By: Daniel Cook
ID: 056808132
Overview - Starbucks
Starbucks is a multinational franchise of coffeehouses and roasters reserves which strives to
provide responsible growth for both the people and planet. The COVID-19 pandemic has
affected many businesses around the world and Starbucks is one of them. With regulations in
place to deter physical interaction, decreases in sales due to lack of traffic was bound to occur.
With the closure of over 300 Starbucks locations we can see that covid-19 has affected their
business. However, Starbucks has stated 2 years ago that store closures have been in the works
to follow their business strategies. This pandemic has accelerated Starbucks store
transformation strategy from 5 years to 18 months and this can been seen through the closure
of many stores.
With the development of covid-19, Starbucks has determined to accelerate their strategies to
ensure business growth and stability. With the ever changing behaviours of consumers,
Starbucks had to implement new strategies to ensure company stability and profitability.
Starbucks is determined to grow its business by implementing strategies to improve traffic. To
do this, Starbucks has been developing their understanding of consumer behaviour and
implementing strategies that coincide with their understanding and values. Starbucks has been
restructuring their business by increasing new drive-thru locations and delivery availability.
With the addition of a pilot program of a curb-side only. Plans for the growth of Starbucks have
not only been for profit but for environment sustainability. Starbucks has assured their
investors there will be increases in annual non-GAAP growth of at least 20% by fiscal year 2022
and with the closure of many stores, we can see that their strategies have been actioned.
Complete an external assessment of Starbucks Corp. incorporating the current information
given in the linked articles above.
Starbucks has many potential external forces that have been impacting their business. There is
competition between other franchises, currency fluctuations due to operating globally, vendors
negotiations, government regulations and consumer behaviours. With these factors in mind,
Starbucks is determined in increasing EPS by understanding these factors to determine an
appropriate strategy. Strategies are continuously changing from deadlines to customer
preferences when interacting with the franchise to improve customer satisfaction and
availability of their products. These strategies will impact the EPS as they are looking to
maximize their profits while minimizing unnecessary costs.
Identify which tool would be best utilized to complete an adequate external audit of
Starbucks Corp. and explain why you have chosen this one over the others.
Since there are many external factors contributing to Starbucks strategies, I believe it would be
best to use the External Factor Evaluation [Link] analysis would be best to determine
which external factors have the largest impact to their strategies, allowing Starbucks to give
priority to the necessary factors that are affecting their business. There are many other tools
that can be used to determine the audit of Starbucks external forces, but the EFE matrix will
provide more information on the various issues Starbucks will be facing during and after this
pandemic.
Utilize this tool to complete the external audit.
Key External Factors Weight Rating Score
Increase in 0.2 3 0.6
competition/substitute
products
Decrease in customer 0.2 3 0.6
traffic
Regulations placed by 0.25 3 0.75
government
Changes in currency 0.05 2 0.1
fluctuations
Vendor Negotiations 0.05 2 0.1
Changes in consumer 0.25 4 1
behaviour
Total 1 3.15
Regulations placed by the government and consumer behaviour are carrying the most weight.
The is because these factors will affect Starbucks strategies the most. With regulations in place,
customer traffic will decrease due to limited access. In addition, consumer behaviour will also
have a significant impact in their formulation of strategies as they will need to be able to
determine how customers will be shopping during the pandemic. By focusing on these factors,
Starbucks has been increasing drive through options and stores with curb-side only stores.
Complete an internal assessment of Starbucks Corp. incorporating the current information
given in the linked articles above.
Starbucks is known for their continuous innovation of beverages and exemplary customer
service. With the pandemic, this has not changed. This is a key distinctive competency as many
of their competitors are not able to provide the same service or products. Starbucks continues
to reinforce their objective of improving customer satisfaction by understanding their
consumers behaviours. This can be seen by Starbucks capitalizing on their five shifts of
consumer behaviour. For Starbucks to provide exemplary service to their customers, emphasis
on their engagement with their staff is a key building block for this to happen. Staff are valued
and excellently trained to provide customers with consistent and amazing experiences which
show appreciation for their continued business. With the closure of many stores in Canada,
Starbucks has determined that availability of their products during and after this pandemic will
need to be changed. By increasing drive thru locations, Starbucks believes that this will increase
traffic for consumers while decreasing costs that are no longer necessary.
Identify which tool would be best utilized to complete an adequate internal assessment of
Starbucks Corp. and explain why you have chosen this one over the others.
The tool that should be used to complete an adequate internal assessment should be the internal
factor evaluation matrix. With this tools we will be able to determine the key internal factors that
affect Starbucks business and operations. With the identification of these key factors, prioritizing
the factors will increase the likelihood of Starbucks creating a strategy that will increase customer
support and revenues. However, if there was more financial information present it would be best
to perform a cost/benefit analysis as Starbucks has been increasing the amount of drive thru
locations and curb-side only locations. This would be used to determine if the benefits exceed the
costs of restructuring their availability. Since there is a lack of information, using the internal
factors evaluation matrix would be best.
Utilize this tool to complete the internal audit.
Key Internal Factors Weight Rating Score
Providing exemplary .25 3 0.75
customer service
Drive thru and Curb- .3 4 1.2
side locations
Innovative products 0.25 3 0.75
Employee training 0.2 3 0.6
Total 1 3.3
The drive thru and curb-side locations has been given the most weight as Starbucks has been
closing many of their stores that do not provide these options. Starbucks believes that by
increasing drive thru locations, customers will have another option of purchasing their products
without entering the store, reducing the chances of person to person contact. This would allow
Starbucks to operate efficiently during this pandemic while decreasing costs. Since customer
service and innovative products is already something they have a distinctive competency in,
less weighting was given.
