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Starbucks strategic issues
Starbucks Strategic Implementation
Starbucks Strategic Implementation
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Opportunities and Threats SWOT Analysis Starbucks is known for the extraordinary coffee that they have provided over decades. Although the coffee is great and the business is successful, other aspects can put a treat on the company just as any other business. When it comes to the downfalls “higher commodity cost, intense competition, and legal proceedings can have an adverse impact over the business” (Lemus, E.). Per Lemus in the article “Starbucks Corporation: Leading Innovation in the 21st Century” Starbucks current SWOT analysis is as follows: Internal strengths include: • Established 40 years in the market • Adequate financial sustainability • Company’s culture contribution • Ethical for best business practice • Experienced in the market …show more content…
However, it is very noticeable how good Starbucks handles these situations. They continue to add to their strengths, fixing their weaknesses, going for all their opportunities, and decreasing the threats that they are faced with. Starbucks Organizational Future Starbucks are planning to add to their organizations growth, by continuing to make Starbucks a top of the lie coffee distributor and business. Some of the ways that Starbucks plan to continue to grow their organization in the future is by growing the number of stores, elevating the coffee experience, creating new customer occasion, and driving at home coffee share and occasions. By growing the number of stores Starbucks plans to create and open “express stores which essentially function as walk-thrus in New York, Boston, and Seattle” (Speculations, G). By doing this the company’s plans are “aimed at increasing the company’s store penetration” (Speculations, G). After the growing plan Starbucks is sure to see a 5% minimum in growth when compared to the U.S. (Speculations, G). The graph below shows the total change in the franchised store, the graph is from the article “Let’s Look at Starbucks Growth …show more content…
It is safe to say that Starbucks should continue to grow globally. Although it has been proven that they are already doing great globally with their 22,519 store open to date. It will still be good for the company to expand due to their successful growth. Starbucks strengths are good and already leveraged, however their weaknesses could become a risk in the future. Two of the risk that they should watch for is the high price of coffee beans in the market. Because of this it is driving up the price of their product which is also a weakness that they
Internal resource is the first consideration that can lead to sustainable competitive advantage and Resource –Based View (RBV) is a theory that usefully helps a firm focus on internal resources (Kraaijenbrink, Spender & Aard, 2010). According to RBV (Valuable, Rare, hard to imitate and non-substitutable), companies have different tangible and intangible resources, these resources can be transformed into unique ability, this special ability cannot flow between firms and rival firms and difficult to reproduce. These unique resources and abilities are the source of enterprise sustainable competitive advantage. In this part, Starbucks and Apple are worth to be analyzed by RBV.
The importance of economic indicators to the strategic planning process in any organization is the ability to benchmark economic conditions that contribute to improve profitability, business growth and market size. Leadership sets up the mission “to establish Starbucks as the most recognized and respected brand in the world.” In doing so, they have created a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Corporation, 2007).
The threats facing Starbucks include trademark infringements and increased competition from local cafes and specialization of other coffeehouse chains, and the saturation of the markets in developed economies, and supply disruptions. Furthermore, the increasing prices of its inputs such as dairy products and coffee beans pose a threat
With that store being there to help support new stores that would be entering the region. The goal was to have around 20 stores after two years of entering a market and have those stores expand even further into smaller cities and suburban locations. They also started to add drive-through because it made it more convenient for parents with small children. Some of the drawbacks of drive-through were that it took away from impulse buys and sometimes created bottlenecks in the line. Licensing the brand was also a great way that they expanded their business; by putting Starbucks in airports in malls they create a lot of foot traffic lead to successful stores. Starbucks carefully considered their image and the image they wanted to uphold when choosing licensees. The international market is now where Starbucks has the most potential to grow. As of right now Starbucks has plans to open 1,400 new stores in China. That’s more than half of the store it already has in China. The growth technique that I was most impressed with was that having two locations so close to each other would not saturate the market. The first store would see a drop in sales at first but would bounce back and the new store would grow. I notice we have that here, at Target in uptown you can actually see the Starbucks across the street while you are in line. Both seem pretty busy most of the time too.
Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed loop system” that protects the beans from oxygen immediately after roasting to the time of packaging. They did this through their invention of a one-way valve which let the natural gasses escape but keeping oxygen out. This gave them the unique ability to ensure freshness and extended the shelf life to 26 weeks. Starbucks isn’t only about the coffee, it’s also about a place where people can escape to enjoy music, reflect, read, or just chat. It is a total coffee experience. The retail outlet has been responsible for much of Starbucks growth and has contributed substantially to their brand equity.
