Organizational

Design and Change at

Starbucks
Courtney Owens, Alyssa Shirley,
Jen Smith, Jessica Wagner

B U S 4 1 8 , N i g e l D a v e y

Fall

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Table of Contents
Introduction.................................................................................................................................................3
Internal and External Environment...................................................................................................3
Goals and Strategies .................................................................................................................................6
Organizational Design..............................................................................................................................9
Effectiveness..............................................................................................................................................11
Conclusion/Recommendations.........................................................................................................13
References...................................................................................................................................................14
Appendices.................................................................................................................................................17

Introduction
The Starbucks story begins 41 years ago in Pike Place Market, Seattle. Ten partners
(employees) worked for the startup and Starbucks sold only coffee beans and tea.
Today there are over 17,500 stores in 60 different countries, with 200,000+
partners. Although Starbucks is world renowned for its coffee, the company has
expanded its offerings to a variety of drinks, food products, and beverage-related
accessories and equipment. The company reports a strong 14% increase in total net
revenues for the fiscal year of 2012 for a record of $13.3 billion. (Q4 FY12 Earnings
Release; Canto).
Culture and the customer experience has been key to Starbucks success, and it is
very well positioned to continue to be a global leader. The journey certainly has not
been without struggles, but Starbucks innovative approach to change revolving
around customer experiences has fueled the companys notable success. CEO
Howard Schultz attributes the firms strong performance to our unique business
model, which continues to leverage our emotional connection to consumers, our
global retail footprint, our diversified consumer packed goods channel (CPG)
channel distribution capabilities and ongoing innovation across all areas (FY11
Annual Report). This study intends to examine Starbucks and outline how its
organizational design, goals, and strategies have allowed it to properly respond to
the internal and external environment in order to perform effectively as an
organization.

Internal and External Environment

External Environment
Starbucks is the dominating force in the Specialty Eateries industry (NAICS
722515). Coffee shops account for 40 percent of the industry revenue. Donut shops
claim 20 percent of sales, followed by ice cream and other frozen treat locations
with 15 percent of the industry. The remaining portion of the industry includes
shops for special snacks such as pretzels, smoothies, and popcorn. Starbucks is a
clear leader in the industry with a market cap of $34.9 billion (Yahoo Finance).
Starbucks must respond to a rapidly changing external environment to keep an
advantage over competitors. Four aspects of the external environment Starbucks
operates within have been identified and analyzed.
Political/Legal
With stores located around the world, companies in this industry are required to
adhere to government regulations and changing political environments in dozens of
countries. The decisions of foreign governments may affect the vitality of a
companys presence and ability to turn a profit abroad. Coffee companies need to
successfully navigate tariffs and customs when importing coffee to the United States.
Much of the worlds coffee is grown in Africa (Brown, 2011). As with any company
operating in the United States, businesses in this industry must file appropriate

forms and pay appropriate taxes to the federal and state governments.

Economic
Starbucks had its first ever decline in customers in 2008 when the U.S. economy
turned. In 2009 profits decreased by 6% (Brown, 2011). Specialty foods and
beverages became viewed as a commodity that can be cut back on by consumers.
Americans still need their caffeine fix but are opting for low cost options. Players in
this industry compete in a slowed economy by offering both low price menus
choices, and higher priced specialty items.

