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Performance MeasurementAssignment 2Strategic Map of Starbucks Coffee CompanyGroup 4: Alessia Bianchi (1381946), Valentina Chiarini (1573971), Claudia Klapproth (1574367), Federico Nardini (1343623), Andrea Padovani (1347780)

1. United States:Contains company-operated retail stores and specialty operations within the US (e.g. licensed retail stores)2. International:Contains retail store licensing operations in almost 50 countries and foodservice (primarily in Canada and UK)3. Global Consumer Products Group (CPG):Contains packaged coffee and tea, Starbucks VIA Ready Brew and other branded products sold worldwideStarbucks Operating SegmentsSWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPInternationally known, strong, valuable brandsEfficiency and effectiveness in supply chainHigh quality of products and serviceStarbucks ExperienceHigh accessibility (Starbucks at every corner)Strong relationship with suppliers, i.e. low risk of non-deliveryStarbucks Global Responsibility strategySWOT AnalysisGroup 43SWOTThe StrategyLeverage Starbucks brand even more outside the company-operated store baseProduct innovation and new growth platformsExpand international operating segmentExpand in Chinese market (believed to become largest market after North America) and Brazilian marketGlobal Consumers Product Group (e.g. Starbucks VIA and Seattles Best Coffee)

Dependent on relationship with suppliersHealth effects of consuming Starbucks productsNatural disasters may largely affect supplyDependent on US operating segment (75% of total revenues in 2010)Future growth is increasingly dependent on International operating segment (might not work due to taste differences)Regional or global health pandemic could affect business

Supply and price of coffee is subject to significant volatilityLarge number of competitors in specialty coffee beverage business can lead to low profitabilityEconomic conditions in US and certain international markets might decrease customer spending

StrengthsWeaknessesOpportunitiesThreatsSWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPMissionto inspire and nurture the human spirit one person, one cup and one neighborhood at a timeStrategyIt mainly touches four specific fields:Social3 place between home and work with the Starbucks ExperienceSocial community (online and around the physical store)Markets & ProductsIntroduction of new products in the existing market (Product development)Expansion in to new markets with existing products (Market development)Diffusion of existing products in existing market (Market penetration)Public ResponsibilityEnvironmental responsibilityGiving back to the community served both on the local and international levelServiceHigh quality service

According to the strategy Starbucks is adopting, different drivers and objectives can be identified for each one of the four perspectives.

Mission and StrategySWOTThe StrategyGroup 4SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAP4According to this perspective, the most important to Starbucks, its easy to identify 3 main drivers, all of them obviously related to the first point of Starbucks strategy, the social side of its activity.

With the customer as main reference, the company focuses its effort on the existing market, the US one, looking for a diversification in its product offer, in order to increase the customer profitability and the brand loyalty through a higher client satisfaction, in order to maintain and enhance its customers sense of community

Taking into consideration the new market (Europe and Asia), the main goal for Starbucks is the expansion of its market share, through the acquisition of new customers and the increment of the sales per customer

Talking about reputation the company cares about 2 main aspects of its strategy: the awareness of the public about its environmental effort and the creation of the Third place, between work and home, both oriented to the improvement of its public image.1. Customer Drivers and ObjectivesDRIVERSThe ObjectivesGroup 4SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPSince Starbucks main goal is customer and product profitability 3 main drivers can be identified:

Revenue Growth, reached by increasing the number of new products throughout differentiation (product development, not only coffee and bakery, but also salads, sandwiches, bottled drinks sold in supermarkets), reaching new customers and markets and changing to more profitable product or service mix.

Cost Reduction, throughout a reduction of product/service cost per unit (huge implementation of economies of scale and scope economies) and administration costs.

Asset utilization. With higher availability, it is possible to produce and sell more products with the same invested capital, generating more income while the fixed costs remain the same (economies of scale -> same distribution channel for more than one final product or raw material).2. Financial Drivers and ObjectivesDRIVERSThe ObjectivesGroup 4SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAP* Use of new economic but reliable materials (like recicled plastic cups and spones objective: 25% by 2015)

6Starbucks wants to improve on every aspect of its business, from suppliers to operations to customers. This allows us to focus on three drivers, namely

Enhancing consumer relationships, since, as previously mentioned, customers are the most important aspect of Starbucks strategy. This could be done through an increase in service efficiency and quality, as well as an improvement in the complaints resolution service.

Enhancing supplier relationship, since Starbucks supply of fresh coffee is one of its major point of strength. This necessitates an increase in its long-term supplier relationships, which would go hand in hand with an increase in quality and yield of coffee.

Regarding its operations, Starbucks has to work on decreasing process cost and time, as well as increasing process efficiency and quality, in order to be more responsive and rapid and further give consumers an improved experience.

3. Internal Drivers and ObjectivesDRIVERSThe ObjectivesGroup 4SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPThis fundamental perspective focuses completely on the companys employees. Starbucks main goal is to have the best possible staff and be an employer of choice in order to grow in the long-run. To do so, this perspective is divided into 3 main drivers.

