmers without the constraints of owning and managing large coffee
farms. This flexibility is especially important when sourcing from diverse regions.

Criteria Weight ACA 1 ACA 2

Cost 5 2 4

Quality Control 5 3 3

Sustainability 5 4 5

Flexibility 5 3 5

Risk Mitigation 5 2 3

Total 25 14 20

Optional for the group

In case you want to be more innovative in your presentation, you may use a decision
matrix to assist you in picking the best ACA . This matrix allows you to rank the
ACAs based on your criteria. No bearing to your grade, but are you up for the
challenge?
RECOMMENDED IMPLEMENTATION PLAN (present in table format only)

Chosen ACA:

ACA #2: Expand company-operated farmer support centers from 10 to 20 or more

through its strategic relationships with suppliers

An implementation plan—also known as a strategic plan—outlines the steps your

team should take when accomplishing a shared goal or objective. This plan
combines strategy, process, and action and will include all parts of the project from
scope to budget and beyond. In this guide, we’ll discuss what an implementation
plan is and how to create one.

Use GANTT chart framework to describe your implementation plan. Provide

maximum of four (4) key activities, namely: (1) Planning, (2) Organizing, (3)
Leading, (Control)

Recommended implementation plan:

Action Steps Objective of Responsibl Resources Date of Possible Risk of the

the Action e requirements
Implement Action
department

Identify specific Planning Complete Insufficient data or

Assessment requirements and Expertise in data within one inaccurate information
and Planning and challenges Research analysis and month from farmers
faced by farmers Department assessment
in the target
regions.
Collaborate with Procurement Legal and contract Ongoing Challenging negotiations
Supplier suppliers to Department management throughout and conflicting interests
Relationship define their roles expertise the
Development and Law expansion
responsibilities Department process
in supporting the
centers.
Identify a 1.Suitable locations Start within Inadequate Infrastructure
location that is Developmen for new support 3 months or Utility Disruptions on
Site Selection strategically t centers. and the sites.
advantageous Department complete
for the support within 6-12
centers. months
 Develop and Training and 1.Training curriculum Ongoing Resistance or limited
Training and implement Developmen and materials throughout participation from farmers
Capacity training t the or support center staff.
Building programs for Department 2.Training facilities expansion
farmers and and equipment process
support center
staff.

Development or Expansion Teams: If the site selection is part of a broader expansion or

development project, a dedicated team or department may be formed to handle this
task. This team often includes professionals with expertise in project management,
engineering, and real estate.