Porter’s 5 Forces Analysis of Starbucks Assignment

Porter’s 5 Forces Analysis of Starbucks Assignment Words: 2575

Management and Planning – CE00317-2 Group Assignment Learning Outcome: The written report of this assessment is designed to assess students’ ability to: 1. define, describe and discriminate between strategy and planning and show an understanding of the vocabulary of the subject applied to the management of a business organisation 2. describe and discuss a typical planning process including the role of qualitative and quantitative forecasting, modelling and dealing with uncertainty, through the use of recognised planning techniques 3. emonstrate and discuss the effective use of some techniques of strategic auditing and environmental analysis as applied to a typical organisation. 00 4. discuss and criticise some important issues relating to organisational design and orgnisational culture. Group Assessment: One Written Essay (50%) The work will normally be done in pairs. The work will include the analysis of an existing situation, the application of analysis techniques (introduced in lectures and developed in tutorials) and the presentation of conclusions using similarly-acquired techniques. It is intended to promote and assess practical research skills.

Read the case study (Page 6 onwards) and answer the following questions: 1. Using an appropriate model, analyse the ways in which Universal has provided a superior level of service to its customers. (30 marks) 2. Using the information provided in the case scenario, strategically evaluate the performance of the company up to 2004, indicating any areas of particular concern. (30 marks) 3. Matthew Black is well aware that the achievement of the growth targets for the 2005 to 2007 period will depend on successful implementation of the strategy, affecting all parts of the company’s activities.

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Explain in detail the key issues affecting implementation and the changes necessary to achieve Universal’s ambitious growth strategy. (20 marks) 4. What criteria would you use to assess whether Universal is an ‘excellent’ company? (20 marks) Assessment Requirements: A written report of approximately 2,500 words that synthesises and critically evaluates management and planning issues from the case study. State the number of words used at the end of the assignment. You may include diagrams, figures, appendices etc. without word penalty. A sliding scale of penalties for excess length will be imposed.

The penalties will be as follows: Up to 10% excess words:no penalty 11-20% excess words:- 5% penalty 21-30% excess words:-10% penalty 31% plus excess words: cannot achieve more than a pass grade (50%). Guidelines: A written report must be compiled in a suitable format that must incorporate the following: • A clear and concise outline of the practical management and planning issues; • Generation of conclusions that draw upon both theoretical and practical aspects; • Use of appropriate terminology that will indicate a thorough understanding of management concepts; • Suitable referencing of he materials used to support arguments put forward that will indicate competence in the academic issues discussed; • Evidence to suggest a more in-depth understanding of the planning concepts being reviewed and their practical applications; • Written content and structure that will demonstrate practical benefits being derived from the module, reading lists and research required for the assignment; • A wide range of sources used and cited (a minimum of 5 and not before 1999). • Full referencing of material and sources cited that incorporate the Harvard Referencing System. Mark Distribution for assignment

The mark allocation for the assignment will be as follows: ? 30 % of the mark will be allocated for familiarity with subject/material and evidence of original thinking. ? 30% of the marks will be allocated for Quality of argument/reasoning; the depth of analysis; expansion of ideas/argument and recognition of wider context/complexity of topic ? 10 % of the marks will be allocated for the relevance of answer to task set; the accuracy of details; consistency of focus and the organisation of ideas. ? 10% will be allocated for the ease of comprehension; appropriateness of language; fluency of style and the use of punctuation, grammar, etc. 10% will be allocated for the presentation format; word count and length ? 10% will be allocated for the use of supporting evidence; acknowledgement of sources: references, quotes, statistics and range and relevance of bibliography Assessment Guidelines Grading Criteria: The criteria below detail the areas which will be taken into account when the assignment is marked. 1. Pass assignments are expected to be legible, tidy, well organised and written in clear understandable English. The report should include an executive summary or abstract at the beginning and end with clear conclusions and recommendations.

If you have any problems with report formats please do not hesitate to contact the module tutor. 2. High grades [70%, 75%, +80%] need to demonstrate sustained coherent analytical ability. A systematic approach to analysis and evaluation is required for grades 60% to 70% – for grades at the higher end of the scale, integration and synthesis is a requirement. The quality of the arguments used to develop and support prescriptions/recommendations are, the essential test of integration. 3. Evidence of reading and some understanding of models and concepts is needed to achieve a pass grade [40%].

