Strategic InitiativeEssay Preview: Strategic InitiativeReport this essayA corporation with a competitive advantage, developmental progress, and financial endurance is typically established with proper strategic and financial planning. This process is clearly formulated by identifying the organizations business goals, intended objectives and defining the monetary involvement needed to undertake these plans. The process of strategic and financial planning require certain steps or outlines in which organizations use in determination of which direction they would want their business to venture into on top of setting their long-term and short-term goals, and assigning who will assist in organizing the process and achieving those set goals. Strategic planning is a process used by companies that involves evaluating, examining and taking into consideration opposing competitor strengths, weaknesses, opportunities and threats and applying them fittingly towards their own company plans and goals.
Financial planning is the responsibility of managing the finances of a corporation in order to achieve the companys strategic goals and objectives. It also involves in identifying the types of resources and quantifying the amount of resources that are considered necessary to achieve the companys objectives. Once the companys strategic plan is established, having the appropriate finances is essential to the success of the corporation. Businesses and organizations without the suitable funding, financial management, and goals set for their company will have limited success and could result in detrimental shortcoming for the company. Corporations that typically follow their strategic and financial business outlines eradicate areas of inefficiencies and eventually increase their revenue and decrease their costs.
Strategic and Financial planning work harmoniously in the initial business plan. At times companies can get off target with the implemented business plan and can result in a risky financial shift if not planned appropriately. These two business steps of planning work hand-in-hand, without financial stability and a great strategic and financial plan the corporation has a great possibility of not succeeding (Thibodeaux, 2013).
The first step in corporate initiative is analyzing the needs of the organization. For this process Starbucks should look to internal surveys for the next big idea and external demographic studies. This will encompass newer efficient ways of producing the same product, as well as evaluating the future needs of the stakeholders. The second step in the initiative is for the leadership to develop the strategy; documenting the mission and vision with a clear understanding will keep the team focused. After that, the key objectives are identified in a plan. In an organization such as Starbucks, it is plausible to assume this step is multifaceted. Coalition between department managers will develop their needs, responsibilities to the product planning, and individual timelines. Marketing, production, and shipping departments must all be ready and able to meet the needs of a new venture. After the duties are realized, the development process includes working prototypes, researching new plant and equipment costs, and studying market-share information to help the decision makers agree to the initial investment of new products such as Starbucks Ready Brew systems and K-Cups. There should be set goals and benchmarks so the shareholders can weigh the performance based on an internal return on investment or measuring the success of competitors market share to their own.
The prototype was thoughtfully designed to be compatible with competitors brewing machines to offer the notable Starbucks Coffee to those already using K-Cups, before investing in the production and marketing of the brewing machines. The K-Cups themselves had hurdles to overcome; for example, the patented design of the Keurig single-brew cups, and the environmental concerns about the cups not being easily recyclable. With these in consideration, production should be launched in several test areas. Using a notable setting such as Seattle would possibly sway market research due to the name brand loyalty in the region. Seattle is also known as one of the few local governments that enforce recycling fines and penalties, as does the city of New York. Once Starbucks finally approves the initiative, it is important to track the progress showing the stakeholders how the money has been applied. Starbucks reviews all of these initiatives in their quarterly and annual reports. From there, continuous review should exist to ensure the organizations efficiency and dominance in the industry.
Keeping up with the breakneck speed of changes within the business environment presents a challenge to organizations. To succeed in this fast pace environment organizations undertake strategic initiatives. Starbucks implements strategic initiatives to improve operational results and drive shareholder value. An initiative recently implemented by Starbucks to boost long-term growth and continue its mission of focusing on product innovation is the introduction of the Verismo Coffee Machine. On September 19, 2012 Starbucks launched this new premium single cup machine. Starbucks desire to leverage its strength outside company operated stores and to tap into the $8 billion home brewing market led to the launch of the Verismo Coffee Machine (Starbuck, 2012). For the quarter ending December 2012 Starbucks experienced a 7% increase in store sales growth, .5% of the growth is attributed to sales of the new Verismo machines (Novinson, 2013).
Budget
Table 2 shows the budget of the business. In 2012, Starbucks had the lowest total budget in the Starbucks brand. For the quarter ended December 2012, Starbucks had the largest surplus and the lowest budget of all Starbucks brands. In total, the Business and Budget of the Business grew the fastest in 2012 (2.2%) and was also the fastest quarter of growth in 2013 (.3%). After the first quarter of 2012 the business had the worst growth in the business. With its current and future revenues over the forecast, Starbucks is currently underperforming its fiscal goals in the same manner (see “Revenue” below).
In the last two years Starbucks has sold over $1 billion worth of the Business. This number included $5.9 billion in 2012, $3.7 billion in 2013 and $2.7 billion in 2014. This means that of the $7.9 billion Starbucks has sold in 2013, it is over $3 billion. Starbucks also reported an 8.2% increase in revenue for the quarter. This is partially accounted for by a decline in the average revenue per employee (R/E) of nearly 6 for the next 3 quarters. However this figure is still very low compared with a 2% increase for 2012 (Revenue = $5.9 billion). The business reported a decrease in the average R/E from the previous quarter (1.8%).
