The following questions relates to the strategic planning process of Starbucks, Inc. PLEASE BE AWARE THAT FOR SOME OF THE QUESTIONS, THERE IS NO RIGHT OR WRONG ANSWER. You will be graded on the reasoning you use in answering the questions as well as the completeness of the answers. BE AS BRIEF AS POSSIBLE – DO NOT INCLUDE IRRELEVANT INFORMATION! 1. Identify the product and/or service that Starbucks is providing. 2. Who are Starbuck’s customers? 3. How does Starbucks use the external value chain as a tool in the strategic planning process? 4. The four dimensions of the external value chain are functionality, quality, price/cost, and time. Arrange these dimensions in order of importance (#1=Most important, #4=Least important) in the creation of an external value chain specific to Starbucks. EXPLAIN YOUR ANSWER. 5. Explain whether your answer to question 4 would change if you wer studying the external value chain of Dunkin Donuts. 6. Of what importance is the internal value chain to the Starbucks strategic planning process 7. Explain the importance of ‘cost-benefit’ analysis in using the internal value chain. 8. Which component of the internal value chain is most to Starbucks? WHY? 9. Which component (activity) listed in the Starbucks internal value chain can be outsourced? 10. Quality costs are an important factor in the creation of any organization’s internal value chain. For each of the following quality costs, give an example related to the operation of Starbucks. For Example: Internal Failure Cost: Computer systems go down during open store hours. PREVENTION COST: APPRAISAL (INSPECTION) COST: INTERNAL FAILURE COST: EXTERNAL FAILURE COST: 11. Why is it important for Starbucks to incorporate the Balanced Scorecard into its strategic planning process? 12. Assume that you are creating a balanced scorecard for Starbucks and you are working on the Customer Satisfaction dimension. Indicate a specific strategy, performance measure, and target for this dimension. 13. The mission/vision statement of Starbucks is “to inspireand nurture the human spirit – one person, one cup, and one neighborhood at a time. Explain whether you believe that Starbucks is operating toward meeting this end point. 14. A spokeswoman for Starbucks recently stated that the company is attempting to “balance the need to run our business profitably while continuing to provide value to our loyal customers and to attract new customers.” Explain whether you believe that this strategy is working for Starbucks. 15. Lately, Starbucks has raised its prices, despite the fact that the cost of coffee beans has decreased. Explain whether you believe that this strategy will work. (Think about all of the answers you have given in earlier parts of the exam). 16. As a member of the strategic planning committee of Starbucks, of what assistance is the management accountant to you in performing your function?
