Revised Mission Statement The primary goal of Starbucks is to inspire and nurture the spirit. (1, 9) We seek to internationally provide the highest quality coffee, while continually striving to improve our products through innovative and exciting ways. (2, 3, 4) We are not only committed to our diverse customers and invaluable employees, but also to growing our environmental goals to reduce our environmental footprint. (1, 6, 7, 8, 9) Starbucks strives to steadily increase growth and profitability by creating new product offers and extending focus on the Starbucks brands in grocery stores. (5) We will make the world a happier place – one person, one cup, and one neighborhood at a time. (1, 7, 9) Customers (6) Philosophy Products or services (7) Self-Concept Markets (8) Public Image Technology (9) Employees Survival, growth and profitability Coffee Industry Overview Coffee is the most commonly consumed beverage worldwide and is continually growing, producing a demand that café owners and coffee exporters are eager to supply. The market is segmented into growers, roasters, and retailers. On the coffee-growing level, South America was ranked as the major coffee-producing region. Brazil produced and exported 43.2 million 60 kg bags of coffee in 2016. Other major producers are Vietnam and Columbia. Importing countries tend to consume less coffee than their importing counterparts. The United States had the largest sales share with 45.8% of retail sales in 2016, followed by single-cup coffee. Coffee chains have become more and more popular among customers who enjoy their coffee to go. Starbucks and Dunkin Donuts dominated this out-of-home retail market, with a combined market share of over 65%. Growth in coffee cup per capita consumption is up 18% in China, 13% in the United Kingdom, and 3.5% in Japan. Consumers on average 1.64 cups of coffee per day, reporting that they drink it at home, on the way to work, and at work, in order to wake up in the morning or receive a burst of energy throughout the day. Additionally, consumers in the United States tend to drink more coffee as they get older. Coffee consumption worldwide continues to increase from 146.98 million 60kg bags consumed in 2012 and 2013 to 155.71 million 60 kg bags consumed in 2015 and 2016. Competitor Overview
6 Starbucks has 12,711 company-operated stores, 12,374 licensed stores, and employs approximately 254,000 people. 0.05 4 0.20 7 Employee morale is high and Starbucks holds good, long-term relationships with their employees. 0.04 4 0.16 8 Starbucks has a strong global business model, and makes disciplined investments in their business and employees. 0.03 4 0.12 9 There are over 1,000 stores that are Leadership in Energy and Environmental Design (LEED) certified in 20 different countries. 0.02 3 0.06 10 Starbucks reduced consumption from stores by 26.5% in 2015. 0.02 3 0.06 Weaknesses 1 Starbucks is highly dependent on the financial performance of the United States operating segment; Starbucks operates in more than 75 countries, but 69% of revenues are generated in the United States. 0.10 1 0.10 2 Starbucks has imitable products that can be produced and sold cheaper. 0.08 1 0.08 3 The Europe, Middle East, and Africa segment only contributed to 6% of revenue in 2015. 0.07 1 0.07 4 Europe, Middle East, and Asia segment revenues declined 8% to $1.1 billion in fiscal 2016 compared to a year ago. 0.04 1 0.04 5 Product pricing; one customer buying the smallest, cheapest specialty at $3 dollars a cup can expect to spend $780 dollars a year. 0.04 2 0.08 6 Revenue decreased 6% from $1294.8 million in 2014 to $1217.7 million in 2015. 0.04 2 0.08 7 Starbuck's reward system is lacking. You get 2 stars per $1 dollar spent, at 300 stars you get a free drink or food item, costing about $150 dollars to get there. 0.03 2 0.06 8 74% of sales were from beverages, 19% from food, 3% from packaged and single-serve coffees and teas, and 4% from coffee-making equipment. 0.02 1 0.02 9 Lack of internal focus; more interested in expansion, even though the majority of income is from the Americas. 0.02 2 0.04
*Rewards program: 15,607 US stores averaging 500 customers per day. $1 per card, $400 dollars per store for software needed, $20 per month for software usage. *Product placement: $20,000 for a visual placement, $40,000 for a brand name mention, $60,000 for an action to use the product in a scene. *Distribution center: 680,000 square feet in Raleigh, NC at 104 dollars per square feet + estimated costs for equipment. EPS-EBIT Analysis Narrative The EPS/EBIT analysis revealed a minuscule difference between financing through equity versus financing through debt. We looked towards the economy and kept our current shareholders in mind when choosing between debt and equity financing. We to finance through debt because interest rates are so low right now making financing through debt pretty cheap. Additionally, by financing through debt, Starbucks will be able to deduct the interest for taxes, making the cost of debt even lower. Financing through common stock would end up costing more in the long run because returns to equity are continually offered through perpetuity. We also did not want to dilute our current stockholder’s percentage ownership of Starbucks. EPS/EBIT Analysis: Tables and Graphs