Course Project Benefit Plan Analysis Term Paper

Course Project Benefit Plan Analysis - Term Paper Example Association profile This report surveys and investigates the advantage plan and structure. It spins around the profile of an association called the Metropolitan Chicago Health Council (MCHC). This association is occupied with the arrangement of esteemed included social insurance administrations, legislative support and instructive administrations. It has a wide scope of medical clinic HR area prerequisites which handles the advantage plan for the benefit of the workers. The advantages that the representatives collect include a circuitous pay intended to improve the nature of work together the individual existences all things considered. The advantages for the representatives are roughly 43% of their complete gross compensation. Since these advantage programs are exorbitant in nature, this report investigates their expensive nature. It further recognizes the requirement for a correction of these advantages programs so as to meet the current administrative prerequisites and changing bu siness sector needs. Advantages program The advantage program likewise requires advancement of basic decisions at all levels. As per Bohlander (2009), the incorporation of characterized or non-characterized retirement plans in the advantage plan prompts dangers and more outstanding task at hand as far as asset the executives. The undertaking will believe the need of believing components to be contemplated while executing the advantage plan and the explanation behind partner contribution. Primary center is focused towards the part of cost of the advantage program. Arrangements identifying with the cost issue are cost investigation, cost depiction and cost minimization. Cost minimization will be the favored arrangement out of the three. Cost examination and portrayal are similarly acceptable however cost minimization guarantees greatest and ideal advantages to both the business and worker in the short and since quite a while ago run. Attributes of a sound advantage plan A sound advant age plan ought to be the one that qualities all the requirements of both the workers and the business. It ought to likewise contemplate the consistently changing business sector desires both in the short and long haul and should likewise meet all the administrative prerequisites (Rosen, 2005). At last, it should be practical implying that cost are handily overseen and kept at least. Section 2: Statement of the issue The issue in Metropolitan Chicago Health Council is the requirement for an update of its advantages programs so as to meet the current administrative prerequisites and changing business sector needs. Medical advantages for representatives are given by insurance agencies. The model utilized in choosing the sort good for be given to every worker is that of mastery and expertise. The greater part of the advantage bundles are specially crafted by worksite arrangements. Each staff part is given a custom advantage proclamation that incorporated the pay. With the expanded inter est in social insurance advantage plots, the expense of executing and continuing the advantage plans has expanded. Hence, cost minimization is an objective in most association. An online framework is an invaluable method of limiting expenses. This is on the grounds that it

How to Write a Paper in Chinese

How to Write a Paper in ChineseThe average person might not realize that they can write a paper in Chinese. They assume that they will have to study the language to be able to do this. This is a shame because there are many professionals who are native speakers of this language that can write a paper. Some of them are having no trouble doing this but for others it takes time and practice to learn how to write a paper in Chinese.The most important thing a writer should keep in mind is to write for yourself. While you want your writing to convey information to others, you want it to also be reflective of you as a writer. Take some time to sit down and think about what you enjoy writing about. Find out what your strengths are and find ways to exploit them when writing. Doing this will make it easier for you to write in Chinese.It will also be helpful if you know how to research a topic. Researching makes it easier for you to write. You should find resources on a topic that you are inter ested in. Make sure you study the topic so that you can write with knowledge on the subject.This personal characteristic of yours will show up in your writing. It will also show up in your pronunciation. You should use your native tone and intonation when writing a paper in Chinese. If your tone sounds foreign, it will sound unfamiliar to people who are not used to hearing this style of speech.In order to be able to write a paper in Chinese, you need to learn some vocabulary. Practice is the key to learning. You may have to look online for practice exercises that use Chinese. Look for workbooks or even note cards that allow you to write using Chinese and some examples to help you when you are practicing.Remember that the Chinese have very formal rules and it is important to follow these rules. Punctuation is another language that is different from English. You will need to learn how to write Chinese by heart. You can practice writing in Chinese every day and it will become second na ture to you.A person who has been studying how to write paper in Chinese for quite some time can do this. Keep practicing your writing every day. You will be surprised at how quickly your skills will improve. It will not take you long to be able to write a paper using Chinese in English.The point is that how to write paper in Chinese is simple and should not be a mystery. There are many resources available that can help you learn the language in an effective manner. Using these resources will help you to avoid frustration when writing a paper in Chinese.

PIPE Essay Example | Topics and Well Written Essays - 250 words - 3

Funnel - Essay Example Truly, I do. Indeed, they are troublesome to me as well as my family. This is on the grounds that I have not paid for them and they are gathering. The obligation is gigantic subsequently I consider them to be a weight to me and additionally my family. I might not have enough cash to pay and in this manner should go to my family for help. This is stressing them monetarily. They incorporate, leasing a condo, my vehicle is paid off, my protection is high, and my family has house advance in addition to three vehicles. Since my cards are not paid I need to manage obligation authorities once in a while. These budgetary connections describe my life. My money related life rotates around a few components. The variables are adapting to charge cards, paying rent for my loft, contributing and others. I need to endeavor so as to meet these. Also, my family has obligations they are paying for henceforth difficult for them to loan any sort of help towards me. Additionally, I am anticipating how I will make my ventures. I was considering moving toward one of my brokers to make courses of action with them on this. Because of certain dangers that may happen, I have made courses of action with my insurance agency on a portion of my

Analysis Of Private Equity Funds Essay Example Pdf - Free Essay Example

A Private Equity (PE) fund is a fund which invests its money in private equity, usually to gain control over companies in order to re-structure the company. When the fund takes control of a company, it normally takes the company off the market (that is if the company is not private already), restructures the company, and then relists it on the stock market.  [1] A PE fund is raised and managed by investment professionals of a specific PE firm. Typically, a single PE firm will manage a series of distinct PE funds and will attempt to raise a new fund every 3 to 5 years as the previous fund is fully invested.  [2] PE is an asset class of equity shares that are not publicly traded on a stock exchange. It is medium to long-term finance provided in return for an equity stake in potentially high growth unquoted companies. Some commentators use the term PE to refer only to the buy-out and buy-in investment sector.  [3]  Others, in Europe, but not the USA, use the term Venture Capital (VC) to cover all stages of PE. In the USA, VC refers only to investments in early stage and expanding companies.  [4]  To avoid confusion, the researcher has used the term PE throughout this project to describe the industry as a whole, encompassing both VC and management buy-outs and buy-ins. Foreign VC funds have been permitted to operate in India since 1995. Indias PE sector has shown tremendous growth rates. To look at figures, there had been a dramatic increase in fund sizes from US $10 to US $25 million just a few years ago, to between US $400 million and US $ 1 billion in 2007 (before the global economic crisis). The average deal size was around US $25 million, as opposed to US $8 millio n in 2002. These figures clearly indicate the tremendous global interest in the Indian market  [5]  . In the course of the project, the researcher would first try to analyze the sufficiency/insufficiency of the law relating to the PE investment in India. Thereafter, the managerial structural set up of a PE fund shall be discussed. The researcher will then look into the advantages and disadvantages of PE investment, especially in regard to the Indian investment scenario. Regulation of the PE Industry in India Venture Capital Regulation Until 2000, SEBI only regulated the domestic funds vide the SEBI Venture Capital Fund Regulations, 1996 and there was no mechanism to regulate the foreign investors. This put the domestic investors at a disadvantage, especially since foreign investment in most sectors was through the automatic route (i.e. direct exposure by offshore PE funds in shares of unlisted companies was treated as a foreign direct investment and had to be approved in line with the Governments general policy on foreign investments). The Government realized the need to regulate the same. In September 2000, SEBI issued a new set of regulations applicable to offshore funds, called SEBI (Foreign Venture Capital Investors) Regulations, 2000 (the 2000 Regulations). The 2000 Regulations are based on the recommendations of the Chandrashekhar Committee on Venture Capital (January 2000). These regulations were subsequently amended a number of times. As of now, with respect to investment by a foreign VC investor, it is mandatory for the investor to disclose its investment strategy. Prior to the 2004 amendment, the investor was not allowed to invest more than 25 percent of the funds committed for investments to India in one VC undertaking. However, after the amendment, an investor can now invest its total funds committed in one venture capital fund. Another significant amendment was made to sub-clause c of clause 11. Before 2004, an investor had to inv est atleast 75 percent of the investible funds in unlisted equity shares of VC undertaking and not more than 25 percent while subscribing to an initial public offering (IPO) of a VC undertaking. The investments were also subject to a lock-in period of one year. However, subsequent to the 2004 amendment, the percentages have been changed to 66.67% in the first case and 33.33% in the latter. The amendment has done away with the lock-in period requirement and has also introduced a provision for preferential allotment of equity shares of a listed company.  [6]  However, currently there are no legal or regulatory differences between venture capital and PE firms. SEBI is considering the idea of regulating PE funds. Organizational Stipulations in a PE Fund  [7] PE funds have a general partner which raises capital from institutional investors, such as high net worth individuals, pension plans, insurance companies, endowments etc. These economically sound institutional investors invest as limited partners in the fund. This partnership is normally a fixed investment vehicle that is usually ten years in addition to some extensions. Also, a yearly payment has to be made by the investors in the PE fund to the funds manager to pay for the firms investment operations. Moreover, a relatively smaller share of the profits of the investments made by the fund has to be paid (as performance incentive) to the PE funds management company. The remaining profits are paid to the funds investors. However, this payment to the fund manager is subject to the crossing of the hurdle rate (which is the minimum rate of return which must be achieved before the fund manager can receive any carried interest payments). Advantages of PE funds Low Level of Regulati on As there is no public trading involved the regulation levels are low.  [8]  For example if one were to raise funding through a public offering one would have to satisfy several requirements under the SEBI. In addition to management benefits the current regulatory requirements have increased the desirability for many companies to either go private or postpone going public.  [9]  For example, especially in the USA, many business owners cite the costly, inflexible, and invasive disclosure requirements introduced by the Sarbanes Oxley legislation as reasons for forsaking publicly traded status.  [10] Attractive valuation PE transactions are an excellent way for owners wanting to remain private and obtain significant liquidity at an attractive valuation without having to transact an outright sale. In reality, not all PE investments are structured as complete buy-outs or even majority share purchases. Some investments are simply a capital infusion in exchange for a minor ity stake.  [11]  This is often referred to as growth capital as these investments help provide the necessary capital to get companies to the next level without having to turn to the public markets. All of these investments generally result in the PE firm obtaining a seat on the board of directors of the company. Functionally, this not only serves an important monitoring role but also provides added expertise to the board. PE firms either place their own primaries on the board or assign highly qualified business colleagues who provide valuable advice and perspectives. Additionally, since many of these appointees sit or have sat on multiple boards, they can provide the traditional advantages of inter mixing of ideas between companies to bring out better results.  [12]  In a typical PE transaction, the management team will still own a large percentage of the business through a combination of retained ownership and new stock options granted by the investor. Therefore, in three to seven years when the outside investor is ready to exit their investment, the management team will receive substantial additional value for the business.  [13] Low level of interference- In a typical PE transaction, all shareholder guarantees are eliminated and day to day control remains with the management team. While most investors prefer to purchase over 50% of the equity, they have no interest in running the business on a daily basis. In addition to providing liquidity for the selling shareholders, PE firms will provide additional debt and equity capital for internal and external growth opportunities  [14]  . In most PE dealings, the management team has tremendous expansion plans but does not have the resources. These expansion plans could include opening new branch offices, entering a new line of products or services etc. PE investors are more than willing to provide the resources necessary to execute such expansion plans that are strategically sensible. Disadvant ages of PE funds Lack of Liquidity- It is very hard to reconvert shares and this usually ends up as a disadvantage to share holders who invest in PE. It cannot be bought and sold at any time. Since PE funds are not open to investment on the stock market, anybody who wants to sell stocks of a PE fund finds it difficult to locate a buyer. Since PE returns derive from an appreciation in the value of the acquired asset or company, PE investments are often followed by efforts at restructuring to revive loss-making companies or substantially improving the performance of profit-making ones. These efforts are aimed at adding worth to the investment before PE investors exit with a profit. Less appreciated forms of intervention by PE firms are those in which bought out firms are stripped of assets or are broken up so that their parts can be sold to the highest bidder for an aggregate sale price that exceeds the purchase price. PE investments are relatively illiquid, especially in the ea rly years. The usual life of a standard PE fund investment averages three to seven years. Investors in private securities by and large exit their investment and get returns through an initial public offering, a merger, or a recapitalisation. Since the companies are unlisted, investors wishing to exit their PE holding do so by selling the holding to someone else through the secondary market.  [15] Control- One of the major disadvantages of financing through private equity is that the creators must give up some control of their business, which essentially means that in situations where investors have dissimilar ideas about the companys strategy, or routine operations, they can be problematic for the business man. Furthermore, some sales of equity can be very intricate and expensive to manage and may need complicated legal work and a great deal of paperwork to ensure compliance with various regulations, which may necessitate procuring the services of attorneys and accountants.   [16] Conclusion Private equity investment in India fell by almost sixty percent in 2009 as a consequence of the global financial crisis. However, looking at the state of investment prior to the crisis, and the kind of investment that has been flowing in after the markets have revived, the same is a clear indicator of the rapid expansion of private equity in emerging markets like India which have huge growth potential. However, the question that needs to be answered at this juncture is whether India is ready to handle such investments. The researcher suggests the affirmative in this regard, as there is sufficient evidence to see that the size of such investments has grown steadily, not only from domestic but also from foreign investors, over the last decade. The most recent examples of such investments involving massive infusion of capital would be Singapore-based Temasek Holdings investment worth Rs. 880 crore in GMR. Another example would be that of Summit Partners, a 25-y ear-old US based private equity fund (that has $11 billion under management), which made its first investment in India with an infusion of $30 million in agricultural biotech firm Krishidhan Seeds Ltd. In conclusion, the researcher would like to submit that the need of the hour is to ensure a smooth and transparent functioning of such private equity investments to facilitate their robust growth in India. With such rapid expansion in private equity there is a necessity for the regulation of the same. While venture capital is regulated by the SEBI there is a need to regulate all other forms of private equity by framing laws and regulations for the same.

