Balanced Scorecard

8/5/2012

Starbucks Balanced Scorecard Project

Star arbu buck cks s BS BSC - Age gen nda •Company Overview •Purpose of Starbucks BSC •Starbucks Strategy at the Store Level •Starbucks BSC •Causality Relationships for the Proposed BSC •Consequences of New BSC •Feasibility of Proposed Metrics •Conclusion

1

8/5/2012

Company Overview Established in 1971, since then have grown to become the leading retailer, roaster, and brand of specialty coffee in the world with locations in North America, Latin America, Europe, Middle East, and Asia Pacific.

 AS OF 2006 •Net revenue 7.8 Billion •Net earnings 564 Million •Earnings per common share diluted $0.71 •Number of countries Starbuck’s is located in 37 •Total retail stores world wide (excluding franchises) 12,440 •Number of partners (employees) worldwide 145,800

BSC Purpose The purpose of this BSC is to develop metrics that allow individual Starbuck’s stores to measure current performance as they align with the overall store strategy. This scorecard incorporates both lagging and leading metrics to create a holistic view of performance as it pertains to the Cybernetic Feedback Model.

2

8/5/2012

Starbuck’s Individual Store Strategy 1. To provide a clean and comfortable store experience with consistent quality products and service

2. Contribute positively to our communities & environment  3. Provide a great work environment and treat

each other with respect and dignity 4. Recognize that profitability is essential to success •

Source: Starbucks CSR brochure, tailored to the store level

Balance Scorecard FINANCIAL PERSPECTIVE

CUSTOMER PERSPECTIVE

Starbuck’s Strategy

INTERNAL PROCESS PERSPECTIVE

LEARNING AND GROWTH PERSPECTIVE

3

8/5/2012

LEARNING & GROWTH GOAL

MEASURE

STRATEGY ALIGNMENT

Knowledgeable Employees •Test scores on completed training units

•Strategy 1, 3, 4

(Leading) • Number of products tested (Leading) •Number of training sessions completed (Leading) •Number of employee suggestions submitted (Lagging)

Employee Satisfaction

•Employee work referrals (Leading) •Strategy 1, 2, 3, 4 •Length of employee tenure (Lagging) •Percent employee absenteeism (Lagging) •Employee satisfaction surveys (Lagging)

LEGEND Starbucks Store Strategy 1. Quality products/service

2. Contribute to communities

3. Great work environment

4. Profitability

CUSTOMER PERSPECTIVE GOAL

MEASURE

STRATEGY ALIGNMENT

Customer SatisfactionProduct Mix

•Survey (Lagging) •Percent total sale of new products (Lagging)

•Strategy 1, 4

Customer SatisfactionProduct (Drinks, pastries, etc.)

•In Store audits (Leading) •Number of returned drinks (Lagging)

•Strategy 1, 4

Customer SatisfactionService

•Number of complaints (Lagging)

•Strategy 1, 3, 4

Continuous Community Involvement

•Number of projects/month (Leading) •Number of volunteer  hours/month (Leading)

•Strategy 2, 4

LEGEND Starbucks Store Strategy 1. Quality products/service

2. Contribute to communities

3. Great work environment

4. Profitability

4

8/5/2012

INTERNAL OPERATIONS Goal

Measure

Strategy Alignment

Minimize Solid Waste

•Number of customers using their own mug (Both) •Internal audit of solid waste (Lagging) •Percentage of products packaged in recycled/recyclable materials (Leading)

•Strategy 2

Initialize Quality Assurance

•Randomly take temperatures of hot drinks (Both) •Test employees product knowledge (Leading)

•Strategy 1, 4

Maintain a Clean, Safe, and Orderly Store

•Perform and document cleaning and •Strategy 1, 4 maintenance inspections hourly (Leading) •Injury rate per hours worked (Lagging)

LEGEND Starbucks Store Strategy 1. Quality products/service

2. Contribute to communities

3. Great work environment

4. Profitability

FINANCIAL PERSPECTIVE Goal

Measure

Strategy Alignment

 Achieve Profitable YoY Growth

•YoY net revenue growth (Lagging) •YoY Operating Margin Growth (Lagging) •Revenue per employee (Lagging)

•Strategy 1, 3, 4

Make a Meaningful Contribution to the Community

•Measure % of net revenue going to community (Leading)

•Strategy 1, 2, 3

LEGEND Starbucks Store Strategy 1. Quality products/service

2. Contribute to communities

3. Great work environment

4. Profitability

5

8/5/2012

Causality Relationships for Strategic Objectives Contribute positively to our communities and environment 

Financial

Contribution to the community

Profitable Growth Continuous Community Involvement

Customer 

Internal

Minimize Solid Waste Employee Satisfaction

Learning/ Growth

Causality Relationships for Strategic Objectives Provide a great work environment and treat each other with respect and dignity Profitable growth Financial

Customer 

Customer  SatisfactionService Maintain a clean, safe, and orderly store

Internal

Learning/ Growth

Employee Satisfaction

Knowledgeable employees

6

8/5/2012

Causality Relationships for Strategic Objectives To provide a clean and comfortable store environment with consistent quality products and service Profitable growth Financial

Customer 

Internal

Customer  SatisfactionProduct Minimize Solid Waste

Customer  SatisfactionService Initialize Quality  Assurance

Employee Satisfaction

Learning/ Growth

Maintain a clean, safe, and orderly store

Knowledgeable employees

Causality Relationships for Strategic Objectives

Recognize that profitability is essential to success. Profitable growth Financial

Customer  SatisfactionService

Customer 

Internal

Learning/ Growth

Minimize Solid Waste

Initialize Quality  Assurance

Product Mix Maintain a clean, safe, and orderly store

Knowledgeable employees

7

8/5/2012

Consequences and Behavior Changes RELEVANT STAKEHOLDERS • PARTNERS/EMPLOYEES  – Conflict between commitment/expectations of employees and compensation • ex. A barista getting paid minimum wage may not feel the need to put forth extra effort/time into community service

• SHAREHOLDERS  – Setting profitability as a strategy illustrates to shareholders that Starbucks is keeping them in mind

• CUSTOMERS  – BSC will ensure consistent quality for the customer for each visit

Questions… FINANCIAL • Achieve Profitable YoY Growth • Make a meaningful contribution to the

INTERNAL • • •

mi ni mi ze sol id wa ste initialize quality assurance maintain a clean, safe, and orderly store

community

CUSTOMERS • •

customer satisfaction- product mix customer satisfaction- product (drinks, pastries, etc.) • customer satisfaction- service • continuous community involvement

LEARNING & GROWTH • •

knowledgeable employees employee satisfaction

8