CLC-Steps Required for Financial Recommendations

 

CLC - External Factor Evaluation Matrix and Competitive Profile Matrix Comment by Daniel Smith: Team - quite well done! Your write-up was quite well-written and thorough. Your tables were also quite accurate in regard to the metrics. Quite well done! Dr. Smith

 Jose Alonso, Tamberlyn Crayton, Dinaja Dowdy, Pauline Morgan, and Brad Overson

Colangelo College of Business, Grand Canyon University

MGT 660: Strategic Management

Dr. Daniel Smith

May 5, 2021

External Factor Evaluation (EFE) Matrix

Key External Factors 

Opportunities	Weight	Rating   Comment by Daniel Smith: Reasonable metrics…	Weighted  Scores
Globalization makes it easy to enter the international market.	0.15	4	0.60
People are looking for a cheap internet connection.	0.10	3	0.30
Express foods are getting famous to reduce time to spent.	0.10	2	0.20
Demand for non-chemical and healthy products.	0.10	3	0.30
Threats
An increase in the inflation rates creates a demand for lower-priced products.	0.15	3	0.45
Many companies are pricing their products cheaper to impress customers	0.20	3	0.60
Increase in hypermarkets and economical supermarkets	0.10	2	0.20
	1.00		2.55

According to the evaluation listed in the chart above, both threats and opportunities are very vital to the company since they weigh above 2, where 1 is on the lowest side while 4 is on the highest side. Globalization has helped to establish Starbucks as an international company (Hart, 2011). Expanding internationally brought on its own set of threats and issues. Starbucks’ ability to adapt to the global market and the needs of the consumers in each region and its care and concern for its employees has created a positive opportunity. A large threat is the price point given to their products. Decreasing product pricing could potentially decrease some of their threats.  Comment by Daniel Smith: Frame in a more formally academic way

IFE and calculate financial ratios in Starbucks

Net Revenue	10/2/05	%	10/3/04	%	9/3/03	%	Diff  2005  &2004	Diff  2004  &2003
Retail	$5,391,927		$4,457,378		$3,449,624		21	29
Specialty	$977,373		$836,869		$625,898		17	34
Total Net   Rev	$6,369,300	100	$5,294,247	100	$4,075,522	100	20	30
Operating   Expense Comment by Daniel Smith: Why blank?
Store   Operating   Exp.	2,165,911	34	1,790,168	34	1,379,574	34	21	30
Other   Operating	197,024	3	171,648	3	141,346	4	15	21
Depreciation & Amort   Exp.	340,169	5	289,182	6	244,671	6	18	18
General &   Admin Dev	357,114	6	304,293	6	244,550	6	17	24
Income   From   Equity Ven	76,745	1	59,071	1	36,903	1	30	60
Operating   Income	7,806,615	12	606,587	12	420,850	10	29	44
Gain on Sale Investment	-	-	-	-	-	-	-	-
Net   Earnings	494,467	8	388,973	7	265,355	7	27	47
Net Earn   per share	.61	0	.49	0	.34	0	24	44

Based on the information in the table above, it is evident that the increase in revenue for Starbucks is a result of customer loyalty and the major demand that was experienced. Due to the progressive expansion the company had been making, the outcome was increased operations over the years. By continuing to reach its target, Starbucks will see increased net earnings and will have positive annual reports. Comment by Daniel Smith: Refer to the actual metrics somewhat more…

Current use of Technology by Starbucks 

Transitioning to digital technology is important for any business but especially when expanding globally. Starbucks is always doing its part to keep up with the best and latest advances in technology. Starbucks’ use of technology is one of the key strategic policies to ensure that the company remains marketable and runs smoothly as a global company. In fact, there are some economists who are arguing that Starbucks has proved to be a digital innovation machine. Due to the implementation of their mobile ordering and pay features in 2015, Starbucks saw an increase in sales (Roderick, 2015).

By commencing their investment during the curve of mobile technology, Starbucks has taken the center stage of defining the customer-facing and the apartment-facing mobile experiences of retail for the future. Starbucks has opted to make use of the innovations in technology to strengthen their brand, and to improve their efficiency along with in-store execution (Dignan, 2015). The inception of technology has allowed Starbucks to intersect the physical and the digital worlds. As Starbucks makes use of technology to help in the unique combination of assets including the growth, they engaged their consumers daily to use the available digital technologies to better appeal to customers. Now customers have the capability to make payments through mobile payment. It has made use of digital platforms to build a partnership with firms like Lyft, Spotify, and the New York Times to help in its monetization process.

