Accounting for Managers MGT6000 X70 ELancaster Week 2 Starbucks Balanced Scorecard PDF

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This paper will outline the four perspectives including Financial, Internal Business Process, Learning and Growth, and Customer for Starbucks Balanced Scorecard ...

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Running Head: STARBUCKS BALANCED SCORECARD

Starbucks Balanced Scorecard Estella Lancaster Regis University _ Accounting for Managers _ MGT6000_X70 March 22, 2020

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Introduction Starbucks opened their first storefront in 1971 in Seattle’s historic Pike Place Market. The Chief Executive Officer and chairman Harold Schultz envisioned a place where people could gather and partake in the romance of the coffee experience. This sentimental mentality was first grounded by Gordon Bowker one of the founders of the coffee shop when he came across an old mining town in Washington called “Starbo”. The name of the town reminded Mr. Bowker of Starbuck the first mate in Melville’s Moby-Dick novel. The logo is that of a twotailed mermaid which was inspired by Sirens in Greek mythology. The sirens are said to have lured sailors to their death by shipwreck off the coast of Starbuck Island in the South Pacific. “Today, Starbucks has become one of the largest coffeehouse companies in the world with more than 30,000 locations across in 76 countries, has over 291,000 employees. Starbucks is a publicly traded company with a trading symbol of SBUX on NASDAX.” (Levesque, 2018). The vision statement and mission statement are the heart of the Starbucks organization. The leaders of Starbucks collaborate on implementing strategies that focus on honoring the mission and vision. The balanced scorecard is a non-financial instrument that identifies the four perspectives that capture, and measure said strategies. This paper will outline the four perspectives including Financial, Internal Business Process, Learning and Growth, and Customer. Starbucks Vision Statement “To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” (Starbucks mission statement, 2020).

STARBUCKS BALANCED SCORECARD Starbucks Mission Statement “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” (Mission statement, n.d.) Starbucks Values o Creating a culture of warmth and belonging, where everyone is welcome. o Acting with courage, challenging the status quo and finding new ways to grow our company and each other. o Being present, connecting with transparency, dignity and respect. o Delivering our very best in all we do, holding ourselves accountable for results. (Mission statement, n.d.) “A balanced scorecard is a strategic planning and management system that organizations use to get a more balanced view of the organizations performance and a holistic system for managing strategy.” (Burton, 2020). Starbucks continues to identify and implement operational initiatives to and expand their global footprint and create long-term shareholder value. The strategic objectives that correlate with the four perspectives of the balanced scorecard which have been put in place to help Starbucks reach their initiatives are as follows:

o Increase Revenue (financial perspective) o Improve Operational Efficiencies (internal business processes) o Improve Employee Motivation and Preparedness (learning and growth) o Increase Customer Retention (customer perspective)

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Breakdown of the Four (4) Perspectives The focus of the Financial Perspective is to Increase Revenue. The first objective is to ‘increase shareholder returns to $25 billion in the form of share buybacks and dividends through FY20.” Creating long-term shareholder value is of the upmost importance to any organization and Starbucks is no exception. Starbucks plans to utilize Digital Flywheel to add five (5) million digitally new customers. “Digital flywheel describes all the marketing that you can do, online, that attracts people to your website.” (Vetere & Chickowski, et all, 2019).

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STARBUCKS BALANCED SCORECARD The second objective under the Financial Perspective is to accelerate growth in the two biggest markets, the United States and China. This includes the full rollout of three new platforms: Starbucks by Nepresso, Starbucks by Dulce Gusto, and Starbucks roast and ground coffees. By accelerating product innovation around core beverages and continuing to progress in it’s “Global Coffee Alliance’, Starbucks will see an increase in International Operating Income as well as in Net Revenues. The third objective is to continue working with the U.S. Green Building Council and leading the charge with the first green-certified store (also known as LEED). This is in line with the Starbucks pursuit on social responsibility and sustainability by saving $50 million in utility costs and $30 million annually in operating costs over the next decade. Starbucks continues to build new or renovate existing stores around the world. The plan is to have 10,000 stores fall into this category by 2025. (Rogers, 2018)

The cornerstone on Internal Business Process is to Improve Operational Efficiencies. The first objective is to Enhance the In-Store Experience. The decrease of in-store traffic and instore sales has been attributed to the cookie-cutter format of franchises. To address this issue, Starbucks retail locations are being redesigned to reflect a sense of community by matching the culture of the neighborhood.