Population Growth in Perspective Essays - 3294 Words

Population Growth in Perspective Introduction To anyone even remotely acquainted with the situation, the ever-expanding world population can easily be a cause of grave concern. Indeed, the simple realization that the total world population will most likely be doubling within the next century may seem to imply catastrophe. Considering the strain our current huge population puts on the world, is it not natural to presume that two times our number will spell disaster? While this is the view held by many prominent voices, there also is a less-noticed group of people who contend that the resiliency of the earth and the ingenuity of its people will keep the planet a decent place to live. In this paper, I attempt to critically examine†¦show more content†¦Generally, people have operated under the assumption that the world was (or was on its way to being) overpopulated. I began my research in this topic with the same outlook. I initially wanted to research overpopulation because I was deeply concerned with its implications. I wanted to understand the causes of population growth and to learn what might be done to ameliorate the problem. Soon into the research, however, I happened upon pieces of literature opposing the idea of an overpopulation crisis and immediately respected certain aspects of their arguments. Quickly, I was forced to change the scope of my question from what will be the consequences of overpopulation? to what exactly does overpopulation mean? and does an overpopulation problem even exist?. History of Population Crises The seed of my doubt that an overpopulation crisis was imminent was planted when I began to examine the historical record of population concerns. As a history major, I have at least some respect for patterns in history. While I recognize that new things can emerge, often a current event is a variant on an earlier expressed theme. Regarding population, the first documented concerns over population size date from a Babylonian epic from 1600 BC (Cohen, 1995). More writings on the topic across the globe have continued since then, themselves probably increasing at a rate faster than theShow MoreRelatedEssay on The Growing Population1374 Words   |  6 PagesA Growing Population: Problem or Excuse? The current worldwide population is around 6.9 billion and is expected to reach 9 billion by 2050 (Baird). This projected population number is down from the once predicted 16 billion (Baird) and while some are not concerned others are worried by any increase in population. Population growth is discussed in the articles â€Å"Too Many People?† by Vanessa Baird; â€Å"Population Control: How Can There Possibly Be Too Many of Us?† by Frank Furedi; and â€Å"The PopulationRead MorePopulation Growth Is A Crisis Or Not?1273 Words   |  6 PagesPopulation growth is a great concern of some scientists and this topic has been debating for decades. Increasing of population has been put pressuring on natural resources because of demands of production and consumption are high. According to the BBC horizon documentary (2009), number of current population is about seven billion, seven times more than the last 10,000 years. One main factor of rapid population growth is el iminating from infected diseases. In the last 10,000 years people had a hugeRead MorePopulation Dynamics and Its Effects on Climate Change Policy1306 Words   |  5 PagesPopulation dynamics and its effects of climate change policy Population growth and its effects on climate change have been hotly debated in recent years by scientists and politicians alike. The Fourth Assessment Report of the IPCC has sparked great interest and concern over climate change and how it affects countries differently. The concept of environmental justice has focused on climate change’s unbalanced effects on developing countries, whose populations are more vulnerable to climate changeRead More Overpopulation of the Earth Essay1698 Words   |  7 Pagesnearly 6 billion people in the world. The world’s population has more than tripled in the span of a hundred years. Given that the earth’s population is constantly on the rise and seeing as how our natural resources are gradually being depleted, we must ask ourselves: what is to become of us and what is to become of our environment? In order to understand this question we must first have a thorough understanding of whether or not there is a population crisis. Havi ng understood this, we must then lookRead MoreThe Problem Of Expanding Population Essay1363 Words   |  6 Pagesexpanding population is one both of wonder and catastrophe, as civilizations have risen and fallen throughout time. Collapse (Diamond) touches on this concept of population growth (or change) often, especially because a civilization is, after all, nothing without its population. Using Collapse, we can quickly start to analyze what a growing population entails. Early on, Diamond touches upon the implications of an expanding population. 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India is in a growing state right now and this will continue until it stabilizes itself. One might look at the povern state India is in right now and see that it is the cause if its population problem but othersRead MoreThe Climate Disaster Is Inevitable Or Not?896 Words   |  4 PagesThe climate disaster is the social construction that world population have been embedded this idea through one generation to another generation in society. Actually, it seems like the long-lasting issue for not only regional level but also global level. Several studies might have demonstrated the causes and significant impacts of climate crisis. It is still popular argument in society, whether the climate disaster is currently inevitable or not. If it already occurred, what are the main factors?Read MoreEssay on Population Growth and Standard of Living945 Words   |  4 PagesPopulation Growth and Standard of Living Recently, the human population on this planet surpassed an amazing milestone. In the year 2000 it hit 6 billion, and without a sign of slowing down, continue to increase at an unprecedented pace. After taking nearly 3 million years to reach our first 1 billion, it has taken us only 11 years to raise our population the most recent billion (from 5 to 6). This rate of growth can be graphically interpreted as a J-shape pattern. If the past is any indicationRead MoreThe Limits Of Growth ( Tltg )1558 Words   |  7 PagesIntroduction At the time it was written, The Limits to Growth (TLTG) was groundbreaking in its modeling, analysis and subsequent predictions of future trends. It is a policy paper pushing for sustainable development, coupled with technological modernisation. This essay will examine TLTG through an ecocentric lens. First, this paper will briefly summarise ecocentrism. Second, it will discuss TLTG and its findings in a contemporary context. It will be argued that TLTG ultimately failed in its ambition

Dna Coding For Ampicillin Resistance And Green Fluorescent...

