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An analysis of cost-accounting in Starbucks Coffee Company

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Paul B.
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  1. Introduction
  2. History of Starbucks
  3. Current market threats and issues faced by Starbucks
  4. Analysis of the financial statements published by Deloitte & Touche
  5. Flexible budget for Starbucks
  6. Conclusion and recommendations
  7. Bibliography

Starbucks did not start as a seller of beverages. Its history stems in 1971 from the putting up of a business, which focused on the distribution of coffee beans, by Jerry Baldwin, Zev Siegel and Gordon Bowker. It was with the entry of the entrepreneur Howard Schultz into the company that the concept of selling beverages was raised to the owners. This was not met with enthusiasm though. Regardless, Schultz remained positive that the concept of ?on-the-go? coffee would have an impact in the market and so, he put up the Il Giornale coffee shop. Later on, Starbucks was sold to the chain of the Il Giornale coffee shops. This chain was then re-branded as Starbucks.Starbucks mission statement is ?to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow? and true enough, the company has indeed lived up to its mission statement.Starbucks has started expanding since its formation and its intensive growth over the past decades has enabled it to become known as the largest coffee shop chain in the world.

[...] If the use of a flexible budget and its corresponding variance analysis would be applied in a Starbucks store, the goal of the company to achieve increased sales and revenue would be backed up. To Starbucks, this would mean that the current market is satisfied with the value for money they are getting in the company's products and services. Thus, an increase in the company's sales and revenue would not have much impact on its pricing strategy. On the other hand, this would mean espousal to further market penetration. [...]


[...] Expansion To maintain its status in the industry, the expansion plan of the company should be supported by an aggressive marketing hand. Albeit the Starbucks is already a famous brand, this should not preclude the company from improving its services. Other marketing strategies should be employed to reach out to its market. Corporate Social Responsibility If there's one thing that one would immediately find at a Starbucks store, this would be the fliers which display the company's social responsibility programs. [...]


[...] Although the company also serves other beverages that are low in caffeine, a major component of the company's income is derived from coffee drinks sales. Thus, if the public were to be reluctant about the coffee products due to the danger that over consumption of coffee poses, the company would have difficulty meeting its profitability, which would then affect its expansion targets detrimentally. The loss of key personnel is also going to pose serious threat to the company's growth projections. [...]

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