Starbucks Corporation Competitive Profile Matrix

Ferdinand C. Importado

Competitive Profile Matrix

Identifies a firm’s major competitors and its particular strengths and weaknesses in relation to its competitors.

Displays the basis of an organization’s strategy and is a useful instrument to communicate those strategic attributes to all in the organization.

Difference from IFE and EFE

The IFE matrix consists of the internal factors and the EFE matrix consists of the external factors

The CPM matrix consists of a mix of both internal and external factors

Weakness of CPM

CSF ratings are subjectively assigned a rating between 1 and 4, and non-uniformity may occur due to weights being assigned subjectively by the evaluators.

The total weighted scores obtained for each company reveal relative strengths or weaknesses of the companies but are not to be implied as precise in nature.

Overview of the Quick Service IndustryCompanies in this industry operate restaurants that provide food served to customers who order and pay at a counter.

Overview of the Quick Service IndustryDemand is driven by:

Demographics

Consumer tastes

Personal income

Overview of the Quick Service Industry

15%

40%

45%

Starbucks Competition

McDonald's recently launched its McCafe campaign in which it sells premium specialty coffee beverages at a slight discount to Starbucks’. McDonalds has an excellent platform from which to compete as it already has so many stores in prominent locations with drive-thru windows.

Starbucks Competition

Dunkin' Donuts, uses its donuts and the rest of its menu as the draw.

The customer can choose between a coffee or a coffee and a donut.

Critical Success Factors

Advertising (4 – 3 – 3)

Starbucks

• Brand marketing

• Social media and internet

• $182.40M, 29% ↑, 1.37% of total revenues

McDonalds

• Traditional media

• $787.50M, 2% ↑, 2.8% of total revenues

Dunkin’

• Advertising fund of 5% of gross retail sales

• Mobile application with over 1M downloads

Product quality (4 – 2 – 3)

Starbucks

• Provides the highest quality of coffee brewing through its onsite brewing and smelling

McDonalds

• Utilizes automated brewing with less smelling

• Customer responses “decent” to “absolutely disgusting”

Dunkin’

• CMLs deliver products with the same high consistency and quality

Product variety (3 – 4 – 3)

Starbucks

• Hot and cold coffee, beverages, and some bread

McDonalds

• Hamburger, sandwich, chicken, spaghetti, French fries, and breakfast meals

Dunkin’

• Donuts and sandwich, burrito and breakfast meals

Product competitiveness (2 – 4 – 2)

Financial position (3 – 4 – 3)Starbucks

• Net revenues increased by 14%.

• Consolidated operating income was $2.0 billion in fiscal 2012.

• Operating margin increased to 15.0%.

• EPS for fiscal 2012 was $1.79.

• Cash dividends declared increased from $0.56 in 2011 to $0.72 in 2012.

McDonalds

• Combined operating margin was 19.82% in 2012, down from 20.38% .

• Revenues increased 2.08% from $27,006 in 2011 to $27,567 in 2012.

• Diluted earnings per share was $5.36.

• Cash dividends declared were $2.53 and $2.87 in 2011 and 2012 respectively.

Dunkin’

• Total revenues for 2012 amounted to $658.181.

• The operating margin decreased from 32.68% in 2011 to 36.38% in 2012.

• Diluted earnings per share for 2012 is $0.93

• The company did not pay cash dividends for 2011 and paid $0.60 per share in 2012.

Customer loyalty (2 – 3 – 4)

Starbucks

• 33M Facebook fans

• Former Starbucks consumers begun visiting Dunkin’ Donuts and McDonalds or purchased in-home coffee brewers and espresso machines.

McDonalds

• While low consumer confidence continues to negatively affect overall retail sales and the IEO segment, McDonalds outperformed the market and grew its market share.

Dunkin’

• No. 1 rank in customer loyalty by Brand Keys in coffee category.

• Overall Dunkin’ ranked 17 (12) worldwide, McDonalds at 32 (26) and Starbucks at 45 (100)

Global expansion (3 – 4 – 4)

Starbucks

• Starbucks has about 18,000 stores world-wide of which roughly 13,000 are in the North America.

• Starbucks is in 62 countries

McDonalds

• McDonalds operates over 1,900 restaurants across 19 countries in Latin America and the Caribbean.

• In Japan, there nearly 3,300 restaurants.

• Over 1,600 McCafé locations

Dunkin’

• Dunkin' Donuts had 3,173 restaurants in 31 countries.

• Baskin-Robbins had 4,517 restaurants in 45 countries.

Customer service (4 – 3 – 3)

Starbucks

• Third place concept

• Introduced the “Latte Method”

McDonalds

• Enhanced appearance and functionality of McDonalds’ restaurants

• Extended operating hours and over 5,400 restaurants are open 24 hours.

Dunkin’

• Re-designed coffeehouses.

• Creating a more desirable place for fast-casual eating.

Competitive Profile Matrix

Strategies

Product quality and variety Acquire business that are engaged in the production and selling of highly specialized bread, pastries, cookies, cakes and the like that will supply its own requirement. Starbucks mode of acquisition can be full integration, or just by entering into a long-term contract.

Strategies

Price competitivenessInstead of buying premium coffee beans from outside suppliers at a high cost, the company can just buy supplies from its competitors at a lower price. Acquire or purchase a portion of its competitors’ stocks, so that they will have access lower costs of coffee beans and acquire the necessary competence to become a cost leader.

Strategies

Customer loyaltyPartnership with the producers of espresso machines to include Starbucks products into the packaging. Diversify into the business of producing its own coffee espresso machines.

Strategies

Global expansionIncrease market share by selectively opening stores in new and existing markets (including China and India) as well as increasing revenues in the existing stores.

Grand Strategy Matrix

SFAS Matrix

General Strategies

Into a joint venture with the producers of espresso machines to include Starbucks products into the packaging.

Increase market share by selectively opening stores in new and existing markets (including China and India) as well as increasing revenues in the existing stores.

General Strategies

Acquisition or control of brokerage / logistic firms to support Starbuck’s supply chain management.

Acquisition or control or coffee bean and dairy product producers. ;]]