Mkt 593 - Contingency Plan

Contingency Plan

MKT/593

Contingency Plan

Starbucks is the world’s leading specialty coffee retailer and a Seattle-based coffeehouse chain known for its signature roasts, confections and pastries. The company offers a wide range of products including more than 30 blends of coffee; various handcrafted beverages, including non-coffee blended beverages, smoothies and teas; merchandise; and fresh foods, such as pastries, sandwiches and salads. In this world there are no guarantees of success for businesses (Starbucks, 2015). Each company must be able to form a successful marketing strategy and must be able implement their plan effectively. In this highly competitive global environment the overarching goal of every firm is to successfully execute strategies that will lead to growth, prosperity, and survival.

All companies need to have some form of risk management plan in order to mitigate their potential losses (Kotler & Keller, 2012). One of the major problems that affected Starbucks was its over expansion. The company was in danger of commoditizing coffee and losing its high quality experience. Starbucks must implement a plan for long term financing especially as it expands into international markets. It must also have a back-up plan for its logistics and coffee supply. Another area is the growing healthcare cost for the company. Healthcare now cost more than the beans that the company buys. One way to manage it financing and healthcare cost is to consider buying back its stocks so the company can retain a higher share value. This will make its shares more attractive and help to provide needed financing.

Another risk Starbucks may face is the cost of the premium coffee beans going up or having the supply of coffee beans become scarce. In the event of such an issue, Starbucks will develop a plan of researching for similar quality coffee beans and a distributor that will be able to provide large amounts of beans to Starbucks to replace the current premium coffee beans. It is utmost important to have a back-up plan for the coffee beans as no coffee beans would put a damper on Starbucks as their business is based on coffee beverages.

Starbucks overall industry sales have been reported for Fiscal Year 2014. The revenues reported was US$16,477.8M ending September 28, 2014, an increase of 10.6% over FY13 (Morningstar, 2015). The operating profit of the organization weighed in at US$3,081.1M in 2014, compared to an operating loss of US$325.4 M in 2013. Starbucks recorded a net margin of 12.6%,