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Financial Analysis Of Starbucks

4799 words - 20 pages

Starbucks Financial Analysis

Table of Contents
History 3
Overview 3
Strategy 3
S.W.O.T. 4
Starbucks Ratios 5
Balance Sheet Analysis 5
Profitability Ratios 8
Activity Ratios 9
Investment Returns 9
Comparative Analysis 10
Profitability 10
Management Effectiveness 10
Valuation Measures 10
Share statistics 10
Stock Price History 11
Dividends & Splits 11
Balance Sheet Ratios 11
Conclusion 11
References 12
Electronic Sources 12
Bibliographic Sources 12
Appendix 13

History

The first Starbucks affiliate opened in 1971 in Seattle. The company focused on selling roasted gourmet coffee beans and coffee accessories. The name originates from a character in ...view middle of the document...

Starbucks’ marketing strategy focuses on the image as a responsible company, respecting and caring about ethical, environmental and communal values. Starbucks names its employees as partners and lets them participate on the company´s success by including discounted stock purchase plans into the payment conditions.
Strategy

Starbucks focuses on selling high-class products and creating a socializing point for its customers to meet and greet their friends. Following Porter´s definition of successful generic strategies, Starbucks momentary strategy shows most similarities with the strategy of differentiation. This strategy involves the creation of a unique selling proposition (USP) that may justify having higher prices than their competitors. This USP is reached via a good brand image, high customer awareness, features and customer service. Starbucks has always been known for their high qualitative products that they focused on since its foundation in 1971. Due to Starbucks’ gains in their brand image and the successful expansion, they continuously developed into new target groups. From wealthy, educated and quality-aware customers in the first years, the target group broadened and also includes nowadays students with different financial backgrounds and younger customers in general.

S.W.O.T.

Strengths | Weaknesses |
* Size * Market knowledge * Strong supplier relations * Established logo, developed brand, copyrights, trademarks, website and patents * Company operated retail stores, International stores (no franchises) * Valued and motivated employees, good work environment | * Size decreased flexibility * Lack of internal focus (too much focus on expansion) * High density of Starbucks affiliates in the USA dependent on domestic market |
Opportunities | Threats |
* Continuous expansion * New products * Emerging international markets * New Trends (organic) | * Increased competition from coffee shops and others (restaurants, street vendors, supermarkets) * Coffee price volatility in supplying countries * Consumer trends toward a healthier lifestyle with less caffeine * Cultural and Political issues in foreign countries * Green washing publicity (Fair Trade) |

The table above shows the major strengths, weaknesses, opportunities and threats for the Starbucks Company. It has to be mentioned, that Starbucks remains to be the market leader and continues its expansion, which decreases its dependence on the American market. Starbucks has reached an outstanding market position that it uses to analyze the market and to early adjust to changing demands of the customers. Starbucks underlined their market dominance within the last years and has all chances to sustain their position in the modern coffee market.

Starbucks Ratios

Balance Sheet Analysis
To better understand the financial structure of Starbucks, an important step is the analysis of the balance sheet; this is done through...

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