Social/Cultural
Companies like Starbucks and Dunkin Donuts have a niche market of gourmet
coffee consumers they are trying to reach both in the U.S. and abroad. Much of
Starbuckss success is attributed to its achievement of creating a new culture both in
the atmosphere of its stores and variety of coffee beverages offered (Larson, 2008).
The company continues to grow consumer loyalty by stimulating a Starbucks
culture through happy hours, and special promotions like the highly anticipated
Starbucks Christmas cup.
Consumer demand has evolved from a simple cup of drip coffee to an array of
cappuccinos, lattes, Americanos and the like. Specialty eateries also offer an
assortment of menu items to reach all segments in the market. Snacks and
beverages are available in varying prices, flavors, and calorie levels. Starbucks and
other companies in the industry have boosted their international presence to reach
the vast majority of those around the globe who consume coffee and tea.
Technological
Advances in technology have allowed Starbucks to venture into different markets
and create new products. The chain is well known for offering free Wi-fi to
customers in all 51,000 of its locations (Adkins). An app is available for mobile
payment, simply requiring customers to enter their Starbucks number to use their
smartphone for purchases and tracking reward points. The coffee giant has
embraced and leveraged social media sites like Facebook and Twitter, often creating
events to advertise deals on beverages.
Internal Environment
A SWOT analysis takes information from the external environment and identifies
internal strengths and weaknesses, as well as external opportunities and threats for
a company. This tool is helpful to determine the current state of a business, and
what factors can be leveraged to benefit the company. As the industry leader,
Starbucks must constantly be aware of both the internal and external environments
it operates within. A SWOT matrix can be found in Appendix A.

Strengths
Each Starbucks store offers more than just a convenient cup of coffee, but is a
community gathering place where people come together to connect and discover
new things. We are always looking for innovative ways to surprise and delight our
customers, comments Schultz (Financial release). His words reflect the company
culture of serving the customer with a high quality product and comfortable and
consistent store atmosphere.
Schultz also emphasizes the importance of supporting Starbucks partners (baristas).
The motivation and quality of baristas and other employees is perhaps the most
important strength of the company and is the driving factor behind the success of
Starbuckss vision. Starbucks attracts the best employees by offering competitive
wages and providing part-time workers with healthcare benefits (Brown, 2011).
In just 40 years, Starbucks has positioned itself as the most recognizable brand
within the industry, and is quickly becoming an iconic brand around the world.
Logos and other branding have added immense value to the Starbucks name. Unlike
other companies in with stores located across the U.S. and globally, Starbucks does
not use franchising, except in certain locations such as airports, which enables
consistency and open communication among all storefronts (Schwartz, 2011).
Weaknesses
Starbucks expanded rapidly through 2007, when 3.7 stores were opened daily,
totaling of 1,342 new stores for the year. The result was self-cannibalization where
competition between new and existing stores led to underperformance of some
locations (Trefis Team). In 2008-2009 Starbucks underwent restructuring and 890
stores were closed in a move to increase the number of customers per store.
Expansion slowed for several years due to economic recession in the U.S, but has
since been on the rise.
While Starbucks is the largest and most recognizable company within its industry, it
faces heavy competition and a declining market share. The company must be aware
of competition among stores, as well as in coffee bean sales, coffee makers, and
other new ventures. Tullys, Caribou Coffee, and Dutch Bros. have continued to
expand their businesses and retail locations. New entrants to the industry like
McDonalds have begun to offer gourmet coffee on the go at lower prices. Starbucks
has not responded to this competition in pricing, as its coffee has remained more
expensive than all competitors.
Opportunities
The most obvious opportunity for Starbucks is expanding internationally to
emerging markets. Coffee and tea are consumed worldwide and the strong financial
performance of Starbucks will allow it to take the risk of opening new stores abroad.
Working internationally, Starbucks can continue to maintain good relationships
with suppliers and create new distribution agreements. Starbucks is not limited to

expansion into international markets, but may also capitalize on growing U.S.
markets like health and wellness.
Starbucks also has the opportunity to continue extending its brand into new
products, specifically utilizing technology advances. The company currently strives
to use the latest technology for payment options within stores. The brand has been
extended with a venture into the music industry, a Starbucks music label called Hear
Music. Starbucks has had success in the launch of several new products like its line
of instant coffee, Starbucks Via. Further extension of these projects and adding
products into new industries will continue to grow the Starbucks brand.
Threats
Starbucks faces growing and intensified competition as consumer taste for gourmet
coffee products grows. Rivalry exists between Starbucks and existing coffee shops,
local shops, coffee carts, and the multitude of substitutes for a cup of coffee. The
growing saturation of coffee shops in the U.S. could also threaten the future growth
of Starbucks and other companies in the industry.
While Starbucks tries to employ a local coffee shop atmosphere, the company cant
escape the fact that it is a Fortune 500 company, which may deter some customers.
Along with negative connotations of being a corporate company, Starbucks has often
received damaging publicity revolving around the wages and treatment of coffee
farmers. The firm has taken steps to make its products ethically sources, but is still a
long way off from offering all Fair Trade items.

