Head Running: - Starbucks Strategic Initiative Learning Team Assignment: Strategic Initiative Paper

Resource: Ethics and Compliance Paper Prepare a 1,050- to 1,400-word paper in which you describe the relationship between strategic and financial planning. Describe: This has to be for Starbucks A strategic planning initiative for your organization and identify an initiative discussed in the organizations annual report. How the initiative affects the organizations financial planning.

How will the initiative affect costs? How will the initiative affect sales?

Describe risks associated with the initiative and financial effects they may have.

Head Running: - Starbucks Strategic Initiative

Starbucks Strategic Initiative Your Name Here University Name FIN/370 Date Instructor Name Here Starbucks Strategic Initiative

Head Running: - Starbucks Strategic Initiative In this paper, Team C will describe the relationship between strategic planning and financial planning for Starbucks Corporation. The first topic covers Starbucks strategic planning initiative and identifies a strategic initiative discussed in the organizations annual report; from this report Team C will describe how this initiative

affects Starbucks financial planning. Team C will break down and address how Starbucks initiative directly affects costs and the sales of the companys financial plan. The final section will describe the risks associated with the initiative and the financial impact that these risks have on Starbucks. Strategic Planning Initiative Strategic initiatives are strategies outlined by an organization to achieve the goals and objectives outlined in the strategic plan. The Starbucks Corporation is one organization striving to improve the commitment of upholding and achieving organizational missions and goals. Starbucks is committed to ethically sourcing and roasting the highest quality Arabica coffee in the world (Starbucks Corporation, 2012, para.1). Starbucks mission is to inspire and nurture the human spirit one person, on cup, and one neighborhood at a time ) Starbucks Corporation, 2012, para. 1). Guiding principles within the strategic plan of Starbucks ensure high quality products, ethical treatment of partners and customers, and inviting and positive neighborhood and store environment that will reward the organization with continued success and happy shareholders. Successful organizations use strategic initiative and plans created by decision about people, strategy, execution, and cash to build revenues and profits, while maximizing time savings. Starbucks outlines organization initiatives for achieving the

Head Running: - Starbucks Strategic Initiative status of a responsible company by earning trust and respect through ethical sourcing,

environmental stewardship, and community involvement in their company profile. Under ethical sourcing, the company outlines the goal that by 2015 the organization will use coffee that is only produced and obtained through the use of ethical trading and responsible growing (Starbucks Company Profile, 2011). In concerning environmental stewardships, Starbucks is striving to attain the goal of having each of the cups used to serve customers as reusable or recyclable by 2015 to reduce the carbon footprint the organization has on the environment (Starbucks Company Profile, 2011). Starbucks community involvement goal is that by 2015 the organization will provide neighborly assistance to the community of the stores and growing areas by contribution of a minimum of one million volunteer hours yearly to inspire change and make a difference in the lives of all people (Starbucks Company Profile, 2011). Initiative Discussed in Starbucks Annual Report Starbucks is around every corner and considered a giant in the coffee world. Starbucks has set a goal to make 100 percent of their cups recyclable or reusable by 2015. This is a large goal, but they have proven that this is an attainable goal. Starbucks discovered that recycling plants often reject coffee cups for recycling because they are made of a thin plastic lining. This plastic lining makes them waterproof. When a consumer tosses their cup in a recycling bin it will be thrown away by the recycling center because of the waterproof lining. Starbucks recently shipped 6,000 pounds of Starbucks paper cups to the Mississippi River Pulp Mill. The pulp mill has the capabilities or recycling coffee cups with waterproof linings. The Mississippi Pulp Mill successfully recycled all 6,000 pounds of coffee cups in to Starbucks cups. Cups to cups