Integration of theory and practice is expected for any grade above 50%. 4. You are expected to clearly state any assumptions you make, and support statements and theories by referencing to appropriate sources. [This is essential for higher grades but does not necessarily prejudice a pass mark [40%] if it is missing]. CASE STUDY: Universal Roofing Systems Introduction Universal Roofing Systems is a family owned and managed business specialising in the design, assembly and installation of low maintenance PVC roofing products for domestic housing. These products include PVC fascia boards and rainwater drainage systems.

Set up in 1995 by two brothers, Matthew and Simon Black, the firm has grown year on year, achieving almost ? 1 million sales by the year 2001. Universal’s products, or rather services, are primarily for private house owners, though a significant amount of sales are coming from commercial house owners, mainly local government authorities and housing associations, providing cheaper housing for rent. Universal have recently received central government recognition and an award for their contribution to providing employment in deprived inner city areas.

In 2002 and 2003, they were the fastest growing inner city firm in their region. Origins and competitive environment Matthew and Simon’s decision to go into business owed a considerable amount to the experience and skills they had gained working in their father’s local cabinet and carpentry business. At their father’s insistence, both were skilled cabinet-makers and shared his commitment to quality workmanship and installation. Their decision to start a business using PVC materials as opposed to wood came as an unwelcome shock to their father.

However, the opportunity to install PVC roofing boards on the house of a commercial contact provided the stimulus for them to go into business on their own account. In the UK there are some 25 million houses, of which 17 million are privately owned and 8 million rented. New housing is now usually built with PVC doors and windows installed, so it is the replacement market of rotten wooden doors and windows in existing houses that the manufacturers and installers of PVC windows and doors focus on.

PVC offers some significant advantages to the owner/occupier – it is virtually maintenance free and improves the appearance of the house. Consequently, there is a high demand for PVC replacement doors and windows, estimated at ? 1·5 billion in the year 2000. This has attracted some large-scale manufacturers and installers. They compete aggressively for market share and use equally aggressive direct sales and promotion techniques to attract house owners to their product.

Although the market for PVC windows and doors is reasonably mature, there has been no significant movement of large companies into the installation of roofing products. Their complex design and location at the top of a house mean that these products are much more complex and difficult to install. Economies of scale are harder to achieve and, as a consequence, the installation of PVC roofing systems is largely in the hands of small businesses able to charge high prices and frequently giving a poor quality service to the house owner. In a market with potential sales of ? 50 million a year, no firm accounts for more than 3%. It was against this fragmented, but significant market that Universal wanted to offer something distinctively different. Operational processes Matthew and Simon looked at the whole process of delivering a quality service in replacement PVC roofing systems. The experience of the PVC door and window installers showed the long-term rates of growth possible through actively promoting and selling the service. Supplies of PVC board and fittings were reasonably easy to obtain from the small number of large UK companies extruding PVC boards in large volumes.

However, the unequal bargaining power meant that these suppliers dominated and were difficult to involve in any product development. Sales were generated by door-to-door canvassing, followed by a visit from a company sales representative who tried to complete the sale. Advertising in the press, radio and TV now supported this sales activity. In the early days the opportunity was taken to sell the service at Saturday markets and, being so small, Universal could often pleasantly surprise the house owner by offering virtually immediate installation.

Matthew and Simon promoted, sold and installed the systems. One of their key early decisions was to use a new Mercedes van with Universal’s name and logo prominently displayed, to carry the bulky PVC materials to their customers’ houses. In one move they differentiated themselves from their low cost/low quality competitors and got the company’s name recognised. The skills and experience of the brothers meant that they were able to critically examine the installation process being used by their small competitors to deliver a poor standard of service.

Their eventual design incorporated innovative roofing design and parts from Europe and a unique installation stand or frame that provided the installer with quick, easy and safe access to the roofs of the houses being worked on. This greatly improved the productivity of Universal’s installation team over competitors using traditional methods. The brothers recognised that without the ability to offer a service that could be packaged, given standard prices and procedures and made as ‘installer friendly’ as possible they too would be limited to small scale operation and poor service.