Abstract This experiment was performed to assess the efficacy of genetic transformations on bacteria via plasmid DNA coding for ampicillin resistance and green fluorescent protein. Genetic transformation was studied by taking transformed and untransformed Escherichia Coli (E. coli) and placing them on various media to observe gene expression via growth and color under UV light. The transformed E. coli were able to grow on ampicillin while the untransformed E. coli, which lacked the plasmid genes for ampicillin resistance, only grew on nutrient broth. In the presence of arabinose, the transformed E. coli glowed green. These results support the previous scientific understanding of bacterial competency, vectors, and gene expression and support gene transformations as an effective method to transfer the desirable DNA of one organism into another organism’s DNA. These results can be applied to real world issues such as medical treatments, food production, and environmental conserva tion. Introduction Genetic engineering is used in health treatments, agricultural applications, and environmental solutions. Genetic transformations incorporate foreign genetic material into the DNA of a different organism via a vector, which carries the genetic material. Plasmid DNA is small, round, and autonomous, due to its origin of replication. In biotechnology, plasmids carry beneficial genes, such as antibiotic resistance, and also a reporter protein, in this case, Green Fluorescent ProteinShow MoreRelatedUse Of Antibiotic Resistance For A Large Number Of Infections1624 Words   |  7 PagesTransformation Lab Abstract: Ampicillin is a beta-lactam antibiotic which can be used to treat a large number of infections. For example, Escherichia coli (E. coli) bacteria is terminated by this specific antibiotic. Ampicillin interferes with the formation of bacterial cell walls and thus kills newly dividing cells that must form new cell walls. Plasmids contain genes that create antibiotic resistance to their host cell. The pGlo plasmid contains an Ampicillin resistance gene. Therefore, bacteria thatRead MoreLara Guvelioglu. Bi 108 E2. Nahomie Rodriguez-Sastre. 04/13/17.1632 Words   |  7 PagesVector Plasmid DNA pGLO Abstract The field of biotechnology involves the concept of genetic engineering, altering the DNA/genetic material of an organism using information from a different one. The process in which bacteria can obtain this manipulated genetic information from another source is called genetic transformation. The goal of this experiment was to genetically transform Escherichia coli bacteria’s DNA by inserting the vector pGLO plasmid which codes for ampicillin resistance as well as theRead MoreA Report On Bacterial Transformation2203 Words   |  9 Pagesexpected there to be a lawn growth on this plate and it will not fluorescent under UV light (1). b. –pGLO LB/amp plate It is expected there to be no growth on this plate and it will not fluorescent under UV light (1). c. +pGLO LB/amp plate It is expected there to be colonies growth and it will not fluorescent under UV light (1). d. +pGLO LB/amp/ara plate It is expected there to be colonies growth and it will fluorescent under UV light on this plate (1). e. +pGLO LB/amp liquid cultureRead MoreGreen Fluorescent Protein Lab Essay1704 Words   |  7 PagesTitle: Purification of Green Fluorescent Protein Introduction: Transformation is used to introduce a gene coding for a foreign protein into bacteria. Hydrophobic Interaction Chromatography (HIC) is used to purify the foreign protein. Protein gel electrophoresis is used to check and analyze the pure protein. Research scientists use Green Fluorescent Protein (GFP) as a master or tag to learn about the biology of individual cells and multicultural organisms. This lab introduces a rapid methodRead MoreEssay on Pglo Transformation Lab Report1486 Words   |  6 Pagesobvious that DNA is the transforming property and the substance transferred during transformation, between cells. Furthermore, Hershey and Chase, in 1952, hypothesize that DNA and not protein is the genetic material in bacteriophages and after experimenting, concluded this theory and found that DNA must be the molecule used to reprogram cells. DNA, shorthanded for Deoxyribonucleic acid is a nucleic acid contains instructions for the development, functionality, and maintenance of new cells. DNA consistsRead MoreEscherichia Coli Transformation For Ampicillin Resistance And Gfp Expression Using Pglo Plasmid And Calcium Chloride Transformation Solution1768 Words   |  8 PagesFedorovsky 4/6/16 BI108 Lab D8 Escherichia coli transformation for ampicillin resistance and GFP expression using pGLO plasmid and calcium chloride transformation solution Abstract Within the growing field of biotechnology, genetic engineering is becoming more important than ever. To illustrate an application of genetic transformation, pGLO plasmid containing the reporter gene GFP, an arabinose operon, and a gene coding for ampicillin resistance was used to genetically transform Escherichia coli. PlatesRead MoreAnalysis : A Glowing, Gone ! : Bacteria Transformation And Who Dunnit?1890 Words   |  8 PagesAnalysis with DNA Purposes:  · Describe the process of transformation in bacteria  · Understand how to prepare viable E. coli cells  · Describe the components of gene transfer using plasmid vectors  · Be able to describe how antibiotic resistant genes are able to transfer, and identify the transformed cells that are antibiotic resistant  · Describe how restriction endonucleases work  · Describe how a piece of foreign DNA can become a partRead MoreThe purpose of this lab is to use genetic engineering to transform E. coli bacteria by inserting1300 Words   |  6 PagespGLO, and to then see if the bacteria was transformed by using the antibiotic, ampicillin. Background Information: Genetic transformation is the change caused by genes. This transformation includes the insertion of a gene into an organism, changing one of the organism’s traits. There are many other uses for genetic transformation including the altering of plant genes coding for frostbite, pests and spoilage resistance. It can also be used to digest oil spills and even alter in gene therapy to transformRead MoreGenetic Engineering And The Human Genome Project2436 Words   |  10 Pagesvigorous new exploration of human DNA- the Human Genome Project. The goal of this project was to map out all the human genes (An Overview of, 2015), which ultimately led to a deeper understanding of all genes, not just a human’s. This deeper understanding also helped scientists to progress further in the technology of recombinant DNA. Recombinant DNA is when DNA from different cells is spliced together, creating a new strand (Kuure-Kinsey, 2000). Recombinant DNA is often used to genetically changeRead MoreCell Biology Final Essay30093 Words   |  121 Pages_______ in eukaryotic cells. A) ribosomes B) oxidative phosphorylation C) DNA molecules -D) a nucleus 2. Cytoplasmic organelles are - A) absent in prokaryotic cells; present in eukaryotic cells. B) present in both prokaryotic and eukaryotic cells. C) present in prokaryotic cells; absent in eukaryotic cells. D) absent in both prokaryotic and eukaryotic cells. 3. Eukaryotic chromosomes contain _______ DNA molecules. A) single linear B) single circular -C) multiple linear

Business Information Systems Improving Marketing and Sales

Question: Discuss about theBusiness Information Systems for Improving Marketing and Sales. Answer: Improving Marketing and Sales Suppose that August Online Technology wanted to increase the annual sales of the product analyzed, the Internet can be used to improve the marketing and sales in the following ways: by enhancing the awareness of goods. Customers always purchase products they know well. Through the utilization of the social media, the business can boost product awareness. At the same time, marketing the public can be introduced hence, alerting a larger group of people about the product provided by the company (Arndt and Ze, 2014). This access to broader market can be realized through print ads and television. Therefore, the Internet enables the business to access and sell goods to more people, both internationally and locally. The internet can also be used to increase sales by increasing the traffic. Traffic increment only requires the company to exert more effort on the web marketing. Having a bigger website audience, the August Online Technology can disseminate information regarding the organization, improve the businesss product image and foster good customer relationships. When the image of products and services is developed, most online users can get attracted easily resulting in more sales (Peeters and Gilmore, 2013). With all the mentioned means, the realization of higher returns of investments by August Online Technology is evident. Marketing through the internet is useful enough to make the company put forward an active compound effect on its website. This indication implies that the effort placed by the corporation during the previous month can still have an impact for the next one or two years. Through the Internet, the company can also use the social media and blogs to attain learning curve, allowing the company to interact freely with customers through chats (Tse, 2013). This good communication plan boosts the relationship between the enterprise and online customers hence, improving marketing and sales. Network Security Risks and Protection Suppose I had product plans and details on the August Online Technology computer network, there are many possible security risks and Internet and Network attacks that might impact the safety and privacy of my product. Some of them are viruses, SPAMs, spoofing, spyware, blended threats and denial of access attack (More hospitals assess computer security risks, 2011). Computer virus represents a program written with the intention of spreading stealthily and faster to other computer systems. Whether more or less, a virus attack causes functioning disruptions to the attacked computer. This type of internet threat is capable of spreading through any mode for digital data exchange, and the danger is always very high. SAMs is an enormous and automatic delivery risk that sometimes occurs repeatedly of unsolicited emails to people with whom the mail sender has possessed no contact. However, this attack is weak. Spoofing is a threat that entails stealing of ones identity, and use them for advantage gain. In this issue, individual rights are obtained and used to claim of having acquired specified qualifications at ones expense (Moon et al., 2016). Spoofing is one of the internet threat whose dangers are very high. Also of significant threat, spyware is a software that collects peoples information without their knowledge of retransmitting the data through the internet. This threat is installed when a user browses the internet, to make an additional download from untrusted sites. On the other hand, the blended threat is an attack to both the consequences and the levels of means of propagation. Blended is a very dangerous threat because it combines many risks together. Lastly, in denial of service attack, attackers sends connections in large number to a target, aiming at making the user unable to meet the requests applied by his computer. Some of the security tools that can be used to protect th e product and the product information are quality antiviruses and real-time anti-spyware protection (Khattak et al., 2014). References Arndt, A. and Ze, W. 2014. How Instructor Enthusiasm influences the Effectiveness of Asynchronous Internet-Based Sales Training. Journal for Advancement of Marketing Education, 22, 2, pp. 26-36. Khattak, N, Chadwick, D, Ahmed Bhatti, R, Shad, S, Shafique Butt, F. and Ullah Munir, E. 2014. Assessment of anti-spyware tools for signature and behavior base techniques. Science International, 26, 5, pp. 2071-2076. Moon, D, Lee, J, Jeong, Y, and Park, J. 2016. RTNSS: a routing trace-based network security system for preventing ARP spoofing attacks. Journal of Supercomputing, 72, 5, pp. 1740-1756. More hospitals assess computer security risks. 2011. Health Facilities Management, 24, 6, p. 6. Peeters, S. and Gilmore, A. 2013. How online sales and promotion of snus contravenes current European Union legislation. Tobacco Control, 22, 4, pp. 266-273. Tse T. M. 2013. The Marketing Role of the Internet in Launching a Hotel: The Case of Hotel ICON', Journal Of Hospitality Marketing Management, 22, 8, pp. 895-908.

