Starbucks Company
Starbucks Company
Introduction
Starbucks is a multinational company that offers coffee and services related to coffee to customers in different parts of the world. The company was formed in 1971 and by this time it had limited its market in few areas of operations. Initially, the company focused on distribution of high quality coffee beans and also on the roaster services. Howard Schultz came up with the idea of selling coffee in 1982, and this strategy has made the company grow international. It has created a market segment that assures success of its operations. The company has slowly developed by adding services and products something that has created a wide market for the company. Some of the common products that have in the recent years been added include coffee mugs, blended drinks, and espresso drinks among others. This essay will focus on strategies that Starbucks Company has developed for its survival in the last few years. Porter’s generic strategies will help evaluate those strategies and the concept of core competencies of the company for its future survival.
Discussion
There are many companies in the current world of globalization that have managed to develop their operations in new markets. This is the same thing that Starbucks Company has entered in and it is responding effectively to the world of business development. Initially the company had a specific target but due to the use of porter’s generic strategies and the concept of globalization, it has made it through different markets where it offers services and products to different markets. Youth appeal strategy is one of the key strategies that this company has implemented in its success. In order for a company to enter into a new market, there are strategies that it uses and applies in order to gain its success. In this case, Starbucks has used youth appeal strategy in developing its new markets in different parts of the world, (Stacey, 2006).
Market penetration is an idea strategy that most companies that want to establish their company’s operation in different areas use. Applying market penetration strategy requires knowledge of the area under which the operation is to be established. For this company, market penetration strategy has responded in the positive direction simply because parties involved contribute a lot for company survival. Evidence shows that the market offers threat of substitution for coffee accessories, products, and services but the company has a strong set up that has enabled the company develop strategies vital for such situations. The presence of threat of substitution for the company has not affected the company simply because it has managed to satisfy target clients. The company is a world renowned coffee company that offers appropriate services to its customers, hence the company focus on survival hopes in few years to come, (Lamb, 2011).
Global expansion strategy is another operation strategy that this company has developed and implemented in the last few years. The company has used global expansion strategy where it targets a group number of areas in order to develop favorable working conditions. It is true that in areas where the company has opened new working environment and where it intends to open is affected by the aspect of competitive rivalry. There are small and large companies that create an environment that is competitive. Competitors in this industry of coffee are not many, and the company has taken this advantage to enter into the market fully. It focuses on quality products that appeal to the customers something that creates power over competitors. Competitors have little say in this market, and this is why Starbucks Company has established global expansion strategy in creating new stores. This aspect helps the company has the strength because it has surety that customers will not buy their products from another company. It also gives suppliers motivation hence supply what the industry wants for production, (Clegg, et al., (2005).
Another strategy that the company has used for development is the strategy of opening many stores in potential areas. This has been possible simply because the company decided to go global. Going global has made the company establish potential areas where it can open a hub and out of a central hub several stores are opened to create an environment where clients access services and products they want. The cost leadership strategy applies in this company simply because comparing its products with products from other companies; this is the best company that offers low costs. It is the lowest cost producer in the industry something that attracts new customers. By integrating the cost leadership strategy with development of new stores in potential places, this company has managed to maintain the strongest operating power in the coffee industry. Opening stores now and then targets potential customers, and this has materialized for the company, and this is the reason why it is doing well in the market compared to other companies that have existed in the market for long, (Crouch, 2008).
The company has employed qualified workers who have skills and experience in the coffee industry. This strategy has enabled the company mimic existing companies by off using a benchmarking strategy of what was done by companies in the past. The company has gone in the old ways of operations where it uses aspects of companies that performed well in the industry. Benchmarking strategy has helped the company understand the concept of working towards long term goals. This aspect aimed at making the company the best in the coffee industry as well as becoming a recognized company in the industry. The company has achieved this by providing quality services that satisfy customer’s needs. Evidence shows that Starbucks Company is the current benchmark organization that most companies use when developing their ideas. Starbucks spokesperson said, “We are working towards making this company the Q-Tip by the year 2015,” (Porter, 2000). In the direction this company is moving, the objective of becoming Q-Tip Company in the industry will be true come 2015, (Porter, 2000).
Concept of Core Competencies
Starbuck Company has managed to be the best coffee company in USA and most parts of the world. The company offers quality services and products simply because it has established some effective strategies it uses in creating a workable environment. It has also won the trust of most customers something that gives it market for the products and services. Its ready market has enabled the company become recognized and trusted by customers who want coffee services, products, and accessories. Starbucks Company is the current benchmark company that other companies use as a standard of measure. Core competencies of a company help the company develop an appropriate working environment. Applying strategies effectively helps the company create a strong environment in order to face with competitors in the right aspect, (Ansoff, 2010).