Goals and Strategies

Mission & Vision
The first critical component to discuss in this section is strategic intent, which
encompasses a defined mission, official goals, operational goals, and competitive
strategies. It is essential that an organization use strategic intent and its components
to give it and its employees direction, focus, legitimacy, motivation, standards of
performance, and decision guidelines. Starbucks mission statement is to inspire
and nurture the human spirit one person, one cup and one neighborhood at a
time (Our Starbucks mission). An expanded mission statement addressed the
needs of each of the six stakeholder groups is available in Appendix B, and will be
discussed further in another section.
Vision is another important aspect of developing specific goals and strategies.
Starbucks vision can be traced back to its inception in 1971. Since then, Starbucks
has strived to do two things with every single workday: to share great coffee with
our friends and help make the world a little better. Schultz envisions Starbucks as
a place for conversation and a sense of community and has set out to make
Starbucks a different kind of companythat [brings] a feeling of connection ("Our
heritage").

One functional purpose of official goals and mission statements is that they describe
the value system of the organization. Melanie Canto of Starbucks comments: values
and fundamentals drive strategy, and that people value the company doing what it
says it will do. Thus, by identifying what is important to the company and where it
would like to be, a strategy for how to achieve this can then be developed. An
example of Starbucks mission statement and values in action is seen in how
Starbucks reacts to tough economic times. Canto described how when the economy
takes a downturn, Starbucks gives even more effort to support the community. The
company will engage in projects that benefit the community, and will hold wages
and the prices its pays for materials above that of the average regardless of
conditions. The discovery has been that when Starbucks gives back to communities
when they struggle, then people will be more likely to return the favor with their
purchases.
Operative Goals
An important part of successfully implementing strategy is developing goals that are
specific, measurable, attainable, realistic, and timely. Setting these goals will give the
organization a measure by which to evaluate its success. However, in order to truly
excel and be a top competitor, an organization must set stretch goals goals that
present a challenge and will discourage the company from becoming stagnant. One
general, overreaching goal that Starbucks has set is to balance profitability with a
social conscience (FY11 Annual Report). There are a variety of operative goals that
Starbucks has delineated that help it to achieve this.
One of Starbucks goals is to become a bigger player in the Health and Wellness
sector, which represents a $50 billion market. The companys first move towards
achieving this was the acquisition of Evolution Fresh, Inc., a super-premium juice
company. Starbucks has also introduced the Bistro Box platform in response to
consumers desires for more choices with wholesome ingredients. These menu
options include items such as cheese and fruit, chicken and hummus, and tuna salad
and fresh veggies. The response to both of these endeavors has been strong. Schultz
comments that effective innovation is about responding to, predicting and creating
customers needs while staying true to our core values, a statement that certainly
rings true in respect to the companys moves into the Health and Wellness sector
(FY11 Annual Report).
Another goal Starbucks is working to achieve is that of further global expansion. The
2011 Annual Report expresses its intent to enter into India and develop China as a
second home market. It also aimed to open 800 new stores globally for the year
2012. Reflecting on Year 2011s results, Starbucks U.S. Retail segment exceeded all
operating and performance metrics and saw continued acceleration of growth
outside of North America. The company attributes this success to disciplined
execution enabling us to leverage that growth into higher profits (FY11 Annual
Report).