Starbucks Risk Assesment free essay sample

Contents 1. Launch of a new product/service2 1. 1 Flowchart for launch of a new product/service2 2. Reasons for a Failed Product Line2 2. 1 Adverse Environment Conditions2 2. 1. 1 Industry Competition2 2. 1. 2 Political Implications2 2. 1. 3 Economic Events2 2. 1. 4 Evolving Social Factors2 2. 2 Error in forecast of consumers’ response2 2. 2. 1 Incomprehensive Market Analysis2 2. 3 Ineffective Product Launch2 2. 3. 1 Wrong Timing2 2. 3. 2 Unprofitable Product2 2. 3. 3 Inadequate Support2 3. SWOT Analysis2 3. 1 Strengths2 3. 1. 1 Wide range of products sold through numerous locations2 3. 1. Strong Brand Equity2 3. 1. 3 Excellent Research and Development capabilities2 3. 1. 4 Relationships with established players2 3. 1. 5 The Starbucks Experience2 3. 2 Weaknesses2 3. 2. 1 Criticism and controversies dilute brand value2 3. 2. 2 Lack of Diversification2 3. 2. 3 Product recalls affect margins and brand image2 3. 3 Opportunities2 3. 3. 1 Growth through acquisitions and partnerships 2 3. 3. 2 Introduction of Starbucks VIA coffee essence in Japan and China2 3. 3. 3 Rapid expansion in China and entrance into a new market – India2 3. 4 Threats2 3. 4. 1 Rising prices of raw ingredients2 3. 4. Increasing health consciousness among Americans could affect demand2 3. 4. 3 Increasingly stiff competition from other giants like McDonalds and Dunkin Donuts2 4. Emerging/Current Trends2 4. 1 Health-conscious customers2 4. We will write a custom essay sample on Starbucks Risk Assesment or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page 2 Brand erosion due to changes in pricing and new product offerings2 4. 3 Strategic alliance with Green Mountain Coffee Roasters2 4. 4 Implication for strategic objectives and strategy formulation:2 5. Risk prioritization for Starbucks2 5. 1 Risk of losing market share due to stiff competition2 5. 2 Commodity price risk2 5. 3 Currency risk2 5. 4 Supply chain disruption risk2 5. Risk of changing consumer preference2 5. 6 Risk of failure and breach of security of IT systems2 5. 7 Product liability2 5. 8 Risk of Non-Compliance with Laws and Regulations2 5. 9 Risk of loss of key personnel2 5. 10 natural hazard risk2 5. 11 Risk Map2 6. Risk Responses and control devices/activities2 1. Launch of a new product/service Being in a heavily competitive market, the need for lean, rapid and profitable new product development has never been more pressing. This is especially so as product life cycles are getting shorter and customers are more demanding as they are now spoilt for choice. Starbucks introduces on average, one new product each day. It is important for Starbucks to keep this trend going and constantly innovate to keep a step ahead of its competitors. Starbucks believe that it is not just about getting new customers; it is also about keeping the old ones interested. Hence they constantly engage in efforts to develop new ideas, products, and experiences for its customers. CEO Howard Schultz and other senior executives honed in the importance of always being open to re-inventing the Starbucks experience. In fact, at Starbucks, consumer input is an important part of their development process. A website was set up to encourage contribution of ideas, facilitate discussions and even allows consumers to see the development of their ideas. Starbucks has a dedicated Research Development team whose job is to constantly design and develop their food and beverages. Expenditures allocated are high each year (2010: $9million, 2009: $7million and 2008: $7million) as Starbucks continues to invest in technical research and development activities, in addition to customary product testing and product and process improvements in all areas of its business. The first step to launching a new product is idea generation. At Starbucks, brainstorming sessions are conducted and consumers’ suggestions on the company’s website are taken into account. Next, these ideas are screened and those which are perceived to be the least likely to succeed will be eliminated. The filtering is first done through discussions between both the staffs and the consumers on their website before being reviewed by Starbucks’ Idea Partners. These partners include not only food scientists from the RD team but also the environmental impact manager. This ensures that ideas which seems feasible to the RD team will also incorporate sustainability into all aspects of its operations. By doing so, Starbucks would ensure that new products will sell well and at the same time fit in with the company’s image, vision and strategic objectives. The third step would be concept development and testing which will require formal evaluations of the product concept by consumers, usually through some form of marketing research. At Starbucks, in testing new products, extensive in-house taste-testing and research done via focus groups are carried out. At each focus group, participants â€Å"taste it, grade it and then tasted it again† to ensure effective and accurate results. From here, ideas which are selected will then be analyzed for its marketability and costs. This is referred to as the business analysis stage whereby both market and product analyses would be carried out. The market demand would be determined and the feasibility of production would be assessed. However, should sales price set be unable to cover the production cost, the idea would be discarded as it would not be economically viable. For ideas approved thus far, Starbucks will first gradually launch these new products to a selected market. This test in an actual market is a step further from the stimulated market assessed during the focus groups. However, as opposed to jumping into the water with both feet, Starbucks tends to take a more cautious approach and engage in a state by state product launch (in the US) to affirm the market analysis previously performed and then reassess the feasibility of introduction of the product in its cafes around the world. As for products which are poorly received by the market, they will be pulled back for reconceptualisation or even be discarded altogether. Lastly, commercialisation takes place. This is the point where the product will be introduced to all markets. Starbucks generally relies on their interactive website to introduce and promote the new products to their customers since new products are consistently introduced and it may be too costly to advertise each time. Taking a step further, Starbucks will continue to improve on new products through the feedbacks it gathers from its customers in an effort to keep customers happy and satisfied. Due to the nature of the products sold by Starbucks, relatively small investments are required throughout the development of new products. However, it was noted that some products took up to a year before being introduced to the market. In this aspect, the development process should be sped up in order for Starbucks to ensure competitiveness and have an edge over its competitors. The flowchart below (Figure 1) depicts the process for the launch of a new product/service from its initial conception to its retail sales to customers. 1. 1 Flowchart for launch of a new product/service Figure 1 2. Reasons for a Failed Product Line Starbucks has a ubiquitous presence in the international cafe scene and recent years have witnessed it introducing new concepts and products. However, while some were embraced by its consumers, others suffered the fate of being withdrawn from the stores. Examples of failed products include: the Blackberry Green Tea Frappuccino, Organic Milk and Orange Mocha Frappuccino. A product is a failure when its introduction into the market is subsequently followed by its withdrawal; with reasons attributed to its unprofitability, the inability of it to go through its anticipated product life cycle or realise a sufficient share of the market to ensure sustainability in the market. There are various factors which can culminate in its failure and the product is not necessarily an inferior good. Figure 2 below, presented in the form of a fault tree diagram, illustrates the circumstances in which a product may fail in the context for Starbucks. The three direct reasons identified for product failures at Starbucks are the adverse environment, error in the forecasting of consumers’ response and an ineffective product launch. These causes are further examined with respect to their causal constituents and discussed extensively. Suggestions would also be proposed to management to ensure that future product development, design, strategy and implementation will be more successful. . 1 Adverse Environment Conditions To investigate the influence the environment may have on the success of a product in the market, we take into consideration the relevant macro-environmental factors, a component of strategic management. Due consideration should also be given to the micro-environment, which is the industry analysis with reference to Porter’s five forces. 2. 1. 1 Industry Comp etition Industry competition has always been very real in all businesses. Starbucks as an international coffeehouse chain faces both global and domestic rivals. In a competitive industry, a company not only has to monitor its competitors’ moves, but it also has to preempt them; failure of which would diminish its competitive advantage over its rivals, and hence dampen the success of a new product. Thus, Starbucks has to be constantly updated of its competitors’ products and their upcoming launches so as to prevent introducing a product that has a relatively lower perceived utility to the consumer. In view of globalization, the company can easily get information on its rivals, albeit more time has to be spent on such industry analysis since the rivalry scene spans globally. Moreover, it needs to continuously innovate and maintain a sustainable competitive advantage lest its products become obsolete over time. Effort should also be spent on building the brand image and establishing customer loyalty through the use of membership cards to encourage consumers to return back to Starbucks and support the current and new range of products offered. This differentiation would also address the threat of substitute products. Starbucks prides itself on premium pricing, hence its products have to be differentiated otherwise consumers would easily choose the low priced ones over the newly introduced products. The constant innovation, building of brand loyalty and offering of differentiated products also serve as a barrier to entry for new entrants as they cannot easily replicate the Starbucks formula and make profits from them which may dilute the potential profits Starbucks can gain. 2. 1. 2 Political Implications Political implications may culminate in the failure of a product when the government intervenes in the form of new policies passed. Events such as minimum wage laws, tax policies, trade embargoes and tariffs may affect the profitability of the product offered and hence diminish its success. Moreover, trade restrictions may effectively impair the import or export of products such as bottled coffee to another market while regulations with respect to food can directly affect its feasibility to be offered to consumers. Losses may be sustained in terms of the sunk costs and effort put into it before the launch of the product itself. Time would be needed for accommodation to the changes and this delay could prove detrimental if competitors have a first mover advantage. Thus, Starbucks has to assess the political climate and stay updated with regard to the policies in place. This is especially so when deciding to venture into new countries as part of its international strategy because certain countries have erratic governmental policies. 2. 1. 3 Economic Events Economic events, particularly black swan events like the recent financial crisis in 2008 may also lead to a failed product line. An unexpected economic downturn would deem the previously forecasted figures overly optimistic when demand plummets due to the fall in disposable income of consumers. The lack of demand for the product would not justify the costs of rolling out or continuation of its production. This premature withdrawal of the product from the market in the face of an economic crisis will thus be labeled a failed product. Thus to accommodate for such events, Starbucks should mete out plans incorporating sensitivity analysis for the worst case scenarios. It should not just benchmark the scale of its launch to that of its competitors, but only to the scale which corresponds to its loss appetite. Its primary mission is to sell its products to the consumers. Hence, even if the economy is burgeoning, it should not speculate and invest heavily on the wave. The risks should still be assessed and hedged. As discussed previously, other economic events with similar results would be the revision of economic policies. 