Running Head: THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE
The Balanced Scorecard
& the Financial Perspective of Starbucks
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THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE
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Company Introduction
Starbucks Inc. is an American company specialized in the brewing and marketing of
blended coffee brands. The company, being an international company, has highly specialized in
the purchasing and sale of coffee blended brands throughout the world. The company sells a wide
variety of coffee brands including cold blended beverages, brewed coffee and Italian-style espresso
among other brands. Moreover, the company produces and sells bottled Frappuccino and iced
premium ice creams through its partnerships and a joint venture with other third party companies
(Starbucks Coffee Company, 2015). Starbucks is considered one of the most successful companies
thanks to its effective leadership of Howard Schultz before his departure.
Mission, Vision and the Overall Strategy of the Company
The mission and vision statement of Starbucks reflects the company’s overall company’s
emphasis on leadership in the coffee house industry. The mission statement of any company serves
as a true indication of the company’s intention in the market. On the other hand, the vision
statement of the Starbucks indicates what the company intends to achieve in the future. In this
regard, the mission and vision statement of the company provides a guide through which the
company can use to achieve its general goals and objectives in the market. In particular, Starbucks
mission and vision statement show the company’s customers the benefits they can get from the
company (Starbucks Coffee Company, 2015).
Starbucks Mission Statement
From the company’s website, Starbucks mission statement states that “To inspire and
nurture the human spirit – one person, one cup and one neighborhood at a time.” This mission
statement thus outlines what the company does to enhance the effectiveness and efficiency of its
THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE
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business (Starbucks Coffee Company, 2015). In this case, the mission statement of the company
has two essential foundations namely to inspire and nurture the human spirit and one person, one
cup and one neighborhood. These are driving force behind the Starbucks success.
Starbucks Vision Statement
Although Starbucks does not bring out its vision statement directly, a thorough look at the
company’s general strategy indicates that the company’s vision statement is “to establish
Starbucks as the premier purveyor of the finest coffee in the world while maintaining our
uncompromising principles while we grow.” (Starbucks Coffee Company, 2015). This vision
statement of the company outlines the company aim and goal.
Starbucks financial performance
Starbucks is the world’s number one specialty coffee retailer, and it is the best performing
company among the coffee house businesses in the world. The company has been recording growth
in revenue annually. As of 2016, the company had a total revenue of about $21.315 billion. On the
same note, the company had about $19.16 billion in revenues for the fiscal year 2015 and this is
clear indication of a positive performance for the company.
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THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE
Objectives for Improving Financial Position for the Company
Objective
Measure
Target
Action
90% market share
Increase the company’s
social services including
corporate social
responsibility and
enhancing corporate
image through ethical
sourcing.
Improving the credit worthiness and Asset to liability ratio
ability to fulfill financial obligations.
$20.5 billion in total
assets / $4.3 billion in
total liabilities
Reduction in finance
and administrative
expenses as well as
reduce external
borrowings
Foster investor trust adding new
investors.
Increase total
shareholder’s equity
from current $5.1
billion to $9.5 billion
Enhance dividend
payout strategy and
increase the company’s
stock value
Gaining a competitive position in
the industry.
Market Share Index
Total Equity
1.
To gain a competitive position in the industry
2.
Strong financial position improves the company’s credit worthiness and enhancing its ability
to meet its short term and long term financial obligations.
3.
To foster investor trust and attract new investors to the company.
The above objectives relate to the company mission, vision and overall strategy in the sense
that they echo the goals of the company. The Strong financial position allows the company to
enhance its service delivery and this aligns with the overall mission of inspiring and nurturing the
human spirit through efficient and quality services (Michelli, 2006). No organization can meet and
exceed the needs of its customers without having the necessary finances to enhance such services.
Objective 1: To gain a competitive position in the industry
Performance measure/ metric: Sustained profits and increased market share
THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE
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Target: 90% market share (Current market share 75%)
Competitive position in the industry is a competitive advantage to the organization since it
is the route to the long term success of the company. Being above the competitors in the industry
allows the company to enjoy long term profits in the industry. One important measure of
competitive position in the industry is sustained profits and increased market share (Michelli,
2006). Industry leaders such Starbucks can maintain its profits and increase its market share when
compared to its close competitors.
Initiative: Increase the company’s social services including corporate social responsibility and
enhancing corporate image through ethical sourcing.
Objective 2: Strong financial position improves the company’s credit worthiness and improving
its ability to meet its short term and long term financial obligations.
Metric: increase in assets and reduction in liabilities
Target: $ 20.5 billion in total assets (Current total assets is $ 14.33 billion). Reduction in total
liabilities to $ 4.3 billion from its current $ 8.4 billion
The creditworthiness of the company is one important valuation performed by the lenders
to determine the possibility of the company defaulting from repaying the borrowed funds.
