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CLC - Marketing Expenses, Perceptual Map, and Organizational Chart Analysis

Jose Alonso, Tamberlyn Crayton, Dinaja Dowdy, Pauline Morgan, and Brad Overson Comment by Daniel Smith: Team - quite well done. I hope that my comments are helpful for you. Dr. Smith

Colangelo College of Business, Grand Canyon University

MGT 660: Strategic Management

June 2, 2021

Marketing Expenses vs Rival Firms

              Comparison of Starbucks with Dunkin Donuts and McDonald's

Starbucks

Dunkin Donuts

McDonald's

# of Stores

32,660

11,300

39,198

# of Employees

349k

270k

200k

Advertising

$258.8B

$506,755

$654.7M

Gross Profit

$15,823M

$1.37B

$9,752M

Net Income

$0.92B

$242.02M

$4.73B

Looking into these companies Starbucks, Dunkin’ and McDonald’s there is a wide variance between these companies. All three have substantial amounts in advertising, however there are some large differences between McDonald’s and the two coffee providers. First, McDonald’s although they offer gourmet coffee, have a wider range of products in the fast-food market with a substantially larger number of locations. Between Dunkin’ and Starbucks, the amount of money spent on advertising does not seem to be in direct proportion to the number of locations. When reviewing the locations of Dunkin’ stores, they seem to be a lot more consolidated in heavily populated areas. Having the focus on certain areas would reduce the amount needed to spend on advertising to maintain or grow in those local markets. Starbucks has a much broader footprint that needs advertising in more areas. There could be several implications regarding how much is being spent such as other areas of the business could be neglected trying to maintain the revenue stream from advertising. Another area that could see issues on the horizon is growth, when spending massive amounts can the company serve the demand created? If unable, they could damage the brand and potentially turn all the progression around and head south. It would be advantageous to plan on repercussions that could be generated from all the advertising done. Both optimistic and pessimistic potentials need to be considered in the strategic planning process. Comment by Daniel Smith: What does this mean and use more formal academic writing.

Perceptual Map

Comment by Daniel Smith: Excellent perceptual map

Perceptual mapping is a graphic illustration of the market position a company occupies. It is the simplest way to view an illustration that compares and pinpoints where different companies are rated as (Perceptual Mapping, 2020). Perceptual mapping also utilizes the customer’s input to understand product, brand, and service (Perceptual Mapping, 2020). As shown in the graph, Starbucks is considered a high luxury and high-priced company since it is positioned in the first quadrant. Alongside Starbucks is a coffee company called Caribou Coffee. They are considered high luxury and high priced. Quadrant three includes Dunkin’ Donuts and quadrant four holds McDonald’s. They are at the bottom of the graph which shows that they are both low priced. Although low priced, Dunkin’ Donuts is low in luxury— lower than McDonald’s. Therefore, it is placed on the left rather than on the right. Overall, out of all its competitors, Starbucks is at the Highest Luxury at the highest price. For Starbucks to expand and capture a bigger audience, they should work on moving towards quadrant four, high luxury at a lower price. This would create greater customer loyalty and generate higher revenues for the company.

Diagramming Existing and Proposed Organizational Chart Comment by Daniel Smith: Excellent org chart - detailed and effective visualization

1. President/CEO - Kevin Johnson

2. EVP/CFO - Rachel Ruggeri 

3. Sr VP/ Chief Ethics and Compliance Officer - Tyson Avery5.yndra Russell Senior Vice eting 

4. Senior Vice President/Store Development - Andy Adams

5. Senior Vice President/Marketing - Kyndra Russell 

6. Senior Vice President/Products - Sandra Stark 

7. Executive Vice President/Global Channel Development - Hans Melotte 

8. Executive VP/President of North America - Rossann Williams

9. COO/Starbucks China - Leo Tsoi

10. President of EMEA - Duncan Moir

11. Senior Vice President /Global Coffee & Tea - Michelle Burns 

12. Senior Vice President Operations - Jen Frisch

13. Executive Vice President/Global Supply Chain - George Dowdie

The only positions the team could really remove were the lower tier positions. Each position plays a key role within the organization and fits their goal of expansion. At the top we have CEO Kevin James, Executive VP Rachel Ruggeri, Store Development VP Andy Adams, and HR Senior Vice President Tyson Avery. Roles that were also kept were the heads of development in each geographical location of North America, China, Asia-Pacific, and the Middle East. Roles in the Marketing and store development teams were also kept in their respective geographical locations. (Organizational Structure is difficult to see so I wrote what I put in those positions above in this text). 

Reasonings for change 

After some research, the team decided that the matrix organizational chart worked the best for the Starbucks corporation. One of the main reasons being the store had three different geographical locations in which they operate from. There were some key positions within the current organizational chart that could not be replaced such as the CEO, Chief Finance Officer, Chief marketing Officer and HR (Human Resources) Vice president. In fact, it was very difficult to even make the attempt to take away certain positions because they all seemed so beneficial to the company. Because Starbucks operated in three different locations, each person in these high positions were necessary to perform the tasks required. 

The only other organizational structure that may work for Starbucks is a simple hierarchical structure because they generate most of their income in the United States (Farley, 2021).  Starbucks can focus their leadership on the United States and develop those stores' future to make them better. But because the company is focusing on expanding their stores in various locations, the company needs to hire different positions to serve those needs. Each position plays a vital role in their goal of expanding their services. The only positions that the group decided to remove were the lower tier positions who work with certain products. The Product Vice president’s position was kept because we still need a leader in that department. The roles that go below can be interchangeable with no position to be filled. 

References

Dunkin Donuts. (2020). Dunkin Donuts. https://sec.report/Document/0001357204-20-000015/#sFDEA02C784945C8E86F8C02CBC4163BF

Farley, Alan. (2021). How Starbucks Makes Money: Most Revenue Comes From America's Beverages. Investopedia. www.investopedia.com/articles/markets/021316/how-starbucks-makes-money-sbux.asp. 

McDonald’s. (2021). McDonald’s. https://corporate.mcdonalds.com/content/dam/gwscorp/assets/investors/financial-information/annual-reports/2020%20Annual%20Report.pdf

Perceptual Mapping: The Benefit of Visualizing Your Competitive Landscape. Alexa Blog. (2020). https://blog.alexa.com/perceptual-mapping/.

Revenue of Dunkin’ Brands Worldwide from 2007 to 2019. (2019). Statista. https://www.statista.com/statistics/291392/annual-revenue-dunkin-brands/

Starbucks. (2021). Starbucks. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000829224/3f9654c9-56fa-4653-8966-000c483fbd7a.pdf