Introduction
Starbucks tends to be one of the most recognized brands in the coffee industry and due to this the company has been able to attain a global recognition due to its quality coffee products and other related services. The organization first opened its first outlet store in the year 1971 and since then it has continued to provide quality products and services that meet the needs of their clients. (4). In addition, Starbucks is categorized as one of the largest coffee companies around the globe as it operates in about 70 countries around the world (7). The organization is also popular for the various products it offers such as the lunch items, cold and hot beverages as well as other related food choices. The company also produces and sells its own merchandise like the coffee cups as well as coffee mugs. Additionally besides promoting their brand through coffee mugs as wel as cups the organization also has ventured into the grocery as a way of promoting their brand. For example, the company sells bottled Frappuccino drinks, tea as well as their coffee K-cups. Starbucks has incoporated significant business strategies as well as corporate strategies to develop a robust brand which gurantees the success of the organization. The paper will focus on analyzing Starbucks business level strategies, corporate level strategies, competitive environment and how the choices of Starbucks may differ in a slow-cycle market or a fast-cycle market. Starbucks ensures that it continually meets and satisfys the needs of its consumers in order to remain competitive in the market.
Starbucks Business Level Startegy
To be able to remain competitive in the coffee industry Starbucks has always implemented the differentiation business level strategy. Differentiation approach often focuses on the integration of the set of action taken in oder to effciently and effectively produce quality products and services that the clients perceive to be different in a manner that is essential to them. Therefore, in my opinion for Starbucks to continue providing its diverse client population with quality products as well as services using the differentiation approach is the right track to follow in order to achieve its organizational goals and objectives. Additionally, through the implementation of the differentiation strategy Starbucks has had the ability to continually produce unique products as well as provides its clients with quality experience at an equivalent price. Mainly, Starbucks often focuses on selling more than just coffee to its clients and it goes an extra mile of selling the ‘Starbucks Experience’ by transforming their coffee shops to a social place where customers can be able to relax, hold meetings as well as chat with friends (2). Generally, Starbucks has turned their coffee outlets to be a third place between home and work rather than a just a place to drink coffee. Through the differentiation strategy Starbucks has been able to position itself to be a high premium brand and that makes it quite difficult for its rivals to imitate its business strategy. It ensures that its clients are satisfied with the prices they pay for their products and services.
Since the establishment of Starbucks, the company has always focused on conducting its business different from other coffee companies. This approach has enabled the organization to be able to develop an fantasting experience for every client by providing him or her with quality products and services that meet the client’s needs by creationg a positive atmosphere, and also connecting with each client individually. The mission of the organization is to inspire as well as nurture the human spirit- one person, one cup and one nighborhood at a time (5). The organization’s CEO Howard Shultz tends to have significant plans that will enable the future growth of the organization. He aims at transforming the organization into something greater and better than it is currently. Additionally, the company asserts to have opened a series of luxury Reserve stores, which enables the clients to be in a position to be able to access a rare as well as coffee assortment (3). The business strategies that Starbucks has developed over the years provide the company with a unique format to design particular coffee and other Starbucks products outlets such as the mobile trucks, which are mainly located in educational institutions (8). The approach of using mobile trucks to deliver their products to the clients has been quite successful because most of the university students thrive to attain a cup of coffee as they go through their busy day as well as nights. Implementation of the differentiation business level strategy has enabled Starbucks to be effectively and efficiently attain their organizational goals and objectives as well as enabling the organization expand within its corporate aspect. It is evident that the differentiation strategy has significantly supported the growth of Starbucks Company as well as it has ensured the steady success of the organization.
Starbucks Corporate Level Startegy
Often the corporate level strategy is the action that an organiztion takes to be able to attain a competitive advantage through carefully selecting as well as managing various businesses competitng within various product markets. Generally, corporate level strategy tends to be the ultimate business decision that significantly impacts the entire organization. Often the corporate strategy tends to impact the finance department, the human resource department, the management as well as the market where its products or services are sold (2). The main purpose of corporate strategy in every organizanization is to aid the organization to be in a position to maximize its profit as well as to be able to maintain its future financial success. Also it aids the organization to increase its competitive advantage over its competitors as well as to be in a position to provide its clients with unique products and services.
The corporate level strategy that is used by Starbucks is the transnational approach. The transnational approach tends to be an international approach which aids the orghanization to be in a position to attain both the local responsiveness as well as the global efficiency (2). However, the transnational corporate level strategy tends to be quite challenging to implement because in most cases the organization is required to accommodate the various cultures from the countries it operates in. Often the two major factors that influence an organization chooses its corporate strategy are the liability of foreignness as well as Regionalization. Liability of foreignness tends to be a set of the cost linked to various issues that an organization often experiences when venturing in a foreign market such as unfamiliar economic, operational environment, cultural difference, as well as administrative. Also, the difficulty of coordination due to distance is an issue faced by organization entering in a foreign market (2). Through the liability of foreignness an organization is able to develop strategies which will enable it to overcome the various issues on the foreign market and be able to productive as well as profitable. This factor has enable Starbucks to be able to critically analyse and overcome the issues that it faces in foreign market hence enabling it to be able to improve and expand its operations in various countries around the world. On the other hand, regionalization is becoming more essential due to the choices that an organization makes in regards to location and competition. Through regionalization an organization is able to decide the best location to set its store to be able to attract more clients. Also it enables the organization to attain advantage to be able impact its strategic competitiveness (2). Through the help of regionalization Starbucks has been able to carefully determine the best location to setup it outlet in order to attract more clients as well as to be more competitive. Through the transnational corporate level strategy, Starbucks has been able to carefully analyse a country or a region to attain a critical understanding on the drawbacks and the advantages the organization may acquire if it sets up it store in that country or region. Fundamentally, the transnational approach has over the years enables Starbucks to be able to develop valid decision and strategies which supports its growth before venturing into a foreign market.
