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Performance Measurement

Assignment 2
Strategic Map of Starbucks Coffee
Company

Group 4: Alessia Bianchi (1381946), Valentina Chiarini (1573971), Claudia Klapproth


(1574367), Federico Nardini (1343623), Andrea Padovani (1347780)
Starbucks Operating Segments
SWOT 1. United States:
The Strategy
Contains company-operated retail stores and
DRIVERS specialty operations within the US (e.g. licensed
The Objectives
retail stores)
MEASURES 2. International:
1. Customers
MEASURES Contains retail store licensing operations in
2. Financial almost 50 countries and foodservice (primarily
MEASURES in Canada and UK)
3. Internal
Process 3. Global Consumer Products Group (CPG):
MEASURES Contains packaged coffee and tea, Starbucks
4. Learning &
Growth VIA Ready Brew and other branded products
STRATEGIC sold worldwide
MAP
SWOT Analysis
Strengths Weaknesses
Internationally known, strong, valuable Dependent on relationship with suppliers
SWOT brands Health effects of consuming Starbucks
The Strategy products
Efficiency and effectiveness in supply chain
High quality of products and service Natural disasters may largely affect supply
DRIVERS Dependent on US operating segment (75% of
Starbucks Experience total revenues in 2010)
The Objectives
High accessibility (Starbucks at every corner) Future growth is increasingly dependent on
MEASURES Strong relationship with suppliers, i.e. low International operating segment (might not
risk of non-delivery work due to taste differences)
1. Customers
Starbucks Global Responsibility strategy Regional or global health pandemic could
MEASURES affect business
2. Financial Opportunities Threats
MEASURES Leverage Starbucks brand even more Supply and price of coffee is subject to
3. Internal outside the company-operated store base significant volatility
Process Product innovation and new growth Large number of competitors in specialty
platforms coffee beverage business can lead to low
MEASURES Expand international operating segment profitability
4. Learning & Expand in Chinese market (believed to
Growth Economic conditions in US and certain
become largest market after North
America) and Brazilian market international markets might decrease
STRATEGIC customer spending
Global Consumers Product Group (e.g.
MAP Starbucks VIA and Seattles Best Coffee)
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Mission and Strategy
Mission
SWOT
The Strategy to inspire and nurture the human spirit one person, one cup and one
neighborhood at a time
DRIVERS Strategy
The Objectives It mainly touches four specific fields:
Social
MEASURES 3 place between home and work with the Starbucks Experience
1. Customers
Social community (online and around the physical store)
MEASURES Markets & Products
2. Financial Introduction of new products in the existing market (Product development)
Expansion in to new markets with existing products (Market development)
MEASURES Diffusion of existing products in existing market (Market penetration)
3. Internal
Process Public Responsibility
Environmental responsibility
MEASURES Giving back to the community served both on the local and international level
4. Learning & Service
Growth
High quality service
STRATEGIC
MAP According to the strategy Starbucks is adopting, different drivers and
objectives can be identified for each one of the four perspectives.
Group 4
1. Customer Drivers and
Objectives
SWOT According to this perspective, the most important to Starbucks, its
The Strategy
easy to identify 3 main drivers, all of them obviously related to the
first point of Starbucks strategy, the social side of its activity.
DRIVERS
The Objectives With the customer as main reference, the company focuses its
effort on the existing market, the US one, looking for a
MEASURES diversification in its product offer, in order to increase the customer
1. Customers profitability and the brand loyalty through a higher client
satisfaction, in order to maintain and enhance its customers sense
MEASURES of community
2. Financial

MEASURES Taking into consideration the new market (Europe and Asia), the
3. Internal main goal for Starbucks is the expansion of its market share,
Process through the acquisition of new customers and the increment of
the sales per customer
MEASURES
4. Learning &
Growth Talking about reputation the company cares about 2 main aspects
STRATEGIC of its strategy: the awareness of the public about its
environmental effort and the creation of the Third place, between
MAP work and home, both oriented to the improvement of its public
image. Group 4
2. Financial Drivers and
Objectives
SWOT Since Starbucks main goal is customer and product profitability 3 main
The Strategy drivers can be identified:

