1. Case Study: Starbucks Presented By: Group 3 Avinav C Thakur (12) Bhuwan Jawa (13) Devdeep Majumdar (14) Devraj Roy (15) Gaurav Ganda (16) Prof. Sonu Goyal

23. LIQUIDITY RATIOS LEVERAGE YEAR 2008 2007 2006 2005 2004 CURRENT ASSESTS 1,748.0 1,696.49 1,529.79 1,209.33 1,350.9 CURRENT LIABILITY 2,189.7 2,155.57 1,935.62 1,227.0 746.26 CURRENT RATIO 0 .8 0.79 0.79 0.99 1.81 YEAR 2008 2007 2006 2005 2004 DEBTS 3181.7 3,059.76 2,200.44 1,423.43 916.33 EQUITY CAPITAL 2490.9 2,284.12 2,228.51 2,090.26 2,470.21 DEBT –EQUITY RATIO 1.28 1.34 0.99 0.68 0.37

24. Net Profit Margin (%) RETURN ON EQUITY RETURN ON ASSESTS YEAR 2008 2007 2006 2005 2004 2003 2002 2001 2000 % 3 7.1 7.5 7.8 7.3 6.5 6.4 6.8 4.3 YEAR 2008 2007 2006 2005 2004 2003 2002 2001 2000 % 12.7 29.4 26.1 23.7 15.7 12.8 12.3 13.1 8.2 YEAR 2008 2007 2006 2005 2004 2003 2002 2001 2000 % 5.6 12.6 13.1 14.1 11.5 9.6 9.5 9.8 6.3

25. GROWTH RATES % Profit Margins % STARBUCKS INDUSTRY S&P 500 Sales (5-Year Annual Avg.) 20.57 18.96 12.90 Net Income (5-Year Annual Avg.) 3.52 9.23 15.13 Dividends (5-Year Annual Avg.) NA NA 11.79 Company Industry S&P 500 5Yr Gross Margin (5-Year Avg.) 23.0 29.6 39.4 5Yr Net Profit Margin (5-Year Avg.) 6.3 8.9 11.5

28. OVERVIEW OF 2008 & STRATEGIES FOR NEXT FISCAL Throughout fiscal 2008, Starbucks experienced a consistent weakening in its U.S. business,. Management recognizes that it faces a more challenging environment from an economic, operational and competitive standpoint entering fiscal 2009. In response to those challenges, management intends to focus in the following key areas: • Better operational excellence at the store level; • More meaningful innovation to continue to differentiate the store experience; and • Increased efficiencies and effectiveness in the general and administrative infrastructure, to become more capable of navigating through the fluctuations in the external environment.

29. FINANCIAL TARGET FOR 2009 In setting targets for fiscal 2009, management’s goal was to balance the long-term opportunity for store growth with the near-term realities of the challenging economic and operating environment. For fiscal 2009 the Company is targetting: • Opening approximately 2,500 new stores; • Comparable store sales growth in the range of 3% to 5%; • Total net revenue growth in the range of approximately 17% to 18%, to over $11 billion; and • Earnings per share in the range of $1.02 to $1.05, representing 17% to 21% growth, with earnings per share expansion expected to be greater in the second half of fiscal 2009.

30. The Competitive Wedge Willingness to Pay Costs Wedge VALUE

32. Process Differentiation (the value chain) Financing, Legal Support, Accounting Recruiting, Training, Incentives, Feedback Equipments, Production, Packaging, Selling Getting the coffee : Where & How Inbound Logistics Delivering the product Promotions and Advertising Customer satisfaction and feedback Billing and collection Firm Infrastructure Primary activities Human Resources Technology & Development Procurement

35. Costs versus Differentiation Others Starbucks Starbucks Others Willingness to pay Costs Costs Willingness to pay

38. Thank You….!!! ?