Price Analyst in Marketing

2. Starbucks enjoyed strong financial performance in 2011. The company did not explicitly attribute this, but with an 8% rise in same store sales it seems that either the consumer market bounced back, or Starbucks made changes that attracted more consumers. The company feels that it offered better products and a better experience at its stores. The company also credited operating efficiencies and tight control of spending for improved profits. In addition, the company continued its global expansion, which improved the top line, and used the economies of scale it generated as part of its cost control program.

Starbucks is known for their Frappuccino’s; unfortunately they are on a downward spiral in sales due to competitors such as McDonalds. In 2008 Starbucks admits to its losses due to their competitors. “Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills (Linn).”

Starbucks financial statements were analyzed for the fiscal year ended September 27, 2015. Like all public companies, annual and quarterly financial statements are required to allow regulators and other interested parties to analyze the financial status and management decision making of the company. This analysis focuses on the results of Starbucks most recent published annual report containing their balance sheets, statement of earnings and cash flows. These statements will be analyzed against the results of one of its competitors, Dunkin Donuts, to investigate how the two companies compare to each other. It was noted that Starbucks and Dunkin Donuts do not have corresponding fiscal year ends. The data therefore is not directly comparable since the reports do not reflect the same time period of data but should provide additional insight. The paper will attempt to provide a brief analysis of Starbucks operations in terms of its liquidity, leverage, activity, profitability and growth ratios used by analysts in the industry.

Nonetheless, Starbucks is big enough that they have created an oligopoly. But like any other company they face the increasingly large task of not only serve their clientele, but be able to still make a profit. In order to stay competitive and still be profitable they need to reconsider their current business plan and focus on the demand for the quality instead of the quantity. The basis of this rationale would be to modify its business plan in order to respond to the needs of it clientele and be able to deliver on their wants. There is no such thing as an ideal profitability methodology, but if the product keeps its value and it is able to withhold its product differentiation as well as brand identification, the profit margin and its ROI would speak for itself.

Starbucks needs to design a Strategic plan focusing on more international and global marketing relationships. This would reduce market saturation allowing management to have some more time to

2) Garthwiate, Craig; Busse, Meghan; Brown, Jennifer; Merkley, Greg “Starbucks: A Story of Growth” Harvard Business Publishing, July 2012.

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

Starbucks’ shares have grown more than 1500% over the past decade. Financially, it has been an oak tree in an ever changing economy with customers that have ever changing demands. However, there has been increased concern for the financial viability of the coffee shop a recently announced plan to close down over 600 stores that were said to be underperforming domestically. That means that more than 1,000 jobs will be eliminated. As scary as that is on the local front to top management, the executive staff feels that it is the only way to recover from it’s shocking $108.7M loss for the 2nd quarter this fiscal year.

Starbucks is the worlds leading specialty coffee retailer. The company produces a wide range of beverages as well as various confections and pastries. With over 17,000 stores world wide one would have to wonder why a successful company like this would need to form a strategic plan. In this world there are no guarantees of success for businesses. Each company must be able to form a successful marketing strategy and must be able implement their plan effectively. In this highly competitive global environment the overarching

Starbucks strategies have successfully made them one of the biggest names in the coffee market globally. Starbucks has been able to survive the high competitive market and to differentiate themselves from other coffee shops by producing high quality coffee. Also, Starbucks successfully create a huge numbers of loyal customers worldwide by providing great services and high quality products. Starbucks was able to survive 2008 financial crisis successfully. In 2008, Starbucks net income was -53% that means Starbucks was losing so much many yet, 2009 Starbucks was able to not only stop their losses but also to gain a profit of 24%. However, Starbucks should be worry from the possibility of another financial

Starbucks is one of the top contenders in the coffee industry and their income statement will provide potential investors with a strong perspective and understanding into the company’s earnings over time. According to Morningstar, Starbucks Corporation’s (SBUX) revenues have consistently grown from $10,707 million USD in 2010 to $16,448 million USD in 2014, while its competitor, Dunkin Doughnuts had a revenue of $577 million in 2010 and $749 million in 2014. These statistics definitely reveal that Starbucks generates a substantially larger volume of revenue than Dunkin Doughnuts. Starbucks’s revenue over the five-year period indicates the company has strong brand recognition with consumers for its high-quality products and attracts a high-income customer base. Additionally, Starbucks rapid pace of growth domestically and internationally has created a large target market, which positively influenced revenues. Furthermore, the introduction of Starbucks and Tazo brand single serve K-cup packs into grocery stores and other retail stores has significantly increased Starbucks revenue. Even during the economic financial crisis in the United States, Starbucks revenue continued on an upward trend. Starbucks gross profit showed a continuous rise between the years of 2010 to 2014 just like their competitor, Dunkin Doughnuts. Both companies had positive increases in profits over the last five years, however; Starbucks seems relatively more financially stable and a

Following its success in the United States, Starbucks ventured overseas and quickly became a globalization icon. With its rapid globalization strategy, Starbucks expanded from about 5000 stores to an estimated 15,000 stores in 2000 (Groth, 2011). By mid-2000s, Starbucks’ supply chain faced many issues, resulting with challenges of having to fulfill expansion strategies yet minimizing escalating operation expenses. By 2008, Starbucks’ stocks fell by 42% (Schultz, 2011). The rapid expansion took a toll on the sales growth and stretched the limits of the existing supply chain, which then rippled down to erode the customer-valued ‘Starbucks experience’ (Gibbons, 2011).

Since January 2008, Starbucks has taken steps to address the deterioration in the US retail environment revitalize its global support structure. These steps have been designed to structure the company’s business for long-term profitable growth. Because of the continued weak economy and decreased customer traffic, as well as the cost associated with the store closures and other actions in its transformation strategy, the company’s fiscal 2008 results were impacted negatively in the following ways:

For Starbucks, business is good. Starbucks continues to come up with more and more innovations and ways to market their products. Last year Starbucks started bottling their iced coffee and selling them as a new product lines in their stores, as well as many new sandwich choices. The ability to provide fresh new ideas year after year provides Starbucks with a growing customer base and a growing net gain. Starbucks will continue to come up with new ideas and products that will continue to bring in more customers to established stores and the means to build stores in new markets expanding their ability to generate revenue, their ability to innovate and market to different cultures globally. Starbucks ' ability to cut cost anywhere it can enables them to keep the money they use to operate at a minimum, leaving more of their revenue as profit. This allows Starbucks to expand and grow rapidly and increase their profitability greatly.

Nevertheless, Starbucks’ stock price has had its downfalls in the past five years. Around July 29th, 2012, the company’s stock had a significant dip. According to CNN Money, although the company did significantly well in the months prior, it failed to match its predictions due to global economic conditions, more specifically, its increasing efforts to expand in Europe. Therefore, many investors began to mistrust the company due to the small margin of error in its prediction. Furthermore, in 2007, Starbucks Corp. made yet another mistake. After a rapid expansion and significant growth during the previous year, the company’s stock fell by 42% that year. The underlying reason being that in opening new stores, Starbucks lost its identity. It became more of a standard grab-and-go coffee shop than a unique coffee experience. Therefore, many customers felt unsatisfied and the company ultimately had a decrease in sales. However, it is important to note that the dip in stock price was generated by more than just the