Creditors consider the amount of assets and liabilities owned by the company when determining
its credit worthiness (Schultz, 2012). The higher the assets Starbucks have, the better its financial
position.
Initiative: Reduction in finance and administrative expenses as well as reduce external borrowings
and instead enhance its shareholder's equity.
THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE
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Objective 3: To foster investor trust and attract new investors to the company
Metric: increased number of investors to the company as well as increased total equity of the
company.
Target: Increase total shareholder’s equity from current $ 5.1 billion to $ 9.5 billion.
Initiative: Enhance dividend payout strategy and increase the company’s stock value. This will
attract more investors to the company.
THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE
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References
Michelli, J. A. (2006). Starbucks experience. Tata McGraw-Hill Education. Retrieved on 20 July
2017.
Schultz, H. (2012). Pour your heart into it: How Starbucks built a company one cup at a time.
Hachette UK. Retrieved on 20 July 2017.
Škrinjar, R., Bosilj-Vukšić, V., & Indihar-Štemberger, M. (2008). The impact of business process
orientation on financial and non-financial performance. Business Process Management
Journal, 14(5), 738-754. Retrieved on 17 July 2017.
Starbucks Coffee Company (2015). Company Information – Starbucks Coffee Company.
Retrieved on 16 July 2017, from https://www.starbucks.com/about-us/companyinformation
Running head: BSC & THE CUSTOMER PERSPECTIVE
The Balanced Scorecard &
The Customer Perspective of Starbucks
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BSC & THE CUSTOMER PERSPECTIVE
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The Balanced Scorecard and the Customer Perspective for Starbucks
1.
Identify at least three objectives for the organization's customer service perspective
and show how they relate to the mission, vision, and strategy of the organization.
Starbucks first objective is maintaining the company as one of the most respected and
recognized brands worldwide. The company's retail objective is to be the leading retailer as
well as the brand of coffee in every target market through selling high quality and finest
coffee and other high quality related products as well as, providing the best experience to
their customers. The third objective is enhancing community involvement and environmental
stewardship. The company is very committed to inspiring its customers and its employees.
This is due to the fact that the customers are very important in Starbucks business. The
company, therefore, invest in helping its customers do better in their community and
maximize needs satisfaction. It also motivates its employees to work for the company.
Starbucks inspires the employees so that they can offer their best service to their customers.
This helps in strengthening the bond between the employees and the company.
The company's mission statement is inspiring and nurturing the human spirit. The
vision statement for the company is establishing Starbucks as the premier purveyor of the
finest coffee worldwide while maintaining its uncompromising principles as it grows. The
objectives of the enterprise are the pure implementation of the mission and vision statement.
The mission statement is about nurturing and inspiring the human spirit.
2.
For each objective, develop at least one meaningful performance measure (metric).
The first objective for Starbucks as listed earlier is becoming the respected and
recognized brands in the world. The metric used for this objective is market share index. The
company can be said to have achieved this objective to a great extent. Starbucks is the
leading coffee company in the world. It competes with other giant enterprises in the world
such as McDonalds. The second objective is about being the leading retailer offering high
BSC & THE CUSTOMER PERSPECTIVE
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quality products. Starbucks has not achieved this goal so far as there still exist other large
retailers such as Walmart. Walmart is the leading retailer in the world and takes the biggest
market share.
The third objective is about inspiring the employees and the customers. This can be
measured by the rate of employee turnover and the level of customer satisfaction. The
company's rate of staff turnover is shallow meaning that the employees of the company are
motivated what the company motivates them with. For the third objective, the performance
metrics can be the number of social welfare programs the company conducts in a year as well
as the environmental principles the company undertakes (MacKay, 2004). Starbucks is
popular of conducting so many social responsibility programs. Some of them include
recycling and waste reduction, energy conservation, water conservation, green building,
responsibly grown coffee, ethically sourced cocoa, support to farmers and Ethos water fund
among others. Starbucks can, therefore, be said to have scored highly on this objective.
3.
For each objective, identify at least one expected level of performance (target).
The first objective indicates that the company's aims at being the most respected and
recognized brand in the world. The company, therefore, targets customers for the whole
world. It is expected that the company targets the customers all over the world. It is therefore
expected to offer its products and services to customers all over the world. The company can
target to increase the level of customer satisfaction by an extra 20% for the next three years
(Basu, Little & Millard, 2009). For the second objective, the company aims at becoming the
leading retailer in the world. It is expected that the firm should have the largest network of
its suppliers, the widest customer base for its products and services to achieve this objective.