2. 1. 4 Evolving Social Factors Evolving social factors also play a pivotal role in affecting the environment, and the forecast of consumers’ response which will be discussed later. More often than not, the cradle to the launch process of a product takes a significant time period, after factoring in the development process and time needed for research and marketing efforts. Hence, when the product is ready for launch, the demographics might have already changed. The impetus of developing a product is to cater to the consumers; thus when demographics have evolved, the target group might have changed in composition or size. Demand for the products may not be as effective as planned and there is a necessity to divert the marketing efforts to focus on the more relevant targets. Thus, Starbucks should strive to be more efficient in its development process to keep up with the social environment. It also has to monitor its target group closely so that if there is a need to, it would be cheaper to pull out before the whole product development process is complete. This issue is homogenous to a change in customer preferences. Market analysis is usually done before the development of the product, hence Starbucks may be subject to the whims and fancies of the fads in the society which may alter consumer preferences. A new concept or product such as a yoghurt cafe introduced by other competitors may change the trend and induce consumers to stray away from the products Starbucks is planning to offer; the promotion of a theme based lifestyle such as a focus on organic products would also increase the probability of a product failure should it not fit in line with the trend. Thus it can be proposed to the management for them to conduct market surveys throughout, till and after the launch of the product to constantly monitor the market situation. 2. 2 Error in forecast of consumers’ response The success of a product is also contingent on the response from the target customers. The demand is usually forecasted through market analysis based on the characteristics of the consumers and trends in the market. Ineluctably, the evolving social factors may skew the market analysis conducted if there is a significant time lag between the study done and the introduction of the product into the market. The anticipated demand failing to live up to expectations creates an oversupply that would bog down profits should they have low turnover or have to be sold at a loss. Undeniably, the forecast can also be erroneous due to great reliance on a market analysis where not all factors are fully taken into consideration in deliberation of the decision to launch a product. 2. 2. 1 Incomprehensive Market Analysis A forecast error can be attributed to an incomprehensive market analysis conducted and not merely due to the changing environment or the subjects in the analysis. Currently, Starbucks is present in more than fifty five countries and though aligned with their international strategy, it may be tedious on Starbucks’ part to have an in depth analysis of each market. A product or even a whole concept may fail if the organization neglects â€Å"glocalization†. Glocalization is a term coined to illustrate the imperative to cater the product for each individual local market for globalized companies; seldom will there be a one-size-fits-all product that will be embraced by all global consumers. Therefore, if a company fails to identify the distinctiveness in the local scene and capitalizes on the wrong trend and behaviors of the consumers, its product may fail to generate the expected demand and miss the target for sustainable market share. A case in point is the closure of 61 out of 84 stores in Australia because it failed to understand the Australian cafe culture and resulting in it products failing to cater to majority of the locals. Starbucks can consider venturing into countries through joint ventures as the locals would definitely be better versed in the local markets and be able to identify the inherent culture more effectively and efficiently. Management may also be overly optimistic with the market analysis results investing too heavily into the introduction of the product into the market, resulting in greater repercussions when sales are barely able to cover the investment made. The product would then be a failure; which could otherwise turn out to be a small success if the management had not been too ambitious over the launch. An inadequate market analysis could also be due to an overestimated market size and this manifests itself two fold when fueled by optimism. A supposedly smaller than estimated market share may not justify the efforts to launch the product in the first place. Hence management should consider the former solution of a venture partnership to tap on local expertise. If it prefers to have full control, it should engage marketing experts in the local scene who are more experienced and more likely to generate trustworthy estimates. That being said, Starbucks, while relying on the market analysis performed, should also consider working along together with their finance department more closely in examining the financial feasibility of the launch of a product into the market too. The finance department would also have their own set of estimates for the market share and thus provide for sensitivity analysis to measure the threshold, optimal amount and feasibility of the product launch. There is also a possibility of targeting the wrong group of consumers. This can occur when results are misinterpreted and certain assumptions made are erroneous, resulting in an inaccurate stand on the suitable target group for the products. Consequently, advertising and marketing efforts would be directed towards the wrong consumers, and these may prove futile. The product fails to reach out to its intended customers and may fail consequently. In another scenario, the product is developed and catered erroneously to a specified group of consumers who are not suited to it. Although these possibilities are remote, we should not preclude them. This can easily be remedied by concerted efforts to direct the marketing and advertising to the intended consumers provided there is no significant time lag, lest the consumers view the product as obsolete and a failed product to others that is now targeted at them. An incomprehensive market analysis can also occur when the price strategy set is inappropriate for the market. Starbucks prides itself on the high quality coffee beans which it uses for its coffee and this differentiating factor permits them to pursue a premium price strategy. However, individual markets have differing standards for coffee quality and thus what Starbucks proclaims as high quality may be viewed as a normal good in some economies. In such cases, premium pricing is not suited in these environments because there is a weak price-quality relationship. Marketing surveys have also shown that many consumers found that the premium roast coffee offered at McDonald’s (which is relatively cheaper) is even better in quality as compared to Starbucks’. Thus Starbucks should continually strive to yield higher quality brews that customers would perceive to be better relative to its competitors; otherwise, its main business – coffee, would fail. This could be implemented by selecting more premium grade suppliers to justify the price at which it is sold and also to ensure quality control in the grinding and brewing process which could be made transparent to the customers so that they would know what they are paying for. 2. 3 Ineffective Product Launch Ultimately, the inherent nature of the product and factors surrounding its launch would have an impact on whether they would be embraced by the consumers. These factors would include the timing of the launch, the profitability of the product and also the support rendered in the launch of the product in the market. 2. 3. 1 Wrong Timing More often than not, managers would push for constant introduction of new products into the market so as to boost sales as this would reflect well on their performance should they be appraised based on this indicator. Hence, high level executive push of products can be viewed as the main impetus for the launch of products. However, the timing of the launch of products is crucial in determining whether it can capture a sustainable market share at that point in time. If managers are driven more by profit, they may neglect the marketing aspects of the launch of the product and fail to anticipate the moves of its competitors and also neglect the market environment. Introducing a product at a bad time would jeopardise the success of the product as it may coincide with the launch of a popular product by another competitor or an adverse environment. A slate of new products introduced may also undermine their effectiveness as a whole to capture market share. These new products may undercut the integrity of the Starbucks brand for coffee purists. There is also a challenge for the baristas who have to wrestle with an increasingly complex myriad of products offered on the menu. The baristas would also not have time to interact with the customers when they spend time customizing the drinks for the customers; this would conflict with their brand experience since the baristas are hired for their social skills. Besides, waiting time would have increased, further diminishing the effectiveness of the new products introduced. Therefore, the launch of the new products should be timed with more consideration given to the suggestions provided by the marketing department rather than management who may be more concerned about the financial figures. The launch of products should also be paced alongside an implementation timeline so that there would be a greater overall impact brought about by each individual product and their success can be singled out and evaluated more effectively. . 3. 2 Unprofitable Product Another due concern for a product failing can be the profitability of the product itself. The development of un-complementary products that do not fit into the current basket of offerings may fail to bring about the desired sales as the customers may not be accustomed to buying an unrelated product. Using simple economics, complementary products have a higher cross elasticity of demand and th us sales of one related product will bring about the sales of another more effectively. On the other hand, an un-complementary product would be much harder to appeal to the customer to buy as it is viewed as an isolated and new product on its own. It is unable to capitalise and ride on the sales of current products; hence the likelihood of its failure would be higher. Starbucks should avoid venturing into unrelated products under an umbrella branding strategy as consumers may not be able to relate the brand name to the product. Instead, it can practise multiple branding to launch a new un-complementary product. A product can also be unprofitable due to self-cannibalisation, which is defined as the reduction in sales volume, sales revenue or market share of one product as a result of the introduction of a new product by the same producer. The new product may seem successful since it may generate its projected demand but effectively, from the stand of the whole organization, it could be a failed product as it merely captures the market share of another product. For the company, there is no increase in aggregate market share for all of its products. However, Starbucks can turn the situation into its own advantage by selling similar products with different branding. In this manner, customers would be induced to look at the same product twice in different guises. This would serve as a reinforcing advertising strategy and may increase market share since consumers have an alternative to choose from (other than the current product offering) due to their perceived differences in the products. Another reason which can give rise to an unprofitable product would be an error in estimates of the costs needed to produce it. The cost model adopted in deliberating the price setting may not have comprehensively incorporated the factors and risks that the organization may face. Such risks include commodity price risks and operational risks. Though Starbucks hedges against commodity prices, the hedge might not be effective. The risk responses to operations outage may also be unresponsive or ineffective too. Thus when such risks materialise as events, higher costs relating to the product may be incurred by the corporation which would decrease margins and result in losses incurred. Henceforth, Starbucks can consider the proposal for a formal risk management team or committee which would implement the enterprise risk management system to manage its risks more comprehensively. 