Head Running: - Starbucks Strategic Initiative sounds like a nice closed system to us (Inhabitat. 2012). Jim Hanna, from Starbucks environmental impact stated the pilot went a long way to proving to the industry that they can take these cups (Inhabitat. 2012). The cost effectiveness has not been determined, however it is a constant reminder to Starbucks that they can always do more when it comes to being greener. Initiative Affecting Costs and Sales It is predicted that the initiative will have different effects on both costs and sales of the organization. The costs will be a little higher to obtain completely recyclable cups by 2015 and an anticipated higher labor cost associated with providing volunteer work throughout the communities that Starbucks franchises are established (Starbucks Corporation, 2012). These costs will be an initial investment that will have anticipated longer term effects of increased sales and support throughout the community. When businesses provide community involvement and support efforts, such as recycling, a positive marketing strategy is sustained incorporating long term support from the individual communities that franchises are established. Visibility with community involvement is another positive impact that will help with increased sales spreading awareness of the existence of the facilities and product offered. The implementation of these strategies will create a view of Starbucks as a responsible company ultimately

supporting ethical sourcing, positive environmental efforts, and community involvement. The organizations team approach and involvement of communities, employees, and management will determine the successful implementation of all strategies.

Head Running: - Starbucks Strategic Initiative Risks Associated With Initiative The implementation of the reusable or recyclable cups does have its risks. The company will need to create a company design and make the cup to environmental standards fitting the reusable and recyclable materials. Another risk is manufacturing

flaws in the production of the cups. Designing a cup that distinguishes Starbucks products and promotes environmental protection may take time and have a high cost to produce the new cups, which may strain the companys financial flow in the beginning. The higher production costs may also cause an increase in the price of the products to partners, consumers, and stakeholders. The economy is another factor that can lead to financial risks based on the fluctuation and the demand driven by the competition (Titman, Keown, & Martin, 2011). Consumers may start drinking coffee at home during low economic times to save money. A price increase may cause a decrease in sales, in turn causing Starbucks to lose expected revenues. Loss of expected profits and revenue may lead to Starbucks struggling with the break-even point. Careful consideration and planning for all possible risks in making the change to more environmentally safe packaging is needed for Starbucks to meet the initiatives outlined in the organizational strategic plan. Financial Effect of Risks Associated with Initiative In Starbucks attempt to be a responsible organization, there is great risk involved financially. Placing limits on whom and where coffee will be ordered from may increase the cost to obtain product and reduce profit margin. Limiting where the product is ordered from may also impact the cost of a cup of coffee consumers, partners, and

Head Running: - Starbucks Strategic Initiative stakeholders. Starbucks is also working toward changing the packaging of their products which may potentially increase cost. Using recyclable materials for the construction of cups will decrease the

organizations carbon footprint in attainment of strategic initiatives but may lead to price increases. If Starbucks can offer incentives for stakeholders to purchase a reusable cup, an increase in profit is possible because reusable cups would decrease the number of recyclable products. While these changes do help Starbucks brand and image, there is risk involved. A business making changes that will increase the cost of product increases the expense of consumers, partners, and stakeholders. These types of changes open the door for competitors to sell similar products for less and potentially grab part of the market. Summary Cultivating relationships with customers is one of the keys to the success of Starbucks. Starbucks understood the realization that in order to become a competitive organization in their market there had to be a change in how they did business, the way they managed their business improved the overall training and knowledge of organizational objectives. In order to accomplish their goals Starbucks had to develop a strategic and financial plan. These plans were to enforce the objectives of the company and ensure forecasted projections were met.

Head Running: - Starbucks Strategic Initiative References Inhabitat. (2012). inhabitat design will save the world. Retrieved from http://inhabitat.com/all-starbucks-cups-will-be-recyclable-or-reusable-by-2015.com Starbucks Corporation. (2011). Starbucks Coffee Company. Retrieved from http://www.starbucks.com Starbucks Coffee Company. (2011). Starbucks Company Profile. Retrieved from http://assets.starbucks.com/assets/aboutuscompanyprofileq4201112141final.pdf Titman, S., Keown, A., & Martin, J.D. (2011). Financial management: Principles and applications (11th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.