Setting excellent goals is only tells part of the story however; it is crucial that
progress towards or achievement of each goal be measured and the results be
analyzed. This will allow for the company to continuously improve and gauge its
level of success. Appendix C highlights some key operative measures from the year
2007 through 2011. The graph entitled Comparable Store Sales Growth visually
depicts the hit Starbucks stores took from the 2008 recession, as well as its
subsequent return from -6% growth in 2009 to positive 8% in 2011. Further,
Starbucks has been able to maintain a positive upward trend in the other five
displayed financial measures, despite the temporary suboptimal economic
environment (FY11 Annual Report).
The 2011 Annual Report puts forth the question how might we use our scale for
good? This question aims to address Starbucks desire to have a social conscience in
conjunction with profitability. In the year 2011 the company created 3,700 jobs, and
set a challenging goal of introducing 12,500 more globally in the year 2012.
Unemployment is prominent issue in the U.S. and Starbucks has acknowledged its
ability to play a part in restarting the nations jobs engine (FY11 Annual Report).
Strategies & Alignment with the Environment
Organizational goals are achieved through the successful implementation of
strategy, which is influenced by the internal and external environment. Contingency
theory is a key concept to consider in order to understand how this is done. The
theory accounts for the fact that strategy, environment, size, culture, and technology
all interact together to affect organizational design. These contextual factors are not
only affected by the external environment but also each other, and also influence
organizational design, as it must fit the contingency factors. Starbucks has done a
very good job of aligning its strategies and goals with the external environment, as
will be demonstrated by the following discussion.
Starbucks has established a very solid foundation and has forward momentum
propelling it towards successful attainment of obtaining strategic objectives. Schultz
even comments that Starbucks is remarkably well positioned to pursue our
diversified, multichannel, multibrand, business model. The firm is following a
channel development strategy, in part achieved by a growing portfolio of branded
products. Starbucks also strives to differentiate itself from competitors, a strategy
that is partially achieved by the powerful assertion of the firms coffee authority
across multiple channels while creatively enhancing the food and beverage
experience for [customers] (FY11 Annual Report).
Starbucks acknowledges the different opportunities and strengths it has that will
allow it to maintain its position as the industry leader, and strives to take advantage
of such in order to create a sustainable competitive advantage. First of all, the
company has a very strong global brand image, and has discovered that it can get
customers to try just about any product. With this unmatched loyalty, Starbucks has
attempted to leverage such in conjunction with diversified growth strategies in
order to develop and capitalize upon Starbucks opportunities. The company can

introduce any new idea or product it wants and withdraw when it becomes
apparent that the new endeavor is not catching on without experiencing any
negative repercussions in terms of image or customer loyalty (Canto, 2012).
Although the company has many positive things going for it, things do not always go
as planned. With the downturn of the economy in 2008, Starbucks experienced
losses as the rest of the nation did. The chain was opening eight stores a day, which
upon completion of a sensitivity analysis proved to be too fast. As a result of the
recession and the rise of electronic information, the bookstore Borders closed its
doors for business. Being as Starbucks had a partnership with Borders, the result
was the closing of 225 Starbucks shops in Borders bookstores (Canto, 2012).
However, its adaptive culture, focus on the customer, and organizational design
allowed it to effectively move past these difficult times.
Moving forward Starbucks has demonstrated its ability to effectively respond to the
external environment, as shown by its success with matching the stores to the
personality of each store location. When Starbucks began to expand globally, it had
to consider that each country might not react the same way to the same products,
and had to develop different game plans for getting customers into the store.
Starbucks developed a strategy such that stores were designed in a locally relevant
fashion, such that they reflected the community in which they were located. When
introducing drive-thrus, Starbucks was concerned that the addition did not fit with
the companys strategic intent. However, the company tried to make the drive-thru
feel the same as it would on the inside, by adding features such as placing plants on
the outside walls. Stores were adapted to the consumers they serviced, and as a
result sales increased by 35% at each location that installed a drive-thru (Canto,
2012).
Another example of Starbucks correctly aligning strategy with the environment is its
focus on technology as a part of the customer experience. As identified previously,
Starbucks established a loyalty program called My Starbucks Rewards, which allows
customers to make payments from their mobile device. Using these Starbucks Card
Apps, customers can also customize and save their favorite drinks and order
straight from their device. These innovative ideas were hugely popular and have
strengthened Starbucks already unmatched loyalty from its customers. By
leveraging social media, Starbucks has been able to respond to the constantly
changing marketplace in ways that strengthens [its] connection with customers
(Canto, 2012; FY11 Annual Report).

