Financial Analysis - Starbucks



II. Introduction

Starbucks

Starbucks Corporation is U.S. based company founded in 1971 by three partners at Seattle, Washington. It is an international coffee chain which is the largest and leading coffeehouse with approximately 17800 shops in 49 countries. Starbucks not only sell and prepared coffees, hot drinks and other drinks along with snacks and some other products such as mugs and coffee beans but it also offers books, music CDs, and movies.

Strategies adopted by Starbucks

Starbucks offers high quality coffees as it purchase high quality coffee beams along with pleasure atmosphere which make people to visit their shop on regular basis. The success of Starbucks depends on their strategies which were Overall cost Leadership, Differentiation and focus Strategy.

As far as overall cost leadership is concern, Starbucks has focus on new customer prices which is a generic strategy which focus on offering a product and services at lowest per unit cost within an entire market. 

Get products or services at lower prices than the competition and be the cost leader. The sources of advantage may include preferential access to raw materials, superior technology, experience curve, economies of scale and the like.

Starbucks product or service is perceived by customers as unique, being the leader in differentiation. The product or service must be perceived as unique to justify a higher price. In regard to differentiation can pose several strategies if there are several attributes that are widely valued by buyers.

Approach Strategy is very different from the others because it rests on the choice of a narrow view of competition within an industry. Starbucks by optimizing their strategy to target segments, they seeks to achieve a competitive advantage overall.

Financial Overview of Starbucks

Over the five years to fiscal 2012, revenue is forecast to have grown at an average rate of 7.2% per year, with revenue expected to grow 13.6% to $13.3 billion in fiscal 2012. US-specific revenue is also anticipated to grow 5.2% per year to $9.9 billion over the five years to fiscal 2012. In fiscal 2011, revenue increased 9.3% to $11.7 billion. The increase was primarily due to an 8.0% increase in global comparable stores sales, brought on by a 6.0% increase in the number of transactions and a 2.0% increase in average spend per transaction. In November 2011, Starbucks acquired Evolution Fresh Inc, a natural fruit and vegetable juice maker.

In 2010, Starbucks posted strong revenue and profit growth. Net income and operating profit nearly tripled and hit historic highs as store attendance and spending rates increased. Revenue rose 9.5% compared to the prior year. Starbucks earned $8.3 billion in revenue in the United States alone in fiscal 2010. Starbucks also announced that it would offer free Wi-Fi Internet access to its customers.

For fiscal 2009, total net revenue fell 5.9% to $9.8 billion due to customers cutting back on spending in response to the recession. Costs also fell 6.6% due to company restructuring, store closures and workforce reduction. Net earnings still rose 23.9% to $390.8 million. By the end of 2009, Starbucks had ...