All the employees have to be skilled and prepared to reach their goal, and the company tries to enhance employee capabilities mainly through its training and formation program. This way, Starbucks is also able to retain and attract the employees who have the best qualities and skills.The employee motivation is fundamental for a good performance on the job and therefore customer satisfaction. The company's goal is to maintain the level of commitment as high as possible, through bonuses and career opportunities.The last driver is the alignment of objectives. It's important that the personal goal of each worker is aligned with the company's strategy, giving them a common objective. Starbucks is able to align the objectives thanks to the organization of committees and the distribution of stock options for the manager staff.

4. Learning & Growth Drivers and ObjectivesDRIVERSThe ObjectivesGroup 4SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPExisting Market (US)Increase loyaltyNumber of cards given per yearCustomer survey loyalty surveyNumber of accounts created on website per yearIncrease satisfactionCustomer survey satisfaction ratingNumber of complaints per yearAverage time spent in the store per customerIncrease sense of communityNumber of new accounts on website per yearNumber of participants to events organized by StarbucksNumber new fan on facebook per yearIncrease customer profitabilityNumber of products per receiptNumber of purchases per weekNew Market (Europe , Middle East and Asia)Increase market sharePercentage market shareTotal sales to new customersTotal sales per new storeReputationEnvironmental effort *Percentage of stores built following the LEED certification*Percentage of beverages served in reusable cups (objective: 25% by 2015)Percentage of water consumption reduction (objective: 25% by 2015)Create the 3rd placeAverage time spent in the store per customerAverage duration of the connection to the store wifi

1. Customer MeasuresMEASURES1. CustomersGroup 49SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAP* Look at environment scorecard 2010 Starbucks** Green Building Councils LEED Volume Certification pilot program9Revenue growthIncrease the number of new products% of revenues from new products introduced in 2010% of revenue from licensed branded products (4% in 2010)% of revenue from food (23% in 2010)Number of pruduct in product portfolioAttract new customers and enter new markets% of revenues from new stores in US% of revenues from new stores abroadrevenues resulting from new customer loyalty cards issuedChange to a more profitable product /service mixStore sales growth % (open 13 month or longer)Operating income by segment(US, International and Global CPG)Gross profit margin (sustainability of business, success of pricing strategy and market acceptance of product-differentation strategy)Cost reductionReduce product/service cost per unit% reductions in cost per unit(cost of features, cost of quality, efficency of internal process ,customization, investment in R&D and investment in plant and equipment)Reduce selling/general adminstration costs% reductions in selling and administration costsAsset utilizationImprove asset utilizationROIResidual incomeEconomic value-added (EVA)

2. Financial MeasuresMEASURES2.FinancialGroup 4SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPEnhance Customer RelationshipIncrease service efficiency and qualityAverage number of customers served per dayNumber of complaints resolved dailyPercentage of loyalty card holders coming in daily - Improve complain resolution servicePercentage of complaints answeredNumber of complaints received per dayMapping of recurring complaintsEnhance Supplier RelationshipIncrease long term relationshipsNumber of suppliersAverage length of contractIncrease in price in specific countries due to bad weather conditionsIncrease quality and yield of coffee Volatility of coffee priceQuantity sold by each supplierNumber of experts in each Farmers Support CentersDifference in productivity by farm with Farmers Support Centers and other farmsOperationsDecrease process cost and timeAverage cost of processingQuantity of coffee processed dailyAverage time of processingIncrease process efficiency and qualityPercentage of samples not compliant with our quality standards after processingAmount of coffee processed per roasting facilityNumber of employees per roasting facility

3. Internal Process MeasuresMEASURES3. Internal ProcessGroup 411SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPEnhance Employee CapabilitiesImprove quality of trainingNumber of hours of training per yearTraining satisfaction survey ratingEmployee evaluation form ratesAttract and retain quality employeesRevenues per employeeNumber of extra hours per employeeCustomer satisfaction survey rateEnhance Employee MotivationMaintain high level of motivationEmployee satisfaction surveyCareer opportunitiesAverage bonuses and rewards per employeeStock option per managerAlignment of ObjectivesAlignment of employees objectives with overall strategyStock optionsNumber of committees meetings per year4. Learning and Growth MeasuresMEASURES4. Learning & GrowthGroup 412SWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAPMISSION: to inspire and nurture the human spirit one person, one cup and one neighborhood at a timeCUSTOMERExisting MarketIncrease loyaltyIncrease satisfactionIncrease sense of communityIncrease customer profitabilityNew MarketIncrease market shareReputationEnvironmental effortcreate the third placeFINANCIALRevenue GrowthIncrease number of new productsChange to a more profitable product /service mixAttract new customers and enter new markets

Cost ReductionReduce product/service cost per unitReduce selling/general adminstration costs

Asset Utilization Improve asset utilizationINTERNAL PROCESSEnhance Customer RelationshipIncrease service efficiency and qualityImprove complaint resolution serviceEnhance Supplier RelationshipIncrease long term relationshipIncrease quality and yield of cofeeOperationsDecrese process cost and timeIncrease process efficiency and qualityLEARNING & GROWTHEnhance Eployee CapabilitiesImprove quality of trainingAttract and retain quality employees

Enhance Employee MotivationMaintain high level of motivationEnhance Employee AlignmentAlignment of employeesStrategy MapSTRATEGIC MAPSWOTThe StrategyDRIVERSThe ObjectivesMEASURES2. FinancialMEASURES1. CustomersMEASURES3. Internal ProcessMEASURES4. Learning & GrowthSTRATEGIC MAP