Organizational Design
In 2008 Schultz returned as the CEO of Starbucks due to the economic crisis, which
caused Starbucks to struggle. He realized that he needed to reorganize the company
and realign its strategies to move the focus back to the customer experience within
U.S. field operations and centralize or consolidate the support functions. He did this
by changing the organizational structure of Starbucks in the following areas: U.S.
Field operations, divisions, and support functions.


Starbuckss United States operations changed from two divisions to four, which are
Western/Pacific, Northwest/ Mountain, Southeast/Plains, and Northeast/ Atlantic.
Previous to 2012, Starbucks had Starbucks U.S. and Starbucks International, but it
now has 3 regions, which are the Americas, China and Asia, and EMEA or Europe
and it has emphasized more leadership at the helm of each region. The structure
within the United States allows leadership to be closer to the customers and
partners which definitely increases the amount of on the job training and mentoring
that takes place within the company as well as allowing for heightened
accountability. According to a letter from Schultz, divisions are now structured so
that, Each division will be led by a senior vice president, reporting directly to the
U.S. president (Starbucks.com, 2012). Each division does report to the president of
U.S. operations, but internally each department will report to their respective
functions. The following support functions have been combined or reorganized into
functional teams to ensure that they share the same goals and visions: U.S. Store
Development, U.S. Licensed Stores, U.S. Finance, Partner Resources, Marketing, In-
Store Experience, Global Supply Chain, Global Communications, and Partner & Asset
Protection.

Starbucks current organizational design is a hybrid organizational design,
encompassing a geographical structure, functional structure, and a horizontal
structure. Starbucks has executives that are based in their birthplace, Seattle,
Washington and they oversee the whole corporation. Starbucks is then broken
down into 3 geographical regions globally and furthermore into 4 geographical
regions within the United States and this allows it to target the varying geographical
markets quite differently based on each location, culture, climate, and lifestyle;
These geographic regions within Starbucks are managed by district managers who
report to Starbuckss executives directly.
Next, major functions are grouped together within geographical divisions; for
example, within the United States there is a finance department, marketing
department, human resources department, etc. And lastly, each storefront within
Starbucks has a horizontal structure, which organizes employees around core
processes (Daft, 2008). When restructuring, Starbucks went back to its roots,
focusing on the customers and their experience, which was neglected during the
rapid expansion that took place before 2007. The firm redesigned its vertical
structure along its horizontal workflows and processes at the lowest level, which
has created an emphasis on customers and resulted in a flatter more adaptive
culture.
When Schultz returned to his position as CEO in 2008 Starbuckss goal was to go
back to the companys roots and have an adaptive culture that matched its new
flatter organizational structure. Starbuckss six-point mission statement helps guide
it to ensure that the organic culture is nourished and it focuses on its partners,
customers, shareholders, stores, neighborhood, and coffee. Refer again to Appendix
B for the six-point mission statement. In somewhat of a domino effect, Starbucks

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believes that if its partners are happy and well taken care of in a communication
Fall
rich environment where they are respected, then they will enrich the lives of and
truly connect with their customers. A happy satisfied employee and a customer that
feels valued helps to create an environment at stores where customers customers
feel this sense of belonging, our stores become a haven, a break from the worries
outside (Starbucks.com, 2012). Starbucks main concern when it comes to its coffee
is quality and ensuring its beans are ethically sourced, because it genuinely care
about everyone that is involved in the business of making coffee beans for the
company. This leads to a deep concern for the neighborhoods that Starbucks
operate in and it want to be the leader in positive change. If the previous five parts
of the mission statement are followed consistently, then shareholders will reap the
benefits and undoubtedly be happy.
As mentioned earlier, Starbucks places great importance on its relationship with its
employees and has a culture that promotes collaboration and communication.
Starbuckss district managers are encouraged to visit stores often and promote open
communication among employees, which are referred to as partners. If partners
work more than 20 hours they receive impressive benefits, such as: healthcare,
tuition reimbursement, stock options, career development, and retirement plans.
Starbuckss benefits packages cost the company more than its coffee does, which
clearly emphasizes the companys culture of being relationship driven. Starbucks is
currently rated as 73 on Fortunes 100 Best Places to Work list and has a
considerably lower turnover rate than other businesses in the retail industry.
Starbucks treats its partners well and believes that employees share in the
Starbucks experience and employee satisfaction is what causes the low turnover
rate.