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The second objective is to intensify focus on Efficiencies. The thousands of Starbucks across the world are partnering with an external consultant and utilizing Artificial Intelligence (A.I.) called “Deep Brew” to optimize labor allocations, automate scheduling, and drive inventory management in stores. (Gelski, 2019). The use of A.I. will help Starbucks deliver a better experience by freeing employees from operational tasks allowing them to engage and interact with customers. The third objective under the Internal Business Process perspective is centered around Quality Management. The Coffee and Farmer Equity (CAFÉ) program consists of coffee bean farmers who comply with Starbucks quality standards. Starbucks is committed to creating a long-term supply of high-quality coffee and positively impact the lives and livelihoods of coffee farmers and their families by purchasing 100% ethically sourced coffee. (Committed to 100% ethically sourced. (n.d.).

The emphasis on the Learning and Growth Perspective is to Improve Employee Productivity and Engagement. The first objective is to offer robust benefits and unique services package. Managers are directed to engage with their partners (Starbuck’s term for employees) to encourage their employees to take advantage of the company’s mental health care package and other services without fear of retaliation or being looked upon as ‘damaged’ or ‘less than’.

STARBUCKS BALANCED SCORECARD Starbucks offers inpatient and outpatient mental health care, as well as six free visits with a mental health provider through its Employee Assistance Program. (Wiener-Bronner, 2019) The second objective is to increase Employee Satisfaction by introducing the Starbucks College Achievement Program in 2014. Starbucks has an ongoing commitment to not only attracting talent, but to creating opportunity for young people categorized as 16 to 24-year old). Starbucks has implemented a benefit that will graduate 25,000 employees with a bachelor’s degree by 2025. Employees who work an average of 20 hours per week and who do not yet have a bachelor’s degree can enroll in online college courses through Arizona State University (ASU). Starbucks will reimburse the employee at the end of each semester resulting in zero out of pocket cost to said employee. (Starbucks College Achievement Plan, 2015) The third objective under the Learning and Growth Perspective is to Decrease Employee Turnover and Increase Talent Retention. The cost to attract, interview, and hire employees just to have them resign within the first year can be detrimental to any organization. Starbucks has implemented plans to reduce employee turnover and increase talent retention with the very first point of contact. The interview itself is set up to be welcoming and positive. Both fulltime and part-time partners are eligible for health benefits, paid time off, and can also participate in discounted stock purchase plans and equity reward programs. Managers are encouraged to foster a work-family culture that is fun and engaging and to hold quarterly offsite team building events. (Harkness, 2019)

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The foundation of the Customer Perspective is to Improve Customer Retention. The first objective is to increase sales of mobile order and pay. In 2018, Starbucks enhanced its mobile app making it possible for customers to order and pay versus having to preload funds into their account. Customers also have the flexibility to order and pay as a ‘guest’ without having to load $25 at a time, or they can create an account which allows them to track their purchases and see their earned rewards. The rewards program has also been redesigned to appeal to more customers. Rewards can be used towards the purchase of food, beverages, or Starbucks products such as tumblers and whole coffee beans etc. The second objective is to Increase Customer Satisfaction by Prioritizing Beverage Innovation and Expanding Delivery Options. Applying more resources towards customer research provides valuable insight as to ‘needs and wants’ of the customer. Expanding on Delivery options is an important long-term growth opportunity given customers increasing demand for convenience. The consumer expects to have options in what they purchase as well as how to obtain the goods they purchase. Adding a delivery option to the mobile app is an easy and cost-efficient method of increasing customer satisfaction. The third objective is to create a Personal Experience when visiting a Starbucks. Not only do the baristas write down the specifics of each customer’s order, they write their name on the