Being able to replicate a process time after time was the key to delivering an improved service and preventing each job being seen as a ‘one-off’. In Matthew’s words, ‘Whenever the customer can have a predictable experience and you can say that this is what we are going to do, this is the way we are going to do it and this is how much it will cost, the product/service usually goes problem free’. Ultimately, the installers of the roofing systems determined quality. The brothers quickly built up a team of installers, all of whom worked as sub-contractors and were not directly employed by the company.

This gave the company the flexibility to vary the number of teams according to the level of customer demand. Installation took place throughout the year, though it could be affected by winter weather. The two man teams were given comprehensive training in installation and customer care. Payment was by results and responsibility for correcting any installation faults rested with the team doing the particular installation. Sales and marketing Marketing and promotion were recognised as key to getting the company’s name known and its reputation for a quality installation service established.

Comprehensive sales support materials were created for use by the canvassers and sales representatives. Sales representative were able to offer significant discounts to house owners willing to make an immediate decision to buy a Universal roofing system. In addition Universal received a significant income stream from a finance house for roofing systems, sold on extended payment terms. Universal offered a unique 10-year guarantee on its installations and proudly announced that over 30% of new customers were directly recommended from existing satisfied customers.

The growth of the company had led to showrooms being set up in six large towns in the region and the business plans for 2005 and 2006 will see a further nine showrooms opening in the region, each of which costs ? 30K. Brand awareness was reinforced by the continued use of up-to-date Mercedes vans with the company’s logo and contact details prominently shown. Company structure and performance By 2005, the organisational structure of the company was in place, based on functional responsibilities.

Matthew was now Managing Director, Simon was Operations Director with responsibility for the installation teams, and Matthew’s wife, Fiona, was Company Secretary and responsible for the administration and scheduling side of the business. Two key appointments had facilitated Universal’s rapid growth. In 2002, Mick Hendry was appointed as Sales and Marketing Director. Mick had 20 years of experience with direct sales in a large installer of PVC windows and doors. Through his efforts, Universal achieved a step change in sales growth, with sales increasing from ? 1 million in 2001 to ? 3·3 million in 2002.

However, the increased costs involved meant the company made a loss of some ? 250,000. 2003 saw sales increase to ? 5·4 million and a profit generated. 2004 saw further sales increase to ? 6·8 million and a net profit of about ? 400K. Matthew recognised the increasing pressure on his own time and an inability to control the financial side of the business. 2003 saw Harry Potts appointed as Finance Director and put in much needed financial and management information systems. Future growth and development By 2005 Universal had seen 10 years of significant growth and was facing some interesting decisions as to how that growth was to be sustained.

Firstly, there was the opportunity to move from a largely regional operation into being a national company. Indeed, the company’s vision statement expressed the desire to become ‘the most respected roofing company in Britain’, based on a ‘no surprises’ philosophy that house owners all around the country could trust. Economic factors encouraging growth looked fairly promising with a growing economy, stable interest rates and house owners finding it fairly easy to raise additional funding necessary to pay for home improvements.

Secondly, there was a real opportunity to develop their share of the commercial housing market. The government had committed itself to a significant improvement in the standard of housing provided to people renting from local authorities and housing associations. Despite the appointment of a Commercial Manager to concentrate on sales into this specialist market, Universal had real difficulty in committing sufficient resources into exploiting this opportunity. In 2002 commercial sales represented over 11% of total sales, but currently commercial sales were around 5% of the total sales.

Such were the overall growth predictions, however, that to maintain this share of sales would need commercial sales to more than double over the 2005–7 periods. Without the necessary commitment of resources, particularly people, this target was unlikely to be realised. Universal’s products also need to be improved and this largely depended on its ability to get into partnerships with its large PVC suppliers. There were some encouraging signs in this direction, but Universal’s reliance on PVC opened it to future challenges from installers using more environmentally friendly materials.

Above all, however, the rate of projected growth would place considerable pressures on the senior management team’s ability to manage the process. The move towards becoming a national installer was already prompting thoughts about creating a regional level of management. Finally, such had been the firm’s growth record that its inability to meet the budgeted sales targets in the first quarter of 2005 was causing real concern for Matthew and Simon. Table 1: Information on Universal’s current sales and financial performance (? ‘000) (where appropriate) [pic]

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