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Competitive advantage of Starbucks
Competitive advantage of Starbucks
Pros and cons for starbucks
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Starbucks Company has been declared the largest Coffee Company globally. The company has shown considerable growth in profit over the years, and the increase of profit is what has led to the question; what strategies have Starbucks put in place to gain a competitive advantage over the years? Looking at what the company is doing to gain competitive advantage; one will have to look at how the company is connecting with the customers, the products they provide and their marketing behavior. Starbucks has over the years sought to create and strengthen long-lasting relationships with their clients. The company does not just aim at offering coffee alone to the customers but also making sure that the customers get a sense of homeliness with the business that the company terms as “Starbucks Experience.” The demonstration of the “Starbucks Experience” and feeling of homeliness is from the great ambiance designs that the company has in all its locations around the world. When dealing with customers, Starbucks Company has created a Starbucks Rewards Card for its clients who purchase products from them. The Rewards Card is one of the many things that the company uses to entice the customers to come back to them for purposes of making purchases. Through the Rewards Card, the company can build loyalty with the …show more content…
Starbucks faces increased competition and pressure from its competitors, for instance, the McDonalds, Pete’s Coffee, Dunkin Brands, mom and pop specialty coffee stores, and the Costa Coffee stores. Dunkin Brands had proven to be the main competitor, especially in the US market by following Starbucks with a share of 24.6 1 %. Another challenge that the company is recently facing is the consumer changes on lifestyle choices and tastes. The change of users in the direction of healthier products has led to the coffee culture falling at risk for Starbucks coffee
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.
If you had the chance to enjoy the Starbucks experience, then you will appreciate their mission statement, which is , According to starbucks.com, it states, that it is “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”.
Starbucks direct competitors include Dunkin’ Donuts, Krispy Kreme, Caribou Coffee, and Tim Hortons. Starbucks indirectly competes with McDonalds, grocery stores, and Keurig. Dunkin’ Donuts, its major competitor, utilizes Facebook,
Starbucks primary business is that of selling high premium coffee. They have been able to cater a specific product to a specific demographic. Specialization allows for the Starbucks company to deliver great quality and continue to maintain their customer base. Although there is a great amount of coffee flavors the coffee bean is still the constant ingredient in the great tasting coffee.
Shah, A. J., Hawk, T. F., & A, T. A. (2011). Starbucks' Global Quest in 2006: Is the Best Yet to Come. In A. A. Marcus, Management Strategy: Achieving Sustained Competitive Advantage (pp. c468-c495). New York: McGraw-Hill.
Starbucks has many business-level strategies, such as cost leadership strategy. Starbucks focused on increasing its profits and compete with other competitors (Starbucks,n.d). According to Starbucks (n.d), “a cost leadership business strategy focuses on gaining advantage by reducing its economic costs below all of its competitors. Although Starbucks targets product differentiation as their main business strategy, they have also implemented cost savings strategies in an effort to maximize profitability. An example of Starbucks cost saving strategy can be identified between 2007 and 2008 when their operational expenses increased by more than $125 million while sales for the same time period were beginning to dip. As outsourcing for distribution contributed to 70% of Starbucks operational expenses, they began targeting these outsourcing agreements for renegotiations in an effort to bring down costs.” Starbucks intended to reduce their
There are many topics that arise throughout the case with Starbucks Corporation. Starbucks Coffee is located worldwide and there are many different ways to look at this situation. The company offers a unique range of coffee, lattes, espressos, and café style drinks. The company intended to reach a specific target audience, but has ended up in many different markets and has been growing rapidly. Starbucks has greatly used the “youth appeal” strategy to gain entrance into new markets. However, such enthusiasm cannot be counted on indefinitely; other strategies are always in the works. Over time Starbucks has been able to acquire a solid brand reputation and has a world renowned company logo.
Customer’s** and stakeholders What are your key market segments, customer groups, and stakeholder groups, as appropriate?
Emphasis on quality, Starbucks Experience, brand image, and important suppliers to dispute lower price contributions to competitors hence increasing profits
As mention earlier Starbucks has many opportunities of which it can take advantage. These include a joint venture with McDonald’s, where the restaurant giant would supply its customers with Starbucks coffee. Another is the bottled Frappuccino product that Pepsi and Starbucks have created. This has had a very positive response in the test markets and posses to be a lucrative option. Starbucks could also look at the vertical integration possibility of producing its own beans. This could prove to be very successful if they can capture a significant amount of the production they could become a price setter in the coffee commodities. Also because small coffee retail outlets are so trendy it is possible for them to set ...
Overall, how satisfied are you , with [PRODUCT/SERVICE]? Please answer using the rating scale where (5) means "extremely satisfied" and (1) means "very unsatisfied."
Preliminary Starbucks – one of the fastest growing companies in the US and in the world - has built its position on the market by connecting with its customers, and creating a “third place” beside home and work, where people can relax and enjoy themselves. It was the motto of Starbucks’ owner Howard Schultz and, mostly thanks to his philosophy, the company has become the biggest coffee drink retailer in the world. However, within the new customer satisfaction report, there are shown some concerns, that the company has lost the connection with customers and it must be taken some steps to help Starbucks to go back on the right path regarding customer satisfaction. I will briefly summarize and examine issues facing Starbucks. Starting from there, I will pick the most important issue and study it from different positions.
... middle of paper ... ... Strategic planning kit for dummies, 2nd edition. Retrieved from http://www.dummies.com/how-to/content/strategic-planning-diversification.html “Starbucks”.
The strategic vision that Howard Schultz had for Starbucks was "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow". This s...
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,