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Question:
Starbucks is an international organization with the headquarters in Seattle, Washington. The stocks of the Starbucks were traded on the NYSE under the SBUX ticker symbol. Starbucks is considered to be the largest coffee outlet in the world. The company has approximately seventeen thousand shops in about fifty countries. The company was founded by three colleagues in the year 1971 in Seattle. In the year 1987 the Star Bucks was controlled by Howard Schultz. The company became the greatest brand in a very short period of time. The product line of the company were not very large in the starting it just included coffee bean retailer and the trader of the various items. But, gradually the company included movies, books and music in to its product line. The positioning strategy that was being followed by the company to grow itself was the penetration strategy. Various innovative and modern business ideas were included by the founder of the company. The company took the advantage of the double digit growth in the financial year 2007. The present report focuses on the various elements and the methods of the operations of the Star Bucks like how the company targeted the market what were its related strategies and how it promoted its brands. The various positioning strategies that was used by the company to grow to a business leader from a small coffee retailer.
The industry of the company can be analyzed by analyzing the two analyses:
The various elements or the factors that can be analyzed by the company are:
There has been lots of change that has been brought by globalization in the way of doing the business by various companies. It becomes very difficult for the companies to survive these days relying on the domestic market only. By taking in to consideration the political background of the various countries and studying the various issues that are related to the political factors the company has managed to expand the business in a very great way and now the time is that the company has the knowledge of the political patterns of almost all the countries all over the world.
One of the most important factor that has the impact over the business of the company is the economic factor because the people consider coffee as a luxury product. The company will be directly affected with the increase in the interest rates along with affecting the suppliers and the various investment plans. This will automatically lead to the decrease in the sales and the expansion of the company will be affected simultaneously.
There shall be various policies and techniques taken up by the company from time to time so that they can identify their local customers and they can be encouraged to come to the stores as frequently as is possible by the company.
Technology is being widely used these days everywhere. There have been various benefits of the advanced technology and due to these benefits the company is trying to use the latest technology where ever possible. The company uses latest coffee machines in its stores along with that the company has also launched its website in the year 1998. The company also provides internet facilities in some of its stores.
There are different laws in the different countries. The company shall be very well aware of the various laws that are related to the product restrictions, employment, trade and health. (Dransfield, 2001)The company shall take care that no laws are being broken by the company of any country while they are doing their business.
The factors that are related to the environment shall also be taken in to consideration by the company. The various environmental factors that often affects the company includes disposal of waste, pollution, planning permission etc. (Fleshier, 2015)The techniques that are eco-friendly shall be followed by the company. The company shall try to use the recyclable material as much as possible.
The company shall use the Five Forces model technique for analyzing the industry environment. The various issue like the threat of new entrants, bargaining power of the suppliers bargaining power of the buyers, the competitive rivalry and threat of substitutes are included in this.
The environment of the company is very competitive. There are various other strong brands that give tough competition to the company that includes McDonalds and burger king. If the company wants to enter in to new market than it can enter easily as the investment required for the entry is quite less. There are many new entrants in the market that are operating single retail stores. (O’Rourke, 2007)There are various distribution channels that are being used by the company to reach its customers that includes the grocery stores, super markets and the mail delivery methods. (Proctor, 2000)
The profits of the company relates to its customers. The bargaining power of the customers was less earlier but now as there are various new brands available in the market and it becomes easy for the customers to shift to other brands the bargaining power of the customers have become high. The bargaining power of the customers was less because the Star Bucks enjoyed monopoly but now there are many suppliers of the coffee in the market due to which there is an increase in the bargaining power of the customers. The company needs to maintain uniqueness so that the bargaining power of the customers can be minimized. (Porter, 2000)
The bargaining power of the suppliers is high as there are fewer suppliers in the market. The coffee beans are very essential raw material for the company. (Duane, 2012) The prices with the suppliers are generally fixed. There is less bargaining power of the suppliers because the industry has less number of suppliers available in the market.
There are various substitutes available in the market that includes the beer, energy drinks, soft drinks, and smoothes and fruit juices. These products often pose threat on the Star Bucks Also there are various pubs, bars and lounges in the market that have similar environment as that of the Star Bucks which is also a major threat for the Star Bucks. (Grant, 2016)
The people recognize the Star Bucks from its brand itself. There are various other companies that have brand image in the market and include De Bella, Gloria and McDonalds. These are famous brands give tough competition to the Star Bucks. Also there are various other coffee suppliers like Dunkin Donuts and Burger king that give tough competition to the company. (Ping & Yao, 2007) Similar products are provided by these companies that automatically increases the competition in the market. (White, 2004)
The main competitors of the Star Bucks are the quick service restaurants and the coffee shops that have specialty in making coffees. There are numerous competitors in the beverage industry. There has been direct competition faced by the Star Bucks from the large US competitors and the quick service restaurants. The whole bean coffee beans of the Star Bucks face direct competition through the various super markets, and various other retailers. The rivalry keeps on increasing as the industry expands from time to time.
(Competitors Analysis, 2015)
After analysiying the case study of the Star Bucks it can be found that it followed business strategy by applying the three generic models that includes differentiation, focus and cost leadership. According to the strategic mission of the Star Bucks it can be found that the company focuses on the differentiation strategy rather than the cost leadership strategy that focuses on making different and innovative product, so that the customers can be valued well. The company uses its business strategy in all the processes and all the stakeholders that starts from the farmers and suppliers. Secondly the company treats its employees differently from the others and they often call its employees as its partners. Another strategy that make the company different from its competitors is the belief that says we do not do the things due to recognition but we do the things because they are right to do. (Thompson & Rindfliench, 2006)
The main mission of the Star Bucks is to nuture and inspires the human spirit- one cup and one neighborhood at a time. The corporate strategy of the Star Bucks includes:
The company needs to change its leadership along with the various changes it is required to make in its organization. The company shall try to improve the skills, capabilities and the attitudes of its managers. The company can go for strategic change only if he leaders have good attitude and qualities in the organization. The company shall try to implement various strategies from time to time so that its operations can be improved and the threats that are confronting it can be overcome. The company shall set various strategic objectives to implement its marketing strategies. Star bucks shall communicate with its customers more frequently. The company shall create new products that are more appealing to the customers. The company can also focus on the various other new market segments so that new customers can be attracted towards the products of the customers. It shall work further on the improvement of the brand reputation and shall follow various new strategies from time to time.
The market power of the Star Bucks is great in the gourmet coffee industry. The customers are being attracted by the company by the experience of the upscale French coffee shop. The company has been focused many times to drive down their prices so that they can compete in the industry. The strategy that the company follows at times is opening more stores so that it can increase its sales. (Smithson, 2015)The company shall try to avoid opening more stores. Instead of that the company shall try to focus on providing quality services to its customers so that they feel satisfied. The company shall fix the cost of products that depends on the purchasing power of the customers. The company shall focus on more research and try to offer new deals to its customers. (Adamkasi., 2015)
Currently, it can be analyzed that most of the strategies of the Star Bucks are focused on creating differentiation and cost advantage by following blue ocean strategy. There are various weaknesses of the company though the company can take the advantage of various opportunities that are available to it. Though the company is facing high competition in the market now a day’s all over the world in the coffee market, there is an opportunity available at the disposal of the company where it can apply the business strategy specially the differentiation strategy so that it can deal with its competitors. Also the company is trying to expand its profit and increasing its market share by the launch of the second brand with the name of Seattle’s best that further helps in the increase of the brand image of its customers.
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