The third objective is about maximizing the social welfare. It is expected that the company
should engage in numerous social responsibility activities.
BSC & THE CUSTOMER PERSPECTIVE
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For each objective, identify at least one new action or program that needs to be
developed to ensure successful implementation of the organization's strategy (initiative).
Starbucks still has more to do to achieve the mentioned above objectives. For the first
objective, the company needs to maintain the highest quality of its products. Additionally,
they should have a wide selection of suppliers, and should only source its products from
entrusted suppliers. For the second objective, Starbucks should consider improving their
communication system, further improving its customer relationship and ensuring that their
delivery schedule is adhered to. Regarding the third objective, the company should introduce
more products which are healthier to its clients. It should also employ the local staffs and
train them on equipping them with international standards (Murby & Gould, 2005). This
initiative will boost the health of its customers.
5.
Comment briefly on the relationships of the customer service objectives that you've
identified here to the financial objectives that you identified in the Module 1 SLP assignment.
How do they help to fulfill those goals? If they don't (and they don't have to), what makes
them more important than objectives that would relate to finances?
The three objectives discussed above are very consistent with the financial objectives
of the company. All the three objectives aim at maintaining the business's competitive
advantage and also increasing its profitability which is one of the financial objectives of the
company (Financial perspective, n d). Through pursuing a long-term goal and pursuing social
and environmental stewardship, the company is likely to receive high financial gains in
return.
6.
Finally, do you wish to make any changes to your Module 1 objective write-up in
light of your Module 2 experience?
No. I don't wish to change module one. It was sufficient.
BSC & THE CUSTOMER PERSPECTIVE
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References
Basu, R., Little, C., & Millard, C. (2009). Case study: A fresh approach of the balanced
scorecard in the Heathrow Terminal 5 project. Measuring Business Excellence, 13(4).
22-33.
Financial perspective (n.d.). EPM Review. Retrieved from
http://www.epmreview.com/resources/articles/item/84-financial-perspective.html
MacKay, A. (2004). A practitioner's guide to the balanced scorecard: A practitioners' report
based on: ‘Shareholder and stakeholder approach to strategic performance
measurement using the balanced scorecard.' Chartered Institute of Management
Accountants. Retrieved from
http://www.cimaglobal.com/Documents/Thought_leadership_docs/tech_resrep_a_pra
ctitioners_guide_to_the_balanced_scorecard_2005.pdf
Murphy, L., & Gould, S. (2005). Effective performance management with the balanced
scorecard: Technical report. Chartered Institute of Management Accountants.
Retrieved from
http://www.cimaglobal.com/Documents/ImportedDocuments/Tech_rept_Effective_Pe
rformance_Mgt_with_Balanced_Scd_July_2005.pdf
Background
BSC Implementation & the Internal Business Process
Perspective
Required Reading
Chapters 1-3 of:
MacKay, A. (2004). A practitioner’s guide to the balanced scorecard: A practitioners’ report
based on: ‘Shareholder and stakeholder approaches to strategic performance measurement using
the balanced scorecard’. Chartered Institute of Management Accountants. Retrieved from
http://www.cimaglobal.com/Documents/Thought_leadership_docs/tech_resrep_a_practitioners_g
uide_to_the_balanced_scorecard_2005.pdf
Also read/review Chapter 2-7 of:
Murby, L., & Gould, S. (2005). Effective performance management with the balanced scorecard:
Technical report. Chartered Institute of Management Accountants. Retrieved from
http://www.cimaglobal.com/Documents/ImportedDocuments/Tech_rept_Effective_Performance
_Mgt_with_Balanced_Scd_July_2005.pdf
Read the following materials on balanced scorecard:
Braam, G. J. M. (2012). Balanced scorecard's interpretative variability and organizational
change, business dynamics in the 21st Century, Dr. Chee-Heong Quah (Ed.), InTech, DOI:
10.5772/35828. Retrieved from http://www.intechopen.com/books/business-dynamics-in-the21st-century/balanced-scorecard-s-interpretative-variability-and-organizational-change
Braam, G.J.M., & Nijssen, E.J. (2011). Exploring antecedents of experimentation and
implementation of the balanced scorecard. Journal of Management & Organization, 17(6), 714728. Retrieved from Trident University Library.
This web article will be helpful for your SLP.
Niven, P. (n.d.). Financial perspective. EPM Review. Retrieved
from http://www.epmreview.com/resources/articles/item/85-customer-perspective.html
Optional Reading
McLean, S.R., & Mahaffey, S.M. (2000). Implementing a surgical balanced scorecard. Surgical
Services Management. 6(1). 43-47.
The Chartered Quality Institute. Retrieved from http://www.thecqi.org//KnowledgeHub/Qualityworld/
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