Effectiveness
Starbucks is centric around innovation, and this drives its high effectiveness. The
organization is a forerunner in the not only the coffee industry, but the business
world as a whole. Starbucks effectively utilizes its organizational structure, internal
and external environmental factors, decision making processes, and organizational
goals to maintain its status as one of the most successful corporations in the world.
The organization has experienced some setbacks and slow times of growth, but
through that, it has always maintained its organizational effectiveness.
Starbucks collaborative and adaptive culture fosters internal process effectiveness.
While Starbuckss strategy and structure are not perfectly aligned, the current
structure allows for the company to have successful communication upward,
downward and laterally with its employees, causing internal processes to run
smoothly. The company values innovation, and genuinely wants the employees to
have a good work experience. The company culture of caring for employees, and
wanting them to succeed leads the company towards its productivity. The low
turnover rate and rating on Fortunes 100 Best Places to Work list attests the
effectiveness of their corporate culture and drive for a positive work environment.

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Starbucks has a clearly designed system for resource acquisition that has proved
highly effective. The company profile claims we take a holistic approach to ethically
sourcing the highest quality coffee. Starbucks employs responsible purchasing
practices making sure that it attains the best resources (beans) in a way that
protects it and the growers. Once Starbucks has attained resources, it has a highly
effective supply chain to integrate the resources into the organizations. The
company restructured its supply chain in 2008 after seeing a growth in costs but
loss in sales, and has seen savings of estimated $500 million since the switch. While
effective acquisition of resources in only one small part of the big picture of
Starbucks effectiveness, it paints a picture for the way the rest of the business is run
(FY11 Annual Report).
Starbucks is also successful in attaining resources in the form of acquisitions of
other companies. Starbucks has been continually buying out other coffee shops and
many of its operators in foreign countries. Through acquisition Starbucks has also
successfully acquired Tazo Tea, Ethos Water, and Evolution fresh juices, all of which
are products sold in nearly every Starbucks store. Starbucks most recent acquired a
San Francisco based bakery, La Boulange, for a staggering $100 million, making that
the companys largest acquisition to date. This acquisition will push Starbucks
further into the fast food type market where it has recently been competing, as La
Boulange offers French pastries and a variety of salads and sandwiches (Choi 2012).
In a time when other organizations of its kinds are seeing sales declines, Starbucks
recently reported sales increases of 6% (OToole 2012). Not only are sales
increasing, but Starbucks market share and share prices also are rising. Starbucks
stock is currently strong, clearly satisfying shareholders. Soon, the corporation plans
to introduce newer products (such as: low calorie refresher drinks, juices, a juice
bar in Washington and Verismo single serving coffee brewers) to continue to boost
sales. Analysts are predicting earnings of 39 cents per share, an increase of about 15
percent from the year-earlier period, on revenue of $3.18 billion for Starbucks in the
next year with the addition of this new product lines.
Starbucks also plans to expand from the current 500 stores in China, to 1500 by
2015. Analysts are also extremely optimistic about this expansion. At least for the
foreseeable investment horizon, these are very doable numbers, said Keith Siegner,
an analyst for Credit Suisse (Hing 2012). Starbucks is now introducing these new
products within its pre- existing market, which is a low risk diversification strategy.
Starbucks coffee is considered the leader in quality in the coffee industry, due to the
firms quality product, genuine customer service, and strategic marketing.
Starbucks last quarter revenue growth of 13% year over year clearly attests to its
effectiveness as a company, compared to competitors Dunkin Donuts growth of
10%, and McDonalds 0% growth. Year over year earnings growth for Starbucks was
a remarkable 19.3%, Dunkin Donuts saw in increase of 7.8%, and McDonalds saw a
decrease of 4.5% (Hing 2012). These numbers indicate that Starbucks is, and will
continue to be, a sound investment for stakeholders against its peers. These
numbers also indicate a clear advantage for Starbucks, leaving no question about

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the companys effectiveness. With such high earnings, and growth Starbucks has a
clear competitive advantage. The entirety of the Starbucks culture, innovation,
strategic intent, and products pushes Starbucks ahead of the competition. Starbucks
has provided immense satisfaction for its stakeholders this past year as its balance
sheet has never been stronger, and its recorded profits have never been higher
(FY11 Annual Report). Starbucks is a forerunner in the coffee and food industry, and
is preparing to expand its strong brand name further.

