DISCUSSIONS

Discussions

Discussions

Controlling

Strong Sales Growth and Unit Growth For the years 1992 to 1996? total sales volume grew at an annualized rate of 61.2% and units grew at a rate of 57.1%. Consistent Sales Mix: To date? the vast majority of sales have come from retail units (86.2%)? specialty sales (11.3%)? and direct response sales (2.5%). This pattern has consistently prevailed over the previous three years. However? as Starbucks continues its build its brand through new channels and as the retail chain begins to mature? this mix may change.

Decrease in Comparable Sales Growth Rate: This rate has decreased from a high in 1992 of 19% to 7% in 1996. Consistent Cost of Goods Sold: During the period? these costs have consistently been in the range of 77.5% to 79%. Decreasing SGA Expense: Since 1992? this expense has decreased from 11.5% to

8.2%. Given that many of these expenses are fixed? this observation is consistent with a high growth company. Large Balance in Cash and Marketable Securities: As of 9/29/96? approximately 31% of the company's total assets were in cash and marketable securities. This amount is high due to the fact that the company has recently completed a debt offering and has yet to deploy the capital. Therefore? it is not expected to continue at these levels. Low Debt Levels: The debt in the capital structure consists entirely of 4.50% redeemable? convertible debt. Furthermore? with the stock trading and $28.00 and a conversion price of $23.00? the debenture is in the money.

Managing Change in a Global Environment

Organisations are dynamic settings in that they are continually changing. To change something means either altering? varying or modifying it in some way. Changes have occurred gradually in organisations since the days of F.W. Taylor? from the methods he used? to the mechanisation and automatic production lines of modern industry.

Organisations today are going through constant change brought about by competition? economics? business innovation and a realization that remaining stagnant may mean organizational death. As the business environment increases in complexity and changes rapidly? organization and management consequently experiences significant transformation to cope with these changes. On a micro level (company level)? these changes would include the transformation of the internal corporate culture as well as enhancements in the management of human resources in response to increasing workplace diversity and the evolving needs of the workforce. Traditional theories have been dominated by the idea that change originates in the ...