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Planning - Essay Example

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If so, what strategies would he need to implement in order to achieve this level of success? If not, why?”
Strengths: It is the case that…
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Starbucks: Planning for Success The purpose of this paper is to address the question “Can CEO Howard Schultz lead Starbucks to reach 23 Billion in sales in three years? If so, what strategies would he need to implement in order to achieve this level of success? If not, why?”
This question will be answered using a SWOT framework.
Strengths: It is the case that Starbucks has a global brand image. According to Helm (2007) it is the case that he organization has dedicated a great deal of energy to streamlining their operations by vacuum packing the coffee for long distance transportation, and by implementing automatic espresso shot makers. The company also has a wide product offering from savory sandwiches to desserts, CD’s to about every variety of coffee combination available, as such the company is able to offer something to accommodate almost all tastes. As it is the case that the firm focuses on using extremely high quality coffee products in many ways the company has segmented themselves in the market as a premium brand. In this respect the company has semi-positioned themselves as a company that offers an affordable luxury.
Weaknesses: As the company is not franchised and simply utilizes a successful business model, it may be a bit ambitious for the company to project opening an additional 26,500 stores whilst still maintaining a high degree of control over product quality and individual store financial success.
Opportunities: According to the international Coffee Organization (2007) the global consumption of coffee is a growing trend with per capita consumption expected to reach stay at 1.3 kilograms annually up from just 1 kilogram in 1996. Furthermore in a number of markets there is very little restriction on the establishment of small business entities such as a coffee shop. As such it may be the case that Starbucks may not face any strong opposition by pursuing a policy of expansion into new markets in places such as Asia and Latin America.
Threats: According to McRoskey (2008) it is the case that there is increased competition from traditional café based coffee vendors but also McDonalds and Dunkin Donuts. As it is also the case that there is a high degree of new entrants in the coffee market, furthermore a massive new expansion policy may prove to be financially unfeasible in already heavily saturated markets. Lastly, it is the case that as Starbucks is an American company, sales could be influenced by influenced in some countries by the current political climate.
In terms of Howard Schultz actually achieving his goal of reaching 23 billion in sales I personally believe that this goal is achievable owing to the fact that there is a growing demand for coffee in the global marketplace. However to achieve this goal it is the case that the company is going to have to massively expand the amount of markets that they have a presence in whilst simultaneously expanding the amount of stores they have in already established markets, ultimately having a total of 40,000 stores. To achieve the goal of 23 billion in sales, this translates to annual sales of only $575,000 per outlet which does not seem like an overly ambitious sales target given the pre existing revenue stream from pre existing individual outlets in the organization.
The question then remains how the company can achieve this ambitious store growth. This could be aided by offering to franchise the operations into some markets, however the tradeoff is that this could offer a smaller degree of control in these particular markets. Secondly it may be the case that to achieve the goal of annual sales of 23billion the company would have to increase the amount of revenue gained in each particular store. This may be achieved by diversifying the breadth of product offerings that can compete with other venders on a price point. For example, by having a lower cost simple drip-coffee the company can directly compete with vendors such as McDonalds whilst gaining a newer client base.
In the long term the outlook for the company still seems optimistic, however only time will tell if Starbucks will be able to achieve this ambitious short term goal.
References
Helm, B. (2007). Saving Starbucks Soul: Chairman Howard Schultz is on a mission to take the company back to its roots! Oh, yeah-- he also wants to triple sales in five years. Business Week. New York: April 09, 2007, Issue 4029, p. 56
International Coffee Organization (ICO). 2008. Historical Coffee Statistics. London : ICO. Available online at: http://www.ico.org/historical.asp.
McRoskey, R. (2008). Starbucks: Big Investors Divorce Grounds. Business Week. New York: August19, 2008 Read More
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