DRIVERS Revenue Growth, reached by increasing the number of new products


The Objectives
throughout differentiation (product development, not only coffee and
MEASURES bakery, but also salads, sandwiches, bottled drinks sold in
1. Customers supermarkets), reaching new customers and markets and changing
MEASURES to more profitable product or service mix.
2. Financial

MEASURES Cost Reduction, throughout a reduction of product/service cost per unit


3. Internal (huge implementation of economies of scale and scope economies) and
Process administration costs.
MEASURES
4. Learning & Asset utilization. With higher availability, it is possible to produce and sell
Growth
more products with the same invested capital, generating more income
STRATEGIC while the fixed costs remain the same (economies of scale -> same
MAP distribution channel for more than one final product or raw material).
Group 4
3. Internal Drivers and
Objectives
Starbucks wants to improve on every aspect of its business, from
SWOT suppliers to operations to customers. This allows us to focus on three
The Strategy drivers, namely
DRIVERS
The Objectives Enhancing consumer relationships, since, as previously mentioned,
customers are the most important aspect of Starbucks strategy.
MEASURES This could be done through an increase in service efficiency and
1. Customers quality, as well as an improvement in the complaints resolution
service.
MEASURES
2. Financial
Enhancing supplier relationship, since Starbucks supply of fresh
MEASURES coffee is one of its major point of strength. This necessitates an
3. Internal increase in its long-term supplier relationships, which would go hand
Process in hand with an increase in quality and yield of coffee.
MEASURES
4. Learning & Regarding its operations, Starbucks has to work on decreasing
Growth process cost and time, as well as increasing process efficiency and
STRATEGIC quality, in order to be more responsive and rapid and further give
consumers an improved experience.
MAP
Group 4
4. Learning & Growth Drivers
and Objectives
This fundamental perspective focuses completely on the companys employees.
SWOT Starbucks main goal is to have the best possible staff and be an employer of
The Strategy choice in order to grow in the long-run. To do so, this perspective is divided into 3
main drivers.
DRIVERS
The Objectives All the employees have to be skilled and prepared to reach their goal, and
the company tries to enhance employee capabilities mainly through its
MEASURES training and formation program. This way, Starbucks is also able to retain
1. Customers and attract the employees who have the best qualities and skills.
MEASURES The employee motivation is fundamental for a good performance on the job
2. Financial and therefore customer satisfaction. The company's goal is to maintain the
level of commitment as high as possible, through bonuses and career
MEASURES opportunities.
3. Internal
Process
The last driver is the alignment of objectives. It's important that the personal
MEASURES goal of each worker is aligned with the company's strategy, giving them a
4. Learning & common objective. Starbucks is able to align the objectives thanks to the
Growth organization of committees and the distribution of stock options for the
manager staff.
STRATEGIC
MAP
Group 4