Starbucks Competitive Environment
Starbucks has two significant rivals in the coffee industry, which are Dunkin Donuts and McDonalds (White, 2017). In this section we will focus on Dunkin Donuts because it has several similarities to Starbucks hence making it its major competitor. Generally, Dunkin Donuts has accomplished several things that Starbucks has attained such as placing their brands in stores. Both Starbucks and Dunkin Donuts tend to have similar business strategies which have assisted them to attain a significant percentage of the coffee industry.
Starbucks VS. Dunkin Donuts
Dunkin Donuts was opened in the year 1950 and it mainly focused on serving donuts and coffee, which were the specialties during that period (1). Due to the shift in the market trends Dunkin Donuts begun to lose business to its competitors. This forced Dunkin Donuts to develop new business strategies which would enable them to stay afloat in the market. By the year 1990 Dunkin Donuts had focused on specializing in the coffee industry (White, 2017). By the year 2006 the organization had introduced various new beverages in their menu aligned with better product line and quality. Also the organization had altered it marketing approach to be able to meet the various needs of the customers’ demand. The main goal of Dunkin Donuts was to provide clients with the same products and services offered by Starbucks but at more affordable price (1). However, Dunkin Donuts has also ventured into the global market and it currently operates in 36 countries around the world (1). The organization has developed a brand that asserts that one is able to attain great cup of coffee and quality experience at an affordable price. Even though Dunkin Donuts tends to copy all the strategies that Starbucks uses in the market. Starbucks has attained it premium position and Dunkin Donuts may not have a significant impact on its market share. On the other hand, Starbucks tends to standout more than it competitors due to its ability to provide its employees with better wages, benefits as well as they assist their employees with training to enable them improve their customer relation (4). Also, they offer their employee with free transportation to and from work (6). Through these activities and benefits enables the employee to remain motivated despite how huge or small income they make. Additionally, Starbucks ensures that its employees are well taken care of, because they are regarded to be a huge part of the company’s growth. Starbucks is a company that is most likely to remain competitive and relevant in the coffee industry because it continues to develop new strategies that are aligned with the rapid shifting of the customer demands as well as the market trends. The organization is able to effectively and efficiently cope with the alteration of the global economy due to its effective business and corporate strategies. Starbucks will succeed through the most competitive environment no matter how difficult it may be.
Starbucks in Slow Cycle or Fast Cycle Markets
Starbucks has the ability to survive in both the fast as well as the slow cycle markets due to its competitive advantage. The organization often focuses on providing it employee with the required knowledge to enable them to provide the clients with quality product, services and experience. Also the organization also provides it employee with particular benefits such as transportation (6). Through this they ensure that the employee keep their jobs in the organization over a long period of time. However, by ensuring that the employees are motivated through provision of various benefits the company’s success is positively impacted during a slow cycle market. On the other hand, a fast cycle market tends to be unstable as well as unpredictable and this establishes the ultimate competition for Starbucks. (2). Due to the constant ability of the company to seek new approaches to conduct its business Starbucks has been able to sustain the ever changing customer demands and market trends enabling it to remain competitive. Fundamentally, Starbucks has been able to remain competitive in both the fast cycle and the slow cycle markets due to its collaboration with other organizations.
Conclusion
The analysis assert that Starbucks has the ability to maintain their lead in the coffee industry and also through their various business and corporate strategies the organization will be able to overcome the different obstacles they may experience in their field of business. Additionally, Starbucks often depends on their loyal clients to remain relevant in the market thus by meet their demands they are able to attain the set organizational goals. However, Starbucks, Dunkin Donuts and McDonalds will continue to be in competition due to the shifting of the clients’ demand in the coffee industry.
References
1. Donuts, D. (2017). About Us. Retrieved November 10, 2017, from Dunkin Donuts: https://www.dunkindonuts.com/en/about/about-us
2. Hitt, M., Ireland, R., & Hoskinsson, R. (2013) Strategic Management (10th ed.). Mason, OH:
a. South-Western Cengage Learning.
3. Isidore, C. (2016, July 14). Starbucks plans new upscale chain. Retrieved November 8, 2017, from CNN: money.cnn.com/2016/07/14/news/companies/starbucks-upscale-chain/index.html
4. Starbucks. (2017). Company Information. Retrieved November 7, 2017, from Starbucks: https://www.starbucks.com/about-us/company-informaton
5. Starbucks. (2017). Our Starbucks Mission Statement. Retrieved November 7, 2017, from Starbucks: https://www.starbucks.com/about-us/company-information/mission-statement
6. Starbucks. (2015, July 22). Starbucks Adds Lyft to Growing Network in its Digital Loyalty Ecosystem . Retrieved November 11, 2017, from Starbucks: https://new.starbucks.com/news/starbucks-rewards-program-extended-to-lyft-drivers
7. Starbucks. (2017). Starbucks Coffee International. Retrieved November 7, 2017, from Starbucks: https://www.starbucks.com/business/international-stores
8. Starbucks. (2014, August 14). Starbucks Tests Mobile Trucks on Three College Campuses. Retrieved November 10, 2017, from Starbucks: https://new.starbucks.com/news/starbucks-tests-mobile-trucks-on-three-college-campuses-this-fall