BUS499 Stayer University Week 8 Analyzing Strategies for Starbucks Paper


Question Description

Research the company on its own website, the public filings on the Securities and Exchange Commission EDGAR database (http://www.sec.gov/edgar.shtml), The annual report will often provide insights that can help address some of these questions.

Write a six to eight (6) page paper in which you:

Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion.

Analyze the corporate-level strategies for the corporation you chose to determine the corporate-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion.

Analyze the competitive environment to determine the corporation's most significant competitor. Compare their strategies at each level and evaluate which company you think is most likely to be successful in the long term. Justify your choice.

Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets.

Use at least three (3) quality references. Note: Wikipedia and other Websites do not quality as academic resources.


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1 Industry Examination; A Case Study of Starbucks Nicholas Hendreson Strayer University BUS499 Business Administration Capstone Dr. Keller Dr. Garnder 08/13/2019 2 Industry Examination; A Case Study of Starbucks Starbucks' Greatest Strengths and Weaknesses and Strategy Used for Maximum Advantage Some of the greatest strengths that Starbucks has included its brand image and an extensive global supply. Starbucks is considered to have one of the leading, strong, and most popular brand, that factor coupled with an ever-increasing loyal customer base, has catapulted the organisation to the very top. Additionally, the extensive global supply network has supported the operations of the company. The company carefully selects its suppliers based on the quality of products that they offer like quality Arabica beans that is, in turn, sells to the customers (SEC, 2018). Weaknesses can be viewed as the internal factors that limit the company's abilities, some of the greatest weaknesses that Starbucks has included the relatively high priced products and the potential of their products being imitated by other organizations. Starbucks has been known to target the high-end buyers and markets, and that can be seen from the store locations that usually are located in well-to-do or high-end streets and locations. Also, the company maximizes the profits but in the process also limits access by reducing the affordability of its products to a vast number of clientele. The downside with such an approach is that it limits the company's market share by locking out those clients that have lower disposable incomes. Also, many of the products that the company sells can be imitated, and they have by other competitors who also sell similar beverages, imitate the store arrangements, and provide similar products (SEC, 2018). The company should leverage its strengths and use 3 strategies such as diversification, innovation, and its global supply network to reduce its weaknesses and take advantage of the strengths for increased performance. Starbucks' Tangible, Intangible Resources, Core Capabilities, and Competencies The tangible resources of Starbucks include the store locations, the roasting plants, and other subsidiary companies owned by the company. The company has approximately 19,700 stores that it runs in more than 60 global locations, and it also owns other companies such as Torrefazione Italia, Teavana's Heaven, Seattle's Best Coffee among many others (SEC, 2018). On the other hand, the intangible resources comprise procurement processes that it uses to get its coffee beans, and it also includes the Starbucks logo, the training programs, and skills of the team. The primary core capabilities and competencies of Starbucks are associated with the brand equity and continuous growth of the company, which has helped it withstand the entry of competitors and other market forces. Highly Ranked General Environment Segments Based on Influence and their Impact on the Corporation Starbucks' external environment is influenced highly by competition and consumers. The competitive and rivalry forces and the bargaining power of the customer are strong forces based on the Porters Five Forces Analysis (Porter, 2008). Starbucks remains as an industry leader and is considered as one of the largest coffeehouse chains globally that also employs innovative approaches which leverage the company's strengths to overcome its weaknesses taking advantage of the opportunities. The company operates in a variety of industries considering that over the years, it has expanded its product offerings intending to complement its core business of 4 selling coffee. Nevertheless, the organization faces stiff competition, and the consumers also have a stronger force in determining how the company functions. Most Significant Competitive Forces and how they have been addressed The main competitive forces are competitive rivalry and the threat of substitutes. Starbucks faces a lot of competition in both the food and specialty coffee segments, and the situation has been made so because of the large number of firms and the difficulty in switching. Additionally, the company faces the threat of substitution of services and products that it offers. Starbucks has addressed the competitive forces by use of technology throughout the organization. For example, it has enrolled nearly 15 million individuals in its loyalty program. Additionally, it uses the information that it gathers through such forums to get more details of its consumers as well as how it can further boost its services (Rachel, 2018). It utilizes data analytics and ethnography, which it uses in the analysis of consumer behavior and then leverages the information in boosting its sales and overall company performance (Lemus et al. 2015). Competitive Forces and Company's Action in Enhancing its Ability in Addressing them To further enhance its abilities in addressing the competitive and other industry forces, the company can change its approach to a customer-oriented one that pays close attention to the needs of the consumers. In such a competitive industry, the primary factors that Starbucks watches out for when selecting which store to visit include the convenience, type of service, product quality, and the prices (SEC, 2018). The company can also consider developing better pricing models such as the use of bundle pricing to deal with the threat of competition. Developing branding and creative marketing can also help build the brand image and boost its performance as well as its overall outlook within the community. 5 Greatest External Threat to Starbucks and how they may be addressed The greatest external threats faced by Starbucks include the heavy competition that it faces in various locations to other low coffee sellers that sell their products at competitive rates, and the imitation of its products and its operations. Both locally and internationally, Starbucks competes against a big number of organizations which is made even more challenging given the wide variety of products that it offers. It competes against other major restaurant chains and coffee outlets in the markets that it operates in across the world and they are mainly in the quick service and the ready to bring beverage divisions (SEC, 2018). Some of the major competitors in the specialty coffee segment include Dunking Brands, Costa Coffee, McDonald's, among others. The other major threat which is imitations consists of the organizations that try to imitate the types of products that the company offers as well as the look and feel of the stores and products. Many other small and medium-sized coffee shops are also springing up and copy the same model taking advantage of the socio-cultural trends to influence the perceptions of the consumers and limit the growth of the larger players. For Starbucks to rise above such competition and imitation, the company needs to counteract the impact of the trends. The company can leverage its brand image, length experience in the industry, and extensive distribution network to increase customer loyalty as well as offer more innovative products to counter those being offered by the competition. The company should carry out aggressive innovations in product development, which will make the company and its products increasingly harder to imitate. The company should also counter the competition by considering pricing approaches, and that includes developing products that are affordable to a wide number of consumers. The company should also focus on the critical factors that the consumers desire and use in making the decision on which store to visit, and for 6 Starbucks it has all the parameters such as the quality of products that it offer, the convenience as well as the type of service that are fairly priced (SEC, 2018). Greatest Opportunity Presented to Starbucks and how it may be Leveraged The greatest opportunities that Starbucks has included the ability to expand in international markets, especially in emerging economies in Africa, the Middle East, and parts of Asia. The company can widen its global reach and therefore increase its revenues by expanding to the developing markets. The advantage of such a prospect is that it helps to draw attention from the highly competitive traditional markets like North America, specifically the U.S., where the company generates much of its revenues. Given the long experience and good performance of the company over the years, Starbucks has great stamina and skilled staff which provides a great opportunity for the company to think innovatively and develop strategies for diversification which can boost its overall stability especially with the entry of newer and more competition. The company will, therefore, be able to maintain a competitive advantage which is the organization’s ability to do things better than its competition a principle that forms the very center of thriving businesses (Porter, 1991). The company also has an opportunity that it can use to widen its supplier network and broaden the supplies range where it sources intending to diversify its sources of inputs for better control. By so doing the company will have less sensitivity to the volatile coffee bean prices, making itself resilient to such risks associated with supply (SEC, 2018). 7 References Lemus, E., Feigenblatt. O.F., Orta, M, and Rivero, O. (2015). Starbucks Corporation: Leading Innovation in the 21st Century. Journal of Alternative Perspectives in the Social Sciences. 7. 23-38. Retrieved from https://www.researchgate.net/publication/326412206_Starbucks_Corporation_Leading_I nnovation_in_the_21st_Century Porter, M. E. (1991). Towards a Dynamic Theory of Strategy. Strategic Management Journal, Vol.12. Retrieved from: https://doi.org/10.1002/smj.4250121008 Porter, M. E. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review, 79-92. Rachel (2018). Starbucks' secret ingredient: data analytics. Digital Innovation and Transformation, Harvard Business School. Retrieved from https://digit.hbs.org/submission/starbucks-secret-ingredient-data-analytics/ United States Securities Exchange Commission (SEC). (2018). Form 10-K Starbucks Corporation. Retrieved from https://www.sec.gov/Archives/edgar/data/829224/000082922418000052/sbux9302018x10xk.htm ...
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School: University of Virginia


