Starbucks Team assignment: Forecast

*Choose from naïve, moving average, weighted moving average, exponential smoothing, linear regression, and/or any of these techniques but adjusting for seasonality. Note you should choose your parameters (eg. number of period for moving average, weights, alpha smoothing constant) based on what you predict will provide the “best” forecast.

Team Assignment 1: Forecasting Starbucks (SBUX)

Find the quarterly net income data for the past five years (you can locate this information from the Investors Relations section on the Starbucks website or from any other reliable source to obtain these financials). Be sure to site the source of your data. Use the quarterly data to do the following: a. Collect and copy the data from Q4-2015 through Q2-2020 into Excel. Graph the data. Label axes

appropriately. Run a trendline through the plot of the data. b. Depending on what you view in your data, choose TWO different forecast techniques* and make forecasts

for the next four quarters (Q3-2020, Q4-2020, Q1-2021, and Q2-2021). Provide a summary of your forecasts under each technique

c. Compare the two methods selected by showing me your error analysis. Summarize your error analysis in a table. Based on your error analysis, which forecast method is better and should be used?

d. Discussion (approximately one page): i. Looking at the graph, what does the data looks like? Is there a TREND? SEASONALITY? CYCLICAL?

RANDOM VARIATION? (2-3 bullet points) ii. What about the data (graph) made you choose the forecasting techniques that you picked and, if

relevant, why did you choose the corresponding parameters (eg. number of period for moving average, weights, alpha smoothing constant)?

iii. Are there any outliers in your data? When (which quarters)? Given your knowledge of Starbucks, can you explain the source of these outliers?

iv. Looking at the data, pre-COVID (ignore Q2, 2020). Describe the seasonality of Starbuck’s income – eg. Are there quarters that experience peaks or declines in net income? If so, explain why you think that these patterns are occurring.

v. What is the overall trend for Starbucks? Has it changed over time? Based on what you know about SBUX and the economy, can you explain the reasons for the trends you see?

vi. Any recommendations for Starbucks to increase (or continue to increase) their Net Income? Any strategies that you are aware of or ideas you have to suggest in our current COVID-world that will help Starbucks become (more) profitable?

Do your work in Excel but copy all relevant tables and results in to Word.

This is team assignment – you must work with your team partner.

Your Word document should include a coversheet, and answers to all questions. Embed Excel graphs and tables into the Word document. You must also submit the Excel spreadsheet as an appendix so I can view your calculations.