1. Customer Measures
Existing Market (US)
Increase loyalty
Number of cards given per year
Customer survey loyalty survey
Number of accounts created on website per year
SWOT Increase satisfaction
The Strategy Customer survey satisfaction rating
Number of complaints per year
Average time spent in the store per customer
DRIVERS
Increase sense of community
The Objectives Number of new accounts on website per year
Number of participants to events organized by Starbucks
MEASURES
MEASURES Number new fan on facebook per year
1.
1. Customers
Customers Increase customer profitability
Number of products per receipt
MEASURES Number of purchases per week
2. Financial New Market (Europe , Middle East and Asia)
Increase market share
MEASURES Percentage market share
3. Internal Total sales to new customers
Process Total sales per new store
Reputation
MEASURES Environmental effort *
4. Learning & Percentage of stores built following the LEED certification*
Growth Percentage of beverages served in reusable cups (objective: 25% by 2015)
Percentage of water consumption reduction (objective: 25% by 2015)
STRATEGIC
Create the 3rd place
MAP Average time spent in the store per customer
Average duration of the connection to the store wifi
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2. Financial Measures
Revenue growth
- Increase the number of new products
% of revenues from new products introduced in 2010
% of revenue from licensed branded products (4% in 2010)
SWOT % of revenue from food (23% in 2010)
The Strategy Number of pruduct in product portfolio
- Attract new customers and enter new markets
DRIVERS % of revenues from new stores in US
The Objectives % of revenues from new stores abroad
revenues resulting from new customer loyalty cards issued
MEASURES - Change to a more profitable product /service mix
Store sales growth % (open 13 month or longer)
1. Customers
Operating income by segment(US, International and Global CPG)
MEASURES Gross profit margin (sustainability of business, success of pricing strategy and
market acceptance of product-differentation strategy)
2. Financial
2.Financial Cost reduction
- Reduce product/service cost per unit
MEASURES
3. Internal % reductions in cost per unit(cost of features, cost of quality, efficency of
internal process ,customization, investment in R&D and investment in plant
Process and equipment)
- Reduce selling/general adminstration costs
MEASURES % reductions in selling and administration costs
4. Learning &
Growth Asset utilization
- Improve asset utilization
STRATEGIC ROI
MAP Residual income
Economic value-added (EVA)
Group 4
3. Internal Process Measures
Enhance Customer Relationship
Increase service efficiency and quality
Average number of customers served per day
Number of complaints resolved daily
SWOT Percentage of loyalty card holders coming in daily
The Strategy - Improve complain resolution service
Percentage of complaints answered
Number of complaints received per day
DRIVERS Mapping of recurring complaints
The Objectives Enhance Supplier Relationship
Increase long term relationships
MEASURES Number of suppliers
1. Customers Average length of contract
Increase in price in specific countries due to bad weather conditions
MEASURES Increase quality and yield of coffee
2. Financial Volatility of coffee price
Quantity sold by each supplier
MEASURES Number of experts in each Farmers Support Centers
3. Internal Difference in productivity by farm with Farmers Support Centers and other farms
Process Operations
Decrease process cost and time
MEASURES Average cost of processing
4. Learning & Quantity of coffee processed daily
Growth Average time of processing
Increase process efficiency and quality
STRATEGIC Percentage of samples not compliant with our quality standards after processing
MAP Amount of coffee processed per roasting facility
Number of employees per roasting facility
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4. Learning and Growth
Measures
Enhance Employee Capabilities
SWOT Improve quality of training
The Strategy Number of hours of training per year
Training satisfaction survey rating
DRIVERS Employee evaluation form rates
The Objectives Attract and retain quality employees
Revenues per employee
MEASURES Number of extra hours per employee
1. Customers Customer satisfaction survey rate
Enhance Employee Motivation
MEASURES
Maintain high level of motivation
2. Financial
Employee satisfaction survey
Career opportunities
MEASURES Average bonuses and rewards per employee
3. Internal
Stock option per manager
Process
Alignment of Objectives
MEASURES Alignment of employees objectives with overall strategy
4. Learning & Stock options
Growth Number of committees meetings per year
STRATEGIC
MAP
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Strategy Map
MISSION: to inspire and nurture the human spirit one person, one cup
and one neighborhood at a time

SWOT CUSTOMER Existing Market New Market Reputation


Increase loyalty Increase market share Environmental effort
The Strategy Increase satisfaction create the third place
Increase sense of community
DRIVERS Increase customer
The Objectives profitability

FINANCIAL Revenue Growth Cost Reduction Asset Utilization


MEASURES Increase number of new Reduce product/service Improve asset utilization
1. Customers products cost per unit
Change to a more profitable Reduce selling/general
MEASURES product /service mix adminstration costs
Attract new customers and
2. Financial
enter new markets
MEASURES
3. Internal INTERNAL Enhance Customer Relationship Enhance Supplier Operations
Process Increase service efficiency Relationship Decrese process cost
PROCESS and quality Increase long term and time
MEASURES Improve complaint resolution relationship Increase process
service Increase quality and efficiency and quality
4. Learning & yield of cofee
Growth
STRATEGIC LEARNING Enhance Eployee Capabilities Enhance Employee Enhance Employee
STRATEGIC
MAP & GROWTH
Improve quality of training Motivation Alignment
MAP Attract and retain quality Maintain high level of Alignment of
employees motivation employees