Starbucks Coffee Company has its unwavering core competencies that have made the company strong enough to survive in the industry of coffee. Some of the known core competencies include its care for employees, product advancement and focus on quality, drive to open stores everywhere, and quality and outstanding customer service. The organization activities of a given company play a vital role in developing a strategy on how to achieve competitive advantage,” (Johnson, Scholes & Whittington). This company has established its core competences for business development through effective use of its quality services and products. Creation of a brand position was an effective approach that made Starbucks Company develops a communication system that helps the company reach the target audience. According to Gary Hamel (1990), companies use unusual strategies when strange times come within organization setting. Strategies that help an organization achieve its goals and objectives are termed as the company’s core competences (Steiner & Kunin, 2011).
Starbucks core competencies have enabled the establishment of relevant working environment that attracts more customers. When the company started, it was in a position to provide quality roasted and poured coffee to the society. The idea of quality products continued when the company established an environment of offering coffee services and other products to the same clients. Focus on quality services and products contribute to the development of the company and establishment strengths for market survival. Starbucks Company has maintained this core concept of quality products. It is the quality aspect that makes an organization survives in a given competitive market. Quality attracts customers simply because customers become satisfied and feels valued by the company. It is through quality coffee services and products the company has established a healthy relation with customers, (Lamb, 2011).
Continuous product advancement within a competitive market is relevant simply because it helps one company develop outstanding products. Starbucks have always advanced its products and services to ensure that clients get the appropriate services that satisfy their needs. The company started in one direction, but it is through product advancement it has managed to create its current reputation. In ensuring that the environment is safe for products and services, Starbucks make sure that the relevant product advancements are put in place during work environment. The company is known for its continuous improvement and advancement of products and services. This core competence has played the best part in the environment because other similar companies are unable to develop such services and products. While others are unable to attract customers, Starbuck have established an environment where customers what they want and where to get appropriate products, (Perry, 2011).
Care for company’s employees is something that most companies in the current globalization do not concentrate on when setting an environment to achieve goals for the company. At Starbuck employees, needs and values are respected. This makes employees establish trust in the company hence act as expected. This is something vital in an organization because employees create a workforce system that ensures clients for the organization get the quality services something that secures return for the clients. Creating a healthy, working environment for employees assures that clients will get appropriate services, (Crouch, 2008).
In order to ensure that the company survives at future market, it should ensure that development plans are put in place to define working environment. Products for the customers should be improved to meet standards. The company will be required to meet standards of operation in order to take care of clients needs. It should also ensure that clients have access to products and services whenever they want. This means that the company should ensure that it has stores that are enough in the industry. Study shows that opening more stores will help fight competition that exists because clients will have what they want ready in the market, (Steiner & Kunin, 2011).
In conclusion, Starbuck is a coffee company that has moved from a single operating level to something that focus on different markets. Strategies help create an environment appropriate for competition. High quality services and outstanding customer services are part of what has made this company strive in the market industry. The company has realized its core competencies, and it is through developing a healthy, working environment Starbuck have established strategies for operation.
Reference:
Ansoff, H. M. (2010). Implanting strategic management: Prentice hall international
Bussing-Burks, M. (2009). Starbucks: ABC-CLIO
Clegg, S. Kornberger, M. & Pitsis, T. (2005) Managing and Organizations London: Sage
Crouch, A. (2008). The Competitive Mind: Strategy for Winning in Business: John Wiley & Sons
Johnson, G. Scholes, K. and Whittington, R. (2006) Exploring Corporate Strategy London: Prentice Hall
Johnson, G., Scholes, K. & Whittington, R. (2010). Exploring Corporate Strategy + Mystrategylab: Prentice Hall
Lamb, R. (2011). BoydenCompetitive strategic management, Englewood Cliffs, NJ: Prentice-Hall
Mintzberg. H, Ahlstrand. B, Lampel. J, (1998). Strategy Safari, Prentice Hall, New York
Perry, M. (2011). Business and Sustainability:: Concepts, Strategies and Changes: Emerald Group Publishing
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Stacey, R.D., (2006), Strategic Management and Organisational Dynamics: Pitman Publishing
Steiner & Kunin, (2011). Sited in Mintzberg et al, (1998). Strategy Safari: Prentice Hall, New York.
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