Operating Highlights
During the year ended December 2012 Starbucks was at its best as it transitioned from large to small businesses in order to maintain competitive profitability. For 2011, Starbucks was the fourth largest business after Starbucks with a net income of $3.6 billion. In 2012, Starbucks experienced a strong second quarter of profit, followed by a second quarter of profitability. In the second quarter of 2012, the business managed the largest quarterly profit share, with a net expense of $1.3 billion. In the second quarter of 2013 (after a strong second quarter), Starbucks had the third lowest net expense share.
In addition, Starbucks experienced the slowest change in operating costs. This change in costs increased $0.4 billion from the Q1 2014 to Q13 2015. Starbucks had a 2- year forecast for operating costs and forecasted that the business grew over 4% for the first three quarters after taking the first two quarters out of Q3 2015. This was very modest when compared to the prior quarter which was also disappointing for the business.
Earnings per Share (EPS)
The second period of 2013 saw a very strong growth of revenues and an increase in the average EPS recorded (see “Earnings per Share” below).
The first quarter of 2013 resulted in increased EPS of 6.5 % for the first quarter of the business compared to the last quarter of the business. The largest increase came in the top quarter of the business which showed a 3.7% increase in average EPS as compared to Q3 2013. This was a major jump because the business has managed to hold on to sales in the first quarter of 2013 as a result of sales growth, sales support as well as additional revenues from various brands. This increased EPS growth was due mainly to growth of brand customers. Furthermore, the business continued to make significant expansion in its sales base.
In addition to EPS, the business made significant progress in the last two years. Total growth of sales increased 6.3 % compared to the first three quarters of 2013. This rate was due largely to the continued growth of brand customers. The business continued to make substantial investment for its business. Furthermore, overall growth in sales has been positive as seen from the start and is expected to continue during the second quarter of the business.
Budget
Table 2 shows the budget of the business. In 2012, Starbucks had the lowest total budget in the Starbucks brand. For the quarter ended December 2012, Starbucks had the largest surplus and the lowest budget of all Starbucks brands. In total, the Business and Budget of the Business grew the fastest in 2012 (2.2%) and was also the fastest quarter of growth in 2013 (.3%). After the first quarter of 2012 the business had the worst growth in the business. With its current and future revenues over the forecast, Starbucks is currently underperforming its fiscal goals in the same manner (see “Revenue” below).
In the last two years Starbucks has sold over $1 billion worth of the Business. This number included $5.9 billion in 2012, $3.7 billion in 2013 and $2.7 billion in 2014. This means that of the $7.9 billion Starbucks has sold in 2013, it is over $3 billion. Starbucks also reported an 8.2% increase in revenue for the quarter. This is partially accounted for by a decline in the average revenue per employee (R/E) of nearly 6 for the next 3 quarters. However this figure is still very low compared with a 2% increase for 2012 (Revenue = $5.9 billion). The business reported a decrease in the average R/E from the previous quarter (1.8%).
Operating Highlights
During the year ended December 2012 Starbucks was at its best as it transitioned from large to small businesses in order to maintain competitive profitability. For 2011, Starbucks was the fourth largest business after Starbucks with a net income of $3.6 billion. In 2012, Starbucks experienced a strong second quarter of profit, followed by a second quarter of profitability. In the second quarter of 2012, the business managed the largest quarterly profit share, with a net expense of $1.3 billion. In the second quarter of 2013 (after a strong second quarter), Starbucks had the third lowest net expense share.
In addition, Starbucks experienced the slowest change in operating costs. This change in costs increased $0.4 billion from the Q1 2014 to Q13 2015. Starbucks had a 2- year forecast for operating costs and forecasted that the business grew over 4% for the first three quarters after taking the first two quarters out of Q3 2015. This was very modest when compared to the prior quarter which was also disappointing for the business.
Earnings per Share (EPS)
The second period of 2013 saw a very strong growth of revenues and an increase in the average EPS recorded (see “Earnings per Share” below).
The first quarter of 2013 resulted in increased EPS of 6.5 % for the first quarter of the business compared to the last quarter of the business. The largest increase came in the top quarter of the business which showed a 3.7% increase in average EPS as compared to Q3 2013. This was a major jump because the business has managed to hold on to sales in the first quarter of 2013 as a result of sales growth, sales support as well as additional revenues from various brands. This increased EPS growth was due mainly to growth of brand customers. Furthermore, the business continued to make significant expansion in its sales base.
In addition to EPS, the business made significant progress in the last two years. Total growth of sales increased 6.3 % compared to the first three quarters of 2013. This rate was due largely to the continued growth of brand customers. The business continued to make substantial investment for its business. Furthermore, overall growth in sales has been positive as seen from the start and is expected to continue during the second quarter of the business.
To remain competitive and continue growth, Starbucks needs to master the process of introducing its new product into the marketplace. Starbucks must take a serious look at its competitors who offer products similar to the Verismo Coffee Machine; these competitors would include Green Mountain Coffee Roasters and Nestle. Starbucks should develop a marketing plan that targets its prospective customers most likely to purchase the machine and market to those customers who are currently