2. 3. 3 Inadequate Support Advertising and marketing are crucial avenues to launch a product and bring it to the masses. However, when there is insufficient publicity due to a small budget allocated by management, the product may not be able to reach out to all its intended targets and thus demand may not be as optimistic as projected. In such a scenario, the management should always decide on the best method of advertising to the consumers and then subsequently allocate a reasonable sum of money for that purpose. The allocation can be based upon launches of previous comparable products for a better estimate. However, with the proliferation of the mass media and the burgeoning use of the Internet and social media platforms, viral marketing can easily achieve the objective of increasing awareness at a lower cost without jeopardizing the success of the product due to insufficient advertising and marketing support. This will however depend on whether the target groups are technology-savvy users of social media. Starbucks should also consider the need for a communications officer to handle this aspect of the organization as the media is a double edged sword any product disgruntles can permeate through the online community virally too. The officer would need to be trained as a spokesperson for the company to monitor and respond to feedback provided from the online social community. The channel of distribution should also be aptly chosen so that it would facilitate the launch of the products. Starbucks previously had Kraft as a distributor and advertiser for its products. This was a strategic alliance in which Starbucks could also leverage on Kraft’s name to sell its products on the market. However, if the channel of distribution was improper, it would tarnish Starbucks’ products and also its reputation. To add on, the choice of distribution also plays a pivotal role in determining the effectiveness of the product launch. Though retailing products through supermarkets and grocery stores may reach out to more consumers, it may also portray the image of a normal commodity good. Conversely, distributing through exclusive boutiques may render the product of higher standing but may not create much awareness in the market. Therefore, there is an imperative to strike a balance and make an optimum choice in the selection of channel of distribution. More importantly, the positioning strategy is one of the most crucial factors in ensuring a smooth product launch. Positioning is the process whereby marketers try to create an image or identity in the minds of their target market. There can be positioning by product attributes and benefits, price or quality, use or application, product class, product user, competitor or cultural symbols. Without a strong positioning strategy, customers would not be able to distinguish the product from the myriad of other products out there; the required strong product impression needed for repeated sales would be absent and an unsustained market share may justify the failure of the product. Hence, the marketing department should delineate a clear and strong positioning strategy so that the product can be more easily identified with and be well received by consumers. Figure 2 3. SWOT Analysis Strengths * Wide range of products sold through numerous locations * Strong Brand Equity * Excellent RD Capabilities * Relationships with established players * The Starbucks Experience| Weaknesses * Criticisms and controversies dilute the brand * Lack of iversification * Product recalls affect margins and brand image| Opportunities * Growth through acquisitions and partnerships * Introduction of ‘VIA Coffee Essence’ in Japan and China * Expansion in China and entrance into India| Threats * Rising prices of rawIngredients * Increasing health consciousness of consumers * Increasingly stiff competition| 3. 1 Strengths 3. 1. Wide range of products sold through numerous locations Starbucks offers a wide variety of coffee and non-coffee flavoured drinks, a broad selection of ice-shaken beverages and premium teas, and distinctively packaged roasted whole coffee beans in both US and international markets. It also sells a selection of fresh food items such as cakes, scones and muffins; with such selections focusing on the use of high quality ingredients with high nutritional value and great taste. Starbucks currently operates more than 17,000 stores in over 50 countries worldwide. Such an extensive product offering allows it to cater to the different tastes and preferences of consumers worldwide. 3. 1. 2 Strong Brand Equity Since the opening of its first store in Seattle in 1971, Starbucks has built up for itself a strong brand name with people associating the brand ‘Starbucks’ as a premium seller of speciality coffee. Moreover, Starbucks has had partnerships and licensing agreements with other big brand names like Kraft, and this helped strengthen its brand further. The company came in 85th amongst the 100 Top Brands in 2008 by Business Week. Due to its premium brand, Starbucks enjoys a high degree of customer loyalty and thus has a significant competitive advantage over lesser known coffee brands. 3. 1. 3 Excellent Research and Development capabilities Starbucks is known for its premium quality of brewed coffee. The secret behind this excellent tasting coffee lies in its Research and Development (RD) department. The company invests a lot of money in developing new tastes and flavours to ensure it stays relevant and keeps up with its competitors. For instance, in 2009, the company launched Starbucks VIA ready brew coffee to tap into the US$21 billion global instant coffee category market. Starbucks VIA is made using a patented micro grind technology to preserve the coffee’s taste, quality and freshness. Starbucks’ investment in RD is evident in the amounts they spent US$9 million, US$9 million and US$7 million during FY 2010, 2009 and 2008 respectively. 3. 1. 4 Relationships with established players Starbucks had a partnership with Kraft Foods, the biggest confectionery, food and beverage corporation in the US from 1998 to early 2011. Through licensing agreements with Kraft, it sold its ready to drink packaged coffee and beverages in supermarkets throughout the US. Kraft managed all distribution, advertising, marketing and promotion of Starbucks’ products. Though the partnership fell through, there is an inherent strength in such alliances and Starbucks employs this strategy not just in the US, but internationally too. For example, it has entered into an agreement with Arla Foods for the manufacture, distribution and marketing of Starbucks-branded premium ready-to-drink coffee beverages in Europe. Through these licensing arrangements, Starbucks reaches out to a wider customer base as its products are prominently featured in supermarkets, a place with high daily customer volume. 3. 1. 5 The Starbucks Experience What makes Starbucks stand out from its other competitors like McDonald’s and Dunkin Donuts is its in-store ambience. The layout and atmosphere of Starbucks stores is specifically designed to be cosy and intimate, while at the same time providing people with their own personal space to use as they wish. Plush sofas, coffee tables and chairs, and additional perks such as free Wi-Fi in its cafes lure a steady stream of customers to its cafes where they enjoy the famous ‘Starbucks Experience’. 3. 2 Weaknesses 3. 2. 1 Criticism and controversies dilute brand value Starbucks has been involved in several lawsuits. One was filed by a former employee in 2004, alleging that the company violated the California Labour Code by allowing shift supervisors to receive tips. In March 2008, Starbucks was ordered to repay California baristas more than US$100 million. Starbucks was forced to repay tips, with interest, that the company had handed over to shift supervisors. Similar suits have been filed in Minnesota and Massachusetts. Also in 2008, Starbucks was lambasted by environmentalists who accused them of wasting more than 23 million litres of water a day for leaving taps running to ‘prevent germs from breeding in taps’. In February 2009, another lawsuit was filed against the company by an employee for laptop data breach. In connection with this lawsuit, Starbucks offered its employees one year of free credit monitoring and protection for its lapse in security. Incidents like these dampen consumer trust and can significantly erode Starbuckss brand value. 3. 2. 2 Lack of Diversification With just 12% of its operating income for 2010 derived from the International segment (as opposed to 73% for its US Segment), Starbucks could be too heavily reliant on the US market for its profitability. Its current 6,000 stores outside the US are almost half that of the total stores it operates in the US. It should seek to expand internationally in order to diversify and not be overly dependent on one segment alone. 3. 2. Product recalls affect margins and brand image In recent years, the company has recalled several of its products. Thousands of its coffee blade grinders were recalled in 2009 as they could fail to turn off or could turn on unexpectedly, thus posing a laceration hazard to customers. In addition, the company also announced a voluntary recall of 12,000 glass bottles due to the risk of lacerations that consumers were subjected to. Furthermore, a few of its products containing peanut butter were recalled from its stores after an outbreak of Salmonella in the US. Products recalls such as these will hurt its brand and could possibly lead to lower consumer trust in them and hence a decline in the demand for its products. 3. 3 Opportunities 3. 3. 1 Growth through acquisitions and partnerships Starbucks has recently been in talks to acquire ‘Peet’s Coffee and Tea’ in an attempt to expand its business further. The potential benefits of such an acquisition are numerous – from increased market share to strengthened brand equity. If the acquisition is successful this year, it will enable Starbucks to capture an even larger share of the coffee market in the US. Also, the company has been wanting to partner ‘Green Mountain Coffee Roasters’ in an attempt to break into the single-cup coffee sector in the United States, which is currently 80 percent dominated by Green Mountain. A successful partnership will lead to added opportunities for Starbucks to develop its brand further. 3. 3. 2 Introduction of Starbucks VIA coffee essence in Japan and China Following the company’s successful launch of VIA ready brew in the US, UK and Canadian markets in 2009, Starbucks launched VIA coffee essence in Japan in 2010, its first premium coffee stick product in Japan, where 63% of total coffee sold is instant. Starbucks will sell its VIA coffee packets through their 870 retail stores in the country, and eventually expand its reach through grocery stores and other distribution channels. More importantly, Japan possesses huge potential to be a large market, as the at-home market coffee in Japan is worth $5 billion, almost a fifth of the global instant and single coffee market that is worth some US$23 billion. On April 6th 2011, the VIA Ready brew arrived in China and the company hopes to replicate the similar success it enjoyed in several other countries where it had already launched the product. Starbucks VIA Ready Brew has already scooped several accolades for being the ‘most innovative’ and best ‘new product’ of the year and these awards further cement Starbucks VIA Ready Brew as a leader in the instant coffee market. 3. 3. 3 Rapid expansion in China and entrance into a new market – India Starbucks is recognised as one of the top 20 brands in China and its stores have outperformed its US stores in terms of average store profitability. The company has announced plans to expand rapidly in China – it aims to triple the number of stores it has in China to 1,500 by 2015. In fact, Starbucks has discovered an area within the Yunnan province which they believe can produce excellent coffee. They believe that growing coffee in a country that is strongly nationalistic will create a significant differentiating factor in the land of China. The massive potential of China has even led CEO Howard Schultz to proclaim that â€Å"China will be the second largest market in the world for Starbucks after North America†. In 2011, Starbucks announced plans to enter India through a strategic alliance with ‘Tata Coffee’, India’s largest coffee producer and exporter. It has been reported that Tata Coffee and Starbucks would soon convert their alliance for sourcing and roasting premium coffee beans in India into a joint venture, in which Starbucks would hold a 26% stake. Subsequently, Starbucks hopes to open outlets in all major Indian cities, and would aim to increase its stake in the new company to 51% within a year. CEO Howard Schultz acknowledges that â€Å"India is one of the most dynamic markets in the world with a diverse culture and tremendous potential†¦Ã¢â‚¬  and is thus exploring the idea of setting up shop in India. Given that China and India are the world’s most populous nations, the potential market for coffee in these two markets is immense. Starbucks will certainly be able to reap the benefits of its expansion in these two nations should their business model work out well. 3. 