Starbuck Strategies Analysis

Starbuck Business -Level Strategies
a. Differentiation
b. Cost Leadership
c. Differentiation Focus
d. Most Important Business-Level Strategy for Starbuck


Starbuck Corporate-Level Strategies
a. Stability
b. Expansion
c. Most Important Corporate-Level Strategy for Starbuck


Competitive Analysis
a. Comparison of Strategies Used by Different Competitors
b. Company Likely to Be Successful in Long-Term


Slow and Fast-cycle Markets


Starbuck Strategies Analysis
Student’s Name
Institutional Affiliation



Starbuck Strategies Analysis

Starbucks Corporation is an American Coffee Company that operates a chain of
coffeehouse globally (Starbucks Inc., 2019). The company embraces numerous business
strategies that have promoted to Starbuck’s significant growth over the years to become one of
the international giants in the coffee industry.
Starbuck Business -Level Strategies
Starbuck Corporation, business-level strategy, incorporate four main techniques that
foster the company growth and gaining of competitive advantage. The business-level methods
are tactic pursued by organizations to facilitate achieving an edge over the rivals’ enterprises
operating the same market.
Starbuck Corporation, over the years, has embraced distinction as the crucial component
of the company business-level strategy. The strategy involves offering a third-place experience
to mean that the company provides the clients with a comfortable and relaxed environment away
from work and home. Besides, Starbuck welcomes the customer to work in the coffeehouses
both in the US and international, where the company offers free wi-fi services as part of the
differentiation business-level strategy. The company, as part of differentiation focus, designs the
coffeehouses to make the clients stay for a more extended period, buy more products offered by
the coffee shops as well as make a return to the coffee houses.
Cost Leadership
Cost is another essential business-level strategy embraced by Starbuck Coffee shops. As
part of business differentiation strategy, Starbucks offers a myriad of quality products to the
consumers, and make the customer pay premium for high-quality products. Besides, as part of



the business-level strategy, cost leadership involves the exploitation of economies of scales from
numerous coffee houses, which enables Starbuck to offer competitive prices compared with the
close rivals such as the McDonald’s.
Differentiation Focus
Moreover, Starbuck focus of differentiation focus involves employing excellent customer
services, which forms the foundations of the company competitive advantage. Over the years,
Starbuck excellent customer services have increased the attractiveness of the coffee retailer
leading to customer loyalty with the brand attributed to high revenues and profitability of the
coffee enterprise. Besides, Starbucks has embraced international expansion with emerging
economies to extend the high level of differentiation as part of the long-term business

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