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Below you will find a Strategic Position and Action Evaluation Matrix (SPACE Matrix) for Starbucks Coffee Company with two of their competitors, McDonalds and Maxwell House.

Based on the space matrix and previous matrices and reviewing the 2021 Starbucks 10-K and other financial documents, Starbucks is clearly in the aggressive quadrant, and competing well against its competition considering its smaller product mix, and more targeted market. It has a very strong financial position (FP) due to a low D/E ratio, and high current ratio and a high inventory turnover. Starbucks stability position is reflective of the covid pandemics, and the rising inflations pressures, as well as a low barrier to entry for competition, and a higher barrier to entry for Starbucks into established coffee cultures and markets.

Starbucks competitive position is very good, they are higher they the coffee suppliers like Maxwell House, and on the heels of larger corporations like McDonalds. As a note, they have no single worldwide competitor with a product mix close to theirs, so McDonalds, even though a fast food restaurant chain, is considered a competitor with their McCafé offerings. So with a smaller product mix Starbucks is in a very competitive position relative to McDonalds. Its Industry position (IP) is quite high, and it is considered the leader in the coffee industry.

With Starbucks being in the aggressive quadrant, there are a few recommendations to consider. Starbucks should accelerate its growth plans in the markets in which they lead, the USA, Canada, and China to maintain and expand its lead over the competition. This recommendation is based on the relative lack of barriers to entry into their core coffee business, and competitive pressures from the competition.

Starbucks should also consider increasing its product mix and quality and remarketing/repositioning stores as a defensive act to not lose market share to competitors that offer equal quality coffee products, but a greater mix of other food-related products. This should include local food offerings in markets that they are struggling with such as EMEA.

Starbucks should also look to expand its involvement in the Global Coffee Alliance with Nestle as this will expand its global reach. Starbucks has expanded its social responsibility with increased investment in its partners, Starbucks refers to its employees as partners, by advancing social and racial equality, and focusing on partner retention. It has integrated social responsibility as the core of its purpose and “our reason for being.” They have also expanded environmental sustainability programs by declaring a bold aspiration to become planet positive by 2050. Starbucks needs to expand this program worldwide, beyond the markets that they lead to truly show that they truly are committed.

Grand Strategy Matrix

Below you will find a Grand Strategy Matrix for Starbucks Coffee Company.

GRAND MATRIX SUMMARY HERE

The Grand Strategy Matrix has four quadrants which holds different strategies within them. As we see the quadrants are split up as such, rapid market growth, strong competitive position, slow market growth, and weak competitive position. The first quadrant that run along the axis of rapid market growth and a strong competitive position involves the strategies of market penetration, product development, and horizontal integration, and diversification. This basically means that Starbucks is in a great standing point within their industry which means they will continue to grow.

Quantitative Strategic Planning Matrix (QSPM)

Below you will find the Quantitative Strategic Planning Matrix for Starbucks Coffee Company that analyzes the two proposed recommendations.

There were multiple strategies developed from the SWOT analysis that could be pursued. The two that were chosen as the best options were as follows:

1. Grow market share and the company as a whole.

2. Maintain market share and the current status of the company

Europe, Middle East, and Africa (EMEA) market are not currently performing at industry standards. The belief behind why this is occurring is due to regional differences in tastes and preferences and not enough products that cater to the local culture and customers. There is the potential for growth in these markets by developing products that are specific to these regions that will appeal to the customers and their desires. The brand equity is currently performing at a high level and can be used to the company's advantage to continue growing the market share and promoting the company in a positive light, as well as pushing more of the ethical business values that the company shares within its mission and vision. Growing the market share would also be profitable for a long-term reinvestment strategy that is multi-faceted per specific region.

Maintaining the current position of the company in regard to the market share would continue to be profitable at a steady rate but not provide the chance for embracing changes that may occur within the industry. The issue with this specific strategy is that it will not continue to grow the company to be as profitable as it can be within the industry. With product recalls, higher prices than competitors, and nearly identical products to competitors, maintaining the current position will not give the company an opportunity to diversify and set itself apart. Further, unionization may pose a threat if the company does not grow and diversify to include and embrace these changes.

References

David, F. R., David, F. R., & David, M. E. (2020). Strategic management concepts and cases: A

competitive advantage approach (17th ed.). New York, NY: Pearson Education. ISBN-12: 9780135203699

Starbucks financial ratios for analysis 2009-2022: SBUX. Macrotrends. (2022). Retrieved