The Starbucks franchise would not be anywhere close to their accomplishments without the support of the farmers, workers, and overall determination to be the best that it can be. Starbucks is the place where people can come together to get there daily fix of caffeinated beverages. It is one of the most if not the most popular coffee franchises in the world. People do not realize that our franchise is facing, and attempting to succeed over various obstacles in order to keep Starbucks up, running, and at full speed and maximum efficiency. Not only do these problems being solved help the franchise, but also, it helps the world as a whole as I will explain.
Long Term Plans In terms of Long Term Plans, Starbucks’ Roastery represented over 2 years of cautious, consistent work to create a unique experience in the world of coffee and retail. Additionally, Starbucks recently announced that they planned to grow their revenue by 10%, nearly $30million over a period of 5 years. In addition, they also planned to open an estimated 12,000 new stores globally by 2021. (Starbucks Corporation, 2017) III.
As with any company considering new products in new markets, there are risks associated with it, and Starbucks would need to be prepared to respond accordingly. With diversification, Starbucks will have the opportunity to increase its growth. Also, this strategy will permit the company to add related or unrelated products to its existing business. This will be the opportunity the company needs in order to expand its products, by offering new products to its customers. If Starbucks is considering diversifying, it’s essential to adopt a strategy that is fitting for the company....
Starbucks Financial Analysis Company Overview Starbucks is the world’s largest specialty coffee retailer, with more than 16,000 retail outlets in more than 35 countries. Starbucks owns more than 8,500 of its outlets, while licensees and franchisees operate more than 6,500 units worldwide, primarily in shopping centers and airports. The outlets offer coffee drinks and food items such as pastries and confections, as well as roasted beans, coffee accessories, teas and a line of compact discs. The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products.
Short for Strengths, Weaknesses, Opportunities and Threats, the SWOT analysis is a tool “commonly used in marketing and business in general as a method of identifying opposition for a new venture or strategy” (Goodrich, 2013). In using this tool, professionals are able to “identify all of the positive and negative elements that may affect any new proposed actions.” The SWOT analysis of Starbucks Coffee Company is conducted below in Table 1.
Convenient locations such as: university campuses, downtown/suburban retail centers, drive thru’s, express stores, office building and shopping malls along with rural and other locations.
One of the main problems that Starbucks is facing at the present time is the ability to maintain national competitive advantage (Monash South Africa, 2014). Due to their local demand conditions, Starbucks tries to satisfy all customers by trying “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks Corporation, 2014). Local demand conditons consist of a company trying satisfy needs of their closest customers and expanding their competitive advantage by upgrading their strategic management policies (Monash South Africa, 2014).
Starbucks has identified high value opportunity in China, India, Brazil and Japan. The large expansion opportunity of twelve billion in China alone is enough to drive Starbucks to expand globally. The organization has planned to double its footprint to 3000 stores in China by 2019 ("Starbucks Details Five-Year Plan to Accelerate Profitable Growth", 2014). Starbucks realizes that eventually there will be a diminishing return on their existing market within the US due to market maturity and there are only two ways to expand through diversification in their offerings and entering new markets. Given the international opportunity for growth and expansive tea market in Asia, the company will enjoy the benefits of the growth opportunity. Management’s decision to continue to grow globally is a driving force that has yielded
One could argue that this could be imitated by competitors but it also is very costly. Another strategy is their strategic alliances and acquisitions such as Teavana (Tea), Bay Breads, Evolution Fresh, and many more. Their acquisition strategy has known to be very horizontal. This gives Starbucks the ability to effectively leverage their cornerstone product differentiation strategies by offering a premium product mix of the highest quality beverages and snacks. Starbucks’ goal is to provide each and every customer with a unique “Starbucks Experience” excellent customer service, and well maintained stores which in turn translates to a high degree of customer loyalty. Its HRM value-based approach is for building strong internal and external relationships with suppliers which helps its deployment to international markets, horizontal integration, and organic expansion across the world. Starbucks is known for its high knowledge employees. Human capital is the main asset for most companies and they are provided with great benefits, stock options, retirement accounts, and competitive pay. Good human capital translates into great customer service. I talked to my friends about working at Starbucks and they both said it
Expansion of Domestic and International retail markets: With the target of 2000 stores by year 2000, Starbucks is on an expansion mode. They are expanding into the international markets and simultaneously they are diversifying in the domestic markets also. Initiatives like Frappuccino and the Doppio cart are part of this.