Recommendations of Starbucks
1- Company analysis � Recommendations Based on your analysis, recommend to an investor if he/she should or should not invest in the company. Give specific reasons for your recommendation (consider financial, organization & industry). If the recommendation is to invest � what should the investor look for in the future � will the company or market grow? Is it a risky investment? How will the investor know when to sell the shares? If the recommendation is to not invest � what would have to change for the company or industry to become a good investment?
2- Write a Conclusion The conclusion should remind the reader of the purpose of your paper and give the information that you said you were going to give when you wrote your introduction � the first place to begin is to review the introduction � does it still make sense? Does the conclusion you are writing �close the loop� for the reader?
Recommendations of Starbucks
Consumers in the modern world seem to have an insatiable hunger for coffee. According to the International Coffee Organization, the trend shows that in the long-term, the worldwide demand for coffee will grow by over 25 percent. For example, countries such as India and China which is are nations of tea drinkers, the yearly consumption of coffee has got double-digit over the last decade and corporations are predictably bullish on the future. The company analysis shows that Starbucks is the real deal to invest. Starbucks is hoping numerous stores in emerging markets globally and receives an overwhelming response from every new customer. Starbucks is one of the leading coffee producers in the world. However, its success is dependent on coffee farmers. Therefore, Starbucks is a fantastic opportunity for investors. To ensure success in the foreseeable future, the company has recently turned to the capital markets to raise funds that will help its suppliers or farmers to overcome the challenges faced by farmers (Berger & Blake, 2016).
An investor willing to put their money in Starbucks should be strategic. The reasons should be the ingredient that will amount to long-term prosperity and growth with the stock. Investing in Starbucks is profitable due to the announcement of premium coffee delivery prices. For example, stores in China and the US are growing tremendously as well as India market is gaining strength. The corporation has extended its innovation all the way from in-store technologies to change for employee retention initiatives like college tuition programs. The rising coffee prices show that they will not impact the bottom line and investors should bet against the stock. Besides, the falling coffee prices, Starbucks offers other services outside the amount of coffee. For example, Starbucks offers other services such as outstanding performance, profitability, and customer loyalty. Therefore, investing in Starbucks is not all about prices, but about the experience for those who love coffee, loyalty and a partnership with customers than any other retail cohort can’t challenge it (Chapter, 2017).
It is good for investors to believe Starbucks will remain at the peak after widespread market success. However, the potential future bear market shared with economic and spending retraction could be an issue for the company and company investors as luxury companies hit its performance. Besides, new worldwide expansion is at risk as global markets have different adoption and preferences levels. Moreover, increase from developed markets to emerging markets might as well have higher risks as spending psychologies car vary spectacularly. Despite the risks involved in Starbucks operations, its 0.63 three-year betas ultimately imply that investors will have less severe losses in a broad market decline which is strategic for any investor. However, it is essential to monitor any systematic change along any notable difference to stay ahead of all potential losses that can be hedged with active investing or probably avoided. Investing in Starbucks according to the company analysis is a profitable deal both in the short term and long term. This is because Starbucks commands a leading position in all coffee segments and its operating fundamentals remain strong. The company has a worldwide retail footprint, digital offerings, rapid growth in the international markets, successful innovations, and best-in-class loyalty program (Chapter, 2017).
Therefore, investing in Starbucks is an excellent opportunity because its loyalty rewards program is a runaway success and the app to handle mobile ordering creates a massive stockpile of customer cash. The company also decides to steward customer cash within the loyalty rewards’ programs. Besides the fact that the model of Starbucks is exploding, “its operating efficiency keeps getting better, and it is the fundamental driver between higher cash flows, higher investments, and profits in company growth.” Improved operating efficiency is also a driver of enhanced dividends and added share buybacks. It is also good to invest in Starbucks because it’s share-friendly the company growth remains remarkable (Qian & Xing, 2016).
According to Geereddy (2012), Starbucks shows that its leading growth is in the global company segment. The emerging markets in Brazil, India, Mexico, and China continue to offer substantial opportunities to serve more customers and add to new stores. The company potential to invest in global markets provides the best return for investors. Besides, the industry analysis shows that the market has a lot of untapped potential for growth. If Starbucks invests in these emerging markets, it will remain relevant to customers and investors for sustainable growth and increased returns. There is value for money for investing in Starbucks Corporation. The analysis shows that Starbucks has growth opportunities for coffee and its products mix. However, Starbucks depends majorly on coffee beans for its value chain strategy. The market prices have had a wide fluctuation for high-quality coffee beans. Investors should monitor the strategy adopted by Starbucks to promote coffee farmers and investment decisions on effective hedging strategies. This should include future contracts for locking in their estimated quantity inputs at lower prices for managing future costs to a greater extent. The company should focus on achieving more penetration into emerging markets with untapped opportunities. The company should develop and retain the loyalty of customers and create a beta concept of on-the-go home delivery to increase the share value of investors.
Berger, K. A., & Blake, L. J. (2016). Starbucks Enters India: The Indomitable Competitor or Underdog?. Journal of Case Studies, 34(2), 75-91.
Chapter, W. R. T. (2017). ONE COMPANY’S PERSPECTIVE ON INNOVATION–STARBUCKS COFFEE, CIRCA 2006. Accelerating New Food Product Design and Development, 105.
Geereddy, N. (2012). Strategic analysis of Starbucks corporation.
Qian, Y. A. N. G., & Xing, T. U. (2016). Starbucks VS Chinese Tea—Starbucks Brand Management Strategy Analysis in China. International Business and Management, 12(1), 29-32.