Conclusion/Recommendations
From its humble beginning 41 years ago in Seattle, Washington, Starbucks has
grown significantly, faced turbulent times where it struggled, and not only
recovered, but are extremely profitable and successful. In 2000, when CEO Howard
Schultz stepped down things were looking delightful for Starbucks, but by 2007 it
was in real trouble and needed to readjust its strategies and go back to its roots.
Starbucks had expanded beyond its core capabilities into areas like music, books,
and film. The pressure to increase profits by at least 20% a quarter were very high
and the company lost vision of the its true values, quality coffee and an experience
that just cant be duplicated in other coffee shops. Starbucks needed to go back to
focusing on the customer experience, and thats just what it did.
Starbucks focused on changing its culture back to an open, organic, and adaptive
culture that fostered innovation and things began to turn around in 2011. The
results show clearly in Starbucks financials, with a 10-13% growth in revenues and
15-20% growth in EPS for the year 2011. It is leveraging fundamentals that have
driven the companys growth, and Starbucks is a strong performer in major markets
and has a strong cash position (Canto, 2012).
As Starbucks moves forward innovation will continue to fuel success and will foster
growth within Starbucks. Vast opportunities await Starbucks, such as buying a food
company, creating a new way to provide cold drinks, and continuing to improve
food products (Canto, 2012). In 2011, Howard Schultz cast further vision for the
company by stating, As we look forward, were excited by ongoing innovation, new
channels of distribution, expansion into new markets, and how these opportunities
will allow us to make a difference in even more communities around the world
(Annual Report, 2011).

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Appendix A SWOT Matrix

Strengths

Company culture
Brand recognition
Motivated employees
Company operated stores
Good relationship with
suppliers
Widespread
Strong financial record

Weaknesses
Declining share in market
Product pricing
Self-cannibalization
Too much outward focus

Opportunities
Emerging markets (international)
Technological advances
New products
Distribution agreements
Brand extension


Threats
Intense competition
Supply of high quality coffee beans
Product saturation in US market
Negative publicity
Consumer trends
Political issues internationally
Corporate giant image

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Appendix B Expanded Mission Statement

Our Coffee
It has always been, and will always be, about quality. Were passionate about
ethically sourcing the finest coffee beans, roasting them with great care and
improving the lives of people who grow them. We care deeply about all of this; our
work is never done.

Our Partners
Were called partners, because its not just a job, its our passion. Together, we
embrace diversity to create a place where each of us can be ourselves. We always
treat each other with respect and dignity. And we hold each other to that standard.

Our Customers
When we are fully engaged, we connect with, laugh with and uplift the lives of our
customers even if just for a few moments. Sure, it starts with the promise of a
perfectly made beverage, but our work goes far beyond that. Its really about human
connection.

Our Stores
When our customers feel this sense of belonging, our stores become a haven, a
break from the worries outside, a place where you can meet with friends. Its about
enjoyment at the speed of life sometimes slow and savored, sometimes faster.
Always full of humanity.

Our Neighborhood
Every store is part of a community, and we take our responsibility to be good
neighbors seriously. We want to be invited in wherever we do business. We can be a
force for positive action bringing together our partners, customers and the
community to contribute every day. Now we see that our responsibility and our
potential for good is even larger. The world is looking to Starbucks to set the new
standard, yet again. We will lead.

Our Shareholders
We know that as we deliver in each of these areas, we enjoy the kind of success that
rewards our shareholders. We are fully accountable to get each of these elements
right so that Starbucks and everyone it touches can endure and thrive.

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Appendix C Fiscal 2011 Financial Highlights

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