4 Threats 3. 4. 1 Rising prices of raw ingredients The rising prices of Starbucks’ main raw ingredients – coffee and sugar will continue to hurt its margins. According to data compiled by the International Coffee Organization, average coffee prices have risen by 54% since the beginning of 2010. Sugar prices also continue to rise steadily and this will have a negative impact on the company’s margins. However, Starbucks tries to mitigate rising costs of ingredients by hedging coffee, dairy and sugar prices to mitigate spot price volatility during the year. 3. 4. 2 Increasing health consciousness among Americans could affect demand The bulk of Starbucks’ products contain caffeine, dairy products and sugar, the health effects of which are the subject of increasing public scrutiny. It is a known fact that excessive consumption of caffeine and sugar can translate into a variety of adverse health related problems. Over recent years, health organisations in the US have been stepping up in their efforts in curbing obesity by promoting a healthier lifestyle in terms of healthier choices of food and drink and the encouragement of more exercise. Increasing health consciousness of American consumers will inevitably reduce the demand for Starbucks’ heavy-laden caffeine and sugar products. This has the greatest impact on their revenue as the US accounts for the largest portion of its market. Globally, consumers are becoming more health conscious too, with Singapore offering popular drinks like bubble tea in different sugar evels. Starbucks might have to resort to adapting to the needs of locals and provide varying sugar levels for their drinks in order to cater to the increasing group of health-conscious Singaporeans. 3. 4. 3 Increasingly stiff competition from other giants like McDonalds and Dunkin Donuts Starbucks has numerous competitors, and major rivals include McDonalds who has, in recent years come up with the McCafe coffee-house-style food and beverage chain, offering similar coffee and food products as Starbucks. Dunkin Donuts is another major competitor that offer similar food and beverage choices at lower prices than Starbucks and stiff competition between these few big-name brands in the US could lead to reduced demand for Starbucks’ products and hence lower profits. 4. Emerging/Current Trends Despite its reputation, Starbucks constantly faces new challenges on the way to meeting its strategic objective: â€Å"to maintain Starbucks standing as one of the most recognized and respected brands in the world†. There are three current issues that may have large impacts on the future growth of Starbucks, namely (1) health-conscious customers, (2) brand inconsistency and (3) strategic alliance with Green Mountain Coffee Roasters. 4. 1 Health-conscious customers Affordable, delicious and healthy food is increasingly demanded around the world. Starbucks’ customers are not an exception to that trend. The Company reported that its customers expect â€Å"better tasting and healthier food options† on the Starbucks’ coffee and non-coffee menus. Starbucks quickly responded to the customers’ needs by introducing a variety of healthy foods in its new menu. Apart from its well-known healthy Skinny Lattes, Starbucks revolutionized the concept of healthy snacking by integrating nutritious and natural ingredients like whole grains and fruits into its bakery products such as the Blueberry Oat Bar and Banana Walnut Bread. The Company also took initiative to reduce preservatives, artificial dyes and flavours and high-fructose corn syrup which link to 90% of its baked products. Moreover, it also currently offers new healthy food options such as Farmer’s Market Salad with almonds, cranberries and sweet apples and Strawberry Banana Vivannoâ„ ¢ Smoothie with pure strawberries. The business strategy of leveraging on complementary products is not new in the industry. It seems that Starbucks has so far tapped well into its complementary food market segment through innovations in its product offerings. 4. 2 Brand erosion due to changes in pricing and new product offerings Starbucks is famous for its authentic brewed coffee and excellent services which allow the Company to charge a premium over its customers. As its business expands, new items such as food and other non-coffee beverages have been added into the Starbucks menu. This deviates from what a traditional coffee house would offer. Recently, Starbucks introduced â€Å"Pike Place Brew†- a US$1. 50 cup of regular coffee which is a contrast to a standard $4 cup of premium coffee. Moreover, to boost the stores’ traffic, the Company also offers USA Today and free pastries to customers who purchase brewed beverages at selected stores. These offerings may be justifiable as the Company has recorded a continuous fall in customers’ visits over the past years. However, using low-pricing as a marketing strategy is dangerous for Starbucks’ image as a premium coffee house. A significant drop in pricing is the fastest way to commoditise a product and Starbucks would face an extremely tough time in increasing the price or removing the low-price products from its menu in future. As the company lives on its innovation and high quality products, offering low-price products would hamper its differentiation strategies and destroy the unique customer experience that it promises to deliver. In 2009, Starbucks launched Starbucks VIA ® Ready Brew which is an instant coffee product with a variety of flavours. While this new line of products may contribute to Starbucks’ growing Consumer Product Group segment (CPG), it could also potentially make authentic coffee lovers desert Starbucks’ stores as sugary and milky flavours like Vanilla and Caramel are inconsistent with espresso Italian-style coffee. 4. 3 Strategic alliance with Green Mountain Coffee Roasters Starbucks Corporation and Kraft Foods Inc. Kraft Foods) had been in a strategic partnership since 1998 which allowed Starbucks’ consumer products to be distributed through Kraft Foods’ channels. Nonetheless, the alliance turned bad over time and led to a litigation war in 2011 where Kraft Foods lost its distribution right of Starbucks coffee to grocery stores. In March 2011, the Company established a new partnership with Green Mountain Coffee Roasters (Green Mountain) in which the new partne r would increase sales of its Keurig machines used to brew Starbucks coffee packaged in its K-Cups coffee packets. While Green Mountain’s competency in packaged food distribution can be comparable with Kraft Foods’ as they are direct competitors, it may take Starbucks a certain amount of time to devise appropriate deal terms and to develop a strong business relationship with Green Mountain. More importantly, since the deal was not an acquisition, there are concerns over Starbucks’ financial benefits from the deal and the commitment of Green Mountain. First, it is unclear if the cost of the coffee cups made from Starbucks’ coffee packs with Keurig machines would be less than the cost of the cups at the walk-in stores. Furthermore, the consumption of complementary products like bakery products would decrease as customers no longer need to go to Starbucks’ stores to get a Starbucks cup of coffee along with other foods. Second, since Green Mountain can leverage on Starbucks’ reputation, its sales of the brewing machines would increase. As these machines are not exclusively designed for Starbucks coffee, Green Mountain may receive attractive deals from other coffee retailers. This would reduce Starbucks’ bargaining power in future deals with Green Mountain and thus would lower the company’s profit margins. 4. Implication for strategic objectives and strategy formulation: To maintain Starbucks as â€Å"one of the most recognized and respected brands†, the Company definitely has to take the described trends and events into consideration in formulating its strategies. The followings are some implications: Providing â€Å"a healthier Starbucks Experience† has been Starbucks’ signature for more than twenty years. As non-beverage sales become a significant component of revenue, Starbucks may have to rethink about the significance of this segment as beyond merely complementary products to its coffee and beverage lines. Natural and nutrition-rich ingredient supplies have to be guaranteed to avoid disruption in its food business and mitigate risk of rising commodity prices. To further enhance the quality and healthiness of its food menu, the Company should source for reliable ingredient suppliers at the lowest cost and have in place rigorous quality control practices to monitor the nutritional value of the food. As the food market becomes more significant, the Company should invest more in positioning its healthy food as a strong connection to the Starbucks Experience motto through marketing and R;D in food processing. Although the Starbucks wants to refresh its customer experience through â€Å"transformations†, a low-price strategy should not be a regular practice to preserve the Company’s premium brand. Starbucks may also explore a multi-branding strategy for sweet and milky coffee drinks by creating a new brand for this beverage line to mitigate confusion with the espresso style of its coffee. Furthermore, the Starbucks may consider developing a new concept for these drinks as opposed to the traditional one in order to emphasise on its diversity in product offerings. Starbucks’ brand equity should be fiercely protected by ensuring the consistency of its strategies with its brand image. Finally, Starbucks should prudently structure the deal terms with Green Mountain to maintain a reasonable level of profit margin based on its financial benefits from the deal. To keep Green Mountain committed to the deal, Starbucks may want to include a non competitive agreement which prevents Green Mountain from packing and distributing its own coffee and a restrictive clause which limits the number of deals from other coffee retailers Green Mountain can have. Apart from balancing the costs between packed coffee and in-store brewed coffee, the Company should create marketing campaigns where it reminds customers of its complementary products. 5. Risk prioritization for Starbucks Risks| Category| Likelihood*| Severity*| Score| Rank| Risk of losing market share due to stiff competition| Strategic| 5| 5| 25| 1| Commodity price risk| Financial| 5| 4| 20| 2| Currency risk| Financial| 5| 3| 15| 3| Supply chain disruption risk| Operational| 3| 5| 15| 4| Risk of changes in consumer preference | Strategic| 3| 4| 12| 5| Risk of failure and breach of security of IT systems | Operational| 2| 5| 10| 6| Product liability risk| Operational| 4| 2| 8| 7| Risk of Non-Compliance with Laws and Regulations| Operational| 2| 3| 6| 8| Risk of loss of key personnel| Operational| 1| 6| 6| 9| Natural hazard risk| Hazard| 1| 3| 3| 10| * Scores range from 1 to 6, with 1 as least likely/severe and 6 as most likely/severe. 5. 1 Risk of LOSING MARKET share due to stiff competition Starbucks experiences direct competition from large multi-national competitors in the quick-service restaurant sector and specialty coffee shops. Other than that, the company’s coffee beans, beverages and Starbucks VIA Ready Brew also face competition from well-established companies in the US ready-to-drink coffee beverage market. For instance, McDonald’s was voted to have the best coffee by Consumer Reports. The finding might come across as surprising since coffee is Starbucks’s main specialty. This would thus threaten the company’s market position since fast food restaurants are now capable of producing better coffees. All these fierce competition would easily erode the competitiveness of Starbucks. However, consumers’ choice of specialty coffee retailers depend on many factors such as quality, service, convenience, price and brand loyalty. With strong marketing and word-of-mouth, Starbucks would most likely retain its foothold in the specialty market in the near future. In addition, the company consistently conducts reviews to ensure positive consumer experience and have strong corporate social responsibility programs. The Starbucks brand has been highly rated in several global brand value studies. Diversification to capture related markets such as venturing into the instant coffee market was one approach the company has adopted in recent years. Hence a rating of likelihood 5 and severity 5 was assigned. 