CPM

The Competitive Profile Matrix (CPM) reveals how a focal firm compares to major competitors across a range of key factors (David et al., 2020). It is important for the use of strategic information regarding a firm’s competitive advantages or disadvantages. The rate values also go from 4 to 1- 4 = response is superior, 3 = response is above average, 2 = response is average, 1= response is poor. When it comes to financial profit, customer loyalty, market share, product quality, top management, and price competitiveness, we compared Starbucks to Dunkin Donuts and Krispy Kreme. Below is a chart to see the data gathered.

 

Key      Factors		Starbucks	Dunkin Donuts	Krispy Kreme
	Weight	Rating	Score	Rating	Score	Rating	Score
Financial profit	0.05	3	0.15	3	0.15	2	0.10
Customer loyalty	0.10	2	0.20	4	0.40	4	0.40
Market share	0.05	3	0.15	4	0.20	2	0.10
Product quality	0.20	3	0.60 Comment by Daniel Smith: Good development of the metrics…	3	0.60	4	0.80
Top management	0.10	4	0.40	4	0.40	2	0.20
Advertising	0.20	3	0.60	4	0.80	3	0.60
Global Expansion	0.10	3	0.30	4	0.40	1	0.10
Price competitiveness	0.20	2	0.40	3	0.60	3	0.60
Total	1.00		3.00		3.55		2.30

 

Data Implications based on the data

  Based on the information above, Starbucks’ biggest competitor is Dunkin Donuts. They are ahead of the game in these key factors listed. For Starbucks to be number one, they need to improve various factors such as price competitiveness and customer loyalty. The weight of those categories is higher because they are of more importance. Once Starbucks focuses on those aspects of business, they will be able to beat their competition. Starbucks should focus on building more company loyalty by providing better customer service. One of the many ways the company can focus on customer service is by being friendly, helpful, and efficient when it comes to solving problems that customers may have (Fugison, 2017). Customers are always going to take note of how staff solves issues and will possibly write reviews in the future. Loyal customers would create more business for the company in the long run so it would be beneficial for Starbucks to try many different ways to get their rating up (O’Brien & Jones,2015).

When it comes to Starbucks and price competitiveness, one of the ways of improving this rating is to develop more incentives for customers to come to the place of business. One of the ways the business can do that is by providing incentives such as advertising discount rates on certain days to get more customers in the stores (Sanders, 2015). Perhaps one of the ways the company can do this is by offering discounts when it comes to trying out new products such as new seasonal drinks. This would incentivize more customers to come in to try the new product, bringing in new customers that would have not shown up without the discount, to begin with.  One last method the company can try to be able to compete with the prices of the competition is possibly find a way to get their resources in a cheaper manner without messing with the quality of the product. This would be a difficult task but if Starbucks can manage this, they will be the best in their field of business.  Comment by Daniel Smith: Great recommendations for improvement.

References:

 

David, F. R., David, F. R., & David, M. E. (2020). Strategic management concepts and cases: A competitive advantage approach (17th ed.). New York, NY: Pearson Education. ISBN-13: 9780135203699 URL: https://www.gcumedia.com/digital-resources/pearson/2019/strategic-management_a-competitive-advantage-approach-concepts-and-cases_17e.php Comment by Daniel Smith: APA 6 - use 7.

 Furgison, L. (2017). 5 ways to increase customer loyalty. Fivestars Insights. https://blog.fivestars.com/5-ways-to-increase-customer-loyalty/

Hart, R. (2011) The globalization of Starbucks and its effect on the world. International IP policy. https://siulaw.typepad.com/international_ip_policy/2011/09/the-globalization-of-starbucks-and-its-effect-on-the-world-to-be-presented-ryan-hart.html

O'Brien, L., & Jones, C. (n.d.). Do Rewards Really Create Loyalty? Market research. https://hbr.org/1995/05/do-rewards-really-create-loyalty

Roderick, L. (2015). How Starbucks is using technology to boost revenue. Marketing week. https://www.marketingweek.com/how-starbucks-is-using-technology-to-boost-revenue/

Sanders, B. (2015). 6 strategies for pricing in a competitive environment. Growth strategies. www.bizjournals.com/bizjournals/how-to/growth-strategies/2015/03/6-strategies-for-pricing.html

Starbucks Corp. (2021). Starbucks®. Starbucks Coffee Company. www.starbucks.com/rewards