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cup in black sharpie. This simple act changes what could be an impersonal interaction into a very personal one. Starbucks also makes it very easy for the consumers to purchase their favorite K-cups, teas, and other merchandise at the local grocery stores or a variety of marketplaces such as Amazon or Ebay. A simple focus on the personal experience goes a long way. Conclusion

The Starbucks Balanced Scorecard provides the objectives, measures, targets, and initiatives that help the business continue to be a leader in the Quick Serve Restaurant industry. Optimizing shareholders returns, accelerating growth in the U.S. and China, concentrating efforts on Social Responsibility and Sustainability, Starbucks can Increase Revenue and achieve the targets established from a financial perspective. Improving operational efficiencies in the area of in-store experience, labor allocation and inventory management as well as quality management ensures that Starbucks will continue to have positive results from the established initiatives. Investing resources to create robust benefits and services packages, partnering with A.S.U. to fund college tuition programs, and creating a friendly and positive culture will undoubtedly increase employee satisfaction and reduce the turnover rate. Maintaining an acute awareness of the pulse of the customer provides insight ensures every interaction is a personal one which increases customer satisfaction and improves customer retention.

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References Burton, B., Boo, M., & Borissov, T. (n.d.). Balanced scorecard basics. Retrieved March 22, 2020, from https://balancedscorecard.org/bsc-basics-overview/ Committed to 100% ethically sourced. (n.d.). Retrieved March 22, 2020, from https://www.starbucks.com/responsibility/community/farmer-support/farmer-loanprograms Foster, L. B. (2018, May). 5 ways Starbucks is innovating the customer experience. Retrieved March 22, 2020, from https://www.qsrmagazine.com/consumer-trends/5-ways-starbucksinnovating-customer-experience Gelski, J. (n.d.). Starbucks takes separate approaches for U.S., China markets. Retrieved March 22, 2020, from https://www.foodbusinessnews.net/articles/14808-starbucks-takes-separateapproaches-for-us-china-markets Harkness, J. (2019, August 11). 4 global food & beverage companies that have cracked the code on employee retention. Retrieved March 21, 2020, from https://www.forcebrands.com/blog/2018/10/03/global-food-beverage-companiesemployee-retention/ Mission statement. (n.d.). Retrieved March 22, 2020, from https://www.starbucks.com/aboutus/company-information/mission-statement

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Rogers, K. (2018, September 13). Starbucks to build 10,000 'GREENER' stores by 2025. Retrieved March 22, 2020, from https://www.cnbc.com/2018/09/13/starbucks-to-build10000-greener-stores-by-2025.html Starbucks announces strategic priorities and OPERATIONAL initiatives to accelerate growth and create long-term shareholder value. (n.d.). Retrieved March 22, 2020, from https://investor.starbucks.com/press-releases/financial-releases/press-releasedetails/2018/Starbucks-Announces-Strategic-Priorities-and-Operational-Initiatives-toAccelerate-Growth-and-Create-Long-Term-Shareholder-Value/default.aspx Starbucks College Achievement Plan: Frequently Asked Questions. (2015, April 6). Retrieved March 23, 2020, from https://stories.starbucks.com/stories/2015/starbucks-collegeachievement-plan-frequently-asked-questions Starbucks mission STATEMENT 2020: Starbucks Mission & Vision Analysis. (2020, March 03). Retrieved March 22, 2020, from https://mission-statement.com/starbucks/ Timmins, B. (2017, July 07). Starbucks was nearly not called Starbucks. Retrieved March 21, 2020, from https://www.independent.co.uk/life-style/starbucks-almost-had-different-nameco-founder-gordon-bowker-seattle-coffee-chain-a7828436.html Vetere, R., Chickowski, E., & Hoque, F. (2019, April 08). Starbucks' digital FLYWEEL strategy continues to pay off. Retrieved March 22, 2020, from https://digirupt.io/starbucks-digitalflyweel-strategy-continues-to-pay-off/

STARBUCKS BALANCED SCORECARD Wiener-Bronner, D. (2019, September 05). Starbucks plans to improve US employees' mental health benefits. Retrieved March 22, 2020, from https://www.cnn.com/2019/09/05/business/starbucks-mental-health/index.html

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