5. 2 Commodity price risk Starbucks purchases commodities such as coffee beans, dairy products and diesel for the company’s operations. Such commodities are highly subjected to price fluctuations due to predominantly supply forces. These price risks would substantially increase the expenses of the company and might in turn negatively impact Starbucks’s financial results. However, Starbucks engages in hedging using financial derivatives such as coffee futures to reduce the impact of such risks. Hence, likelihood of commodity price risk was assessed to be 5 and its severity as 4. 5. 3 Currency risk Although the majority of Starbucks’ revenue, expense and purchases are transacted in US dollars, a significant portion of Starbucks’s operations are also outside the US. As a result, the company faces currency risk from mainly the Canadian dollar, British pound, Euro, and Japanese yen. To reduce the company’s exposure on foreign exchange risk, Starbucks hedged its revenues, inventory purchases, assets, and liabilities denominated in foreign currencies. Thus likelihood of the currency risk bears a rating of 5. Severity was assessed at 3 since a weakening dollar would greatly impact earnings; there have been a few monetary policies put in place by the US Central bank in recent years which are causing the weakening dollar. However, due to Starbucks’ presence in many countries worldwide, any fluctuations in one currency will naturally be offset by the strengthening of another. Thus its impact would not be too severe. 5. 4 Supply chain disruption risk Starbucks faces high likelihood of supply chain risk which is beyond the company’s control. For instance, there could be unexpected disruptions with regards to the company’s roasting plants or interruptions in service by shipping carriers within the company’s distribution channels. There is also the likelihood of trade restrictions such as increased tariffs or quotas, embargoes or customs restrictions. These events will significantly impact the production or distribution process and in turn, cause Starbucks to be unable to meet consumer demands. At the same time, fair trade issues have led to much displeasure amongst the activists in the recent years and their actions might threaten the company’s supply of coffee beans. Due to the nature of the supply chain which could face various forms of disruptions, we assign a likelihood of 3. A severity rating of 5 was given since it will affect Starbucks’ key operations and have significant impact on the company’s financials. 5. 5 Risk of changing consumer preference As aforementioned, there is the risk of changing consumers’ preference, especially in the specialty coffee market where consumer choices rely on many factors. Health concerns would be one apparent area that would impact Starbucks in the upcoming few years. Most of the company’s products contain caffeine, dairy products or other active compounds, which are increasingly coming under public scrutiny as there are adverse impacts resulting from large consumption. Also, other reasons such as obesity, as well as increased consumer litigation based on alleged negative health impacts of various food products are posing a problem to Starbucks and its coffee industry. Consumers might switch to other alternatives such as vitamin drinks, which would slowly reduce the demand for Starbucks’s products. However, Starbucks do take the changes in trend seriously and constantly try to change their products to suit consumers’ taste. Some measures have already been introduced with the health conscious consumer in mind such as allowing the substitution of milk in their drinks with soymilk. A likelihood of 3 and severity of 4 was thus assigned. 5. 6 Risk of failure and breach of security of IT systems There is a great amount of reliance on information technology in Starbucks’s operations for supply chain, in-store point-of-sale processing, Starbucks cards, online business and various other processes and transactions. The ability to effectively manage the company’s business and coordinate the production, distribution and sale of products depends significantly on the reliability and capacity of these systems. This is especially more so since Starbucks operates on a global basis. Any failure or security breach in the system could cause delays in product sales and reduce the efficiency of the company’s operations. In addition, capital investments might be required to remediate the problem. Thus, a likelihood of 2 was assigned, with a severity of 5 since systems are essential to Starbucks’s core processes and any failure will affect a significant number of outlets and all the operations. 5. 7 Product liability In recent years, Starbucks has recalled few of its products. For instance in 2009, the Consumer Product Safety Commission ordered a recall of thousands of Starbucks coffee blade grinders and glass water bottles, which allegedly posed a laceration hazard to consumers. Another incident was Starbucks’s recall of a few products containing peanut butter from its stores following an outbreak of salmonella in the US. Product recalls would generally hurt the value of the corporate brand and thus might reduce the demand for its products. Starbucks operates in the food and beverage industry, such product recalls are common and a likelihood rating of 4 was assigned. A severity rating of 2 was assigned as Starbucks has prompt voluntary recall responses as evident in the incidents mentioned above. It will thus keep the severity low as damage was kept under control. . 8 Risk of Non-Compliance with Laws and Regulations  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   There are strict compliances with regard to applicable laws, accounting and reporting requirements, regulations and tax requirements, including those imposed by the listing exchanges and labour laws for St arbucks to adhere to in the countries that it operates in. Any breach of regulations might result in penalties that might harm Starbucks financially. In addition, there might also be damage to the company’s reputation especially if the company incur civil and criminal liability. Compliance fees pertaining to labour law was an example that affected Starbucks. The minimum wage rate in US had remained $5. 15 per hour since 1997 but rose to $7. 25 an hour from July 2009. Starbucks employed about 142,000 people in the US as of 2009 year end and this increment in labour costs could increase overall costs and affect the companys operating margins when complied with. However, regulatory changes generally happen gradually and with warnings. Starbucks should have risk response plans in place by the time regulations take effect. Hence, a rating of 2 for likelihood and severity of 3 was given. 5. 9 Risk of loss of key personnel Starbucks’ future success depends on the continued service of senior management personnel and any loss of key executive management personnel can harm the company’s business. For example, Howard Schultz, one of the early founders of Starbucks left and was invited back to be the CEO when the company faced some problems in 2008. This shows how important key personnel are to the growth and survival of a company. As such, Starbucks need to ontinue recruiting, retaining and incentivising key management personnel to maintain and carry out operational initiatives, some of which involve ongoing expansion in business channels outside of the company’s traditional company-operated store model. Because of the continuous training and the incentive measures the company has put in place, the likelihood of key personnel leaving bears a rating of 1 but the severity is rated at 6 giv en the necessity of maintaining the talent pool at Starbucks for its continued success. 5. 10 natural hazard risk With close to 17,000 stores currently, Starbucks has coffee outlets in more than 50 countries. Natural disasters are inevitable and black swan events might impact the operations and financials of the company. For instance, in the recent 2011 earthquake in Japan, 50 stores in Japan were destroyed. However, a severity of 3 was assigned on the overall impact of this risk since a disaster would cause a significant amount of disruptions to outlets but only in affected regions; whereas its other outlets across the world would most likely be unaffected. Thus the strain on Starbucks’ financials would not be too severe. Also, a likelihood of 1 was assigned since natural disasters are not expected to happen on a regular basis. 5. 11 Risk Map Severity| High| 6| Risk of Loss of Key Personnel| | | | | | | | 5| | Risk of failure and breach of security of IT systems| Supply chain disruption risk| | Risk of loss of market share due to competition| | | Medium| 4| | | Risk of changing consumer preference| | Commodity price risk| | | | 3| Natural hazard risk| Risk of Non-Compliance with Laws and Regulations| Currency risk| | | | | Low| 2| | | | Product liability risk| | | | | 1| | | | | | | | | 1| 2| 3| 4| 5| 6| | | Low| Medium| High| Likelihood| Legend| Risk response| | Risk avoidance / elimination| | Risk reduction/ prevention| | Risk transfer / sharing| | Risk acceptance| 6. Risk Responses and control devices/activities Operational Risk | Risk Map | Risk Response | Control Activities | Loss of key personnel * Risk of inability to recruit, retain and motivate senior management personnel sufficiently to main tain and expand current operations | Likelihood: 1 Severity: 6 Appropriate risk response: Prevent /reduce | To reduce severity: * Cross functional management (possibly achieved through job rotation) * Ie. Someone should be able to replace Howard Schultz as the current main force behind Starbucks * Management trainees of Starbucks have training covering all aspects of store operations including baristas’ job scopes, not to be cross functional, but rather to have a better understanding of the company’s operations. Besides store operations, the management trainees ought to rotate within other functions such as logistics and finance. * Top level performance appraisal of cross functional abilities of senior management personnel and ensure periodic function / international rotation is carried out among senior management * Annual international meetings for senior management personnel to ensure all are aware and updated of the latest activities and concerns of the company through discussions | | | To prevent / decrease likelihood: * To attract: Competitive compensation benchmarked to market rates * To recruit: Stock options granted with vesting periods and longer period employme nt contractual agreements with heavy penalties for walking away early * To motivate: Clear career prospects with high potential for future development made known to employees and awards for employees with best performance at store and company levels | * Compensation committee to propose and enforce competitive compensations plans with favourable terms and conditions to retain and attract talent * Human Resource Department Head to ensure maintenance of clear career progression within the company and conducting of regular employee job satisfaction surveys * Clear career progression can include communicating Key Performance Indicators (KPIs) as progression criteria to employees as well as how they are monitored * Performance indicators to pinpoint departments with greatest resignation rate / staff shortage to better narrow down employee problem areas | Compliance with laws and regulations * Risk of failure to abide with all applicable laws and regulations of the countries the company operates in | Likelihood: 2 Severity: 3 Appropriate risk response: Transfer /share | To transfer/share risk: * Outsource compliance to external professionals – contractual transfer of risk control * Consider Joint Ventures (JVs) or partnerships with local companies when entering a new market (country) as they are more familiar with their home regulatory environment – contractual transfer of risk control | * Outsourcing mandates a need for continuous monitoring of quality of services received which will determine if company outsourced to should be changed * Top level reviews of cost benefit analysis of JVs and partnerships as well as rigorous screening of potential company candidates * Currently, Starbucks claim to be very â€Å"picky† about their international company partners | | | (Possible consideration) To prevent / decrease li kelihood: * Ensure compliance and legal personnel are competent with updated knowledge of operating countries’ regulatory environment | * Top level reviews of competency of compliance and legal personnel * Management to oversee compliance and legal personnel work closely with risk officers and internal audits to build effective intern