Running head: SIGNATURE ASSIGNMENT
Environmental Scanning
Stacy Northcutt
MGT/498 Strategic Management
March 1, 2018
Alfredo Rodriguez
1
SIGNATURE ASSIGNMENT
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Environmental scanning is the process of evaluation, dissemination, and monitoring of
information from the internal and external environment to major stakeholders within the business
entity. A company uses the tool of environmental scanning to ensure its long-term health by
avoiding strategic surprises (Drew, 2009). The organization should scan both its internal
environment to determine possible weaknesses and strengths as well as its external environment
to identify potential threats and opportunities before a firm can begin its strategy formulation.
The following research describes the external and internal environments of Starbuck Company
applying the environmental scan model. The competitive edges which the company possesses
and the strategies it is using shall be identified.
As per the Starbuck, the company mission is to nurture, motivate, and inspire the human
spirit in form of “one person, one cup, and one neighborhood all at a time”. Starbucks must scan
both its external and internal environments to stay profitable and competitive and to create any
required changes to attract more clients. Starbucks has a pleasant internal environment (Han, and
Zhang, 2009). It is a nice restaurant where the clients can visit to acquire many blended drinks
such as a superb cup of coffee. The restaurant also provides light types of foods, an array of
pastries as well as other healthy snacks. The location and inside atmosphere of the company are
pleasant and quiet. Many customers select the restaurant as a place of meeting to get some quiet
atmosphere away from the busy world and chit-chat with friends. The locations of Starbucks
provide flawless customer services and complimentary Wi-Fi access. Externally, the company is
popular for offering quality services and products and it has taken advantage of this good public
image and reputation to attract and appeal to the potential customers of its products and services
(Hausman, 2008). The company could invent new ideas and concepts to sustain and maintain its
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share of the market even though the firm is always faced with the stiff competition with
companies that offer similar services such as McDonald.
Starbucks offers “third place experience. Its stores are strategically located as a “third
place” away from work, and home, where different customers of the company can spend their
time to feel comfortable and relax (Drew, 2009). Clients are even welcomed so that their duties
can be completed in the stores of the company. The locations of Starbucks provide flawless
customer services and complimentary Wi-Fi access. The restaurant offers coffee of the highest
quality and this business strategy can be categorized as product differentiation. The coffee chain
giant pays more attention to its products quality that it allows its clients to pay a premium price
to acquire such high-quality services and products. The excellent services to the customers as
one of Starbucks competitive edge solid sources increase the attractiveness of the restaurant in
the hotel industry. On a long-term perspective, global market expansion with the emphasis on
emerging markets is one of the critical Starbucks business strategy elements (Hausman, 2008).
The business entity has also integrated technology in different processes of the business. When it
says that the new technology purpose is not just to quicken its process of payments or to improve
its website, Starbucks is adamant (Han and Zhang, 2009). The chain of coffee accomplishes
value addition that is technology-associated through the integration of technology into a broad
range of business procedures and processes like the development of new products, the marketing
message communication, sales completion, and monitoring the customer satisfaction level.
Recognition of brand is a critical aspect in the growth of business entity where clients
readily pay the premium prices for quality goods, services, and brands (Drew, 2009). When
consuming a brand which attracts a strong loyalty to them, the customers feel satisfied. Brand
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yields expression for internal as well as external environment stakeholders. Staff feels safe to
work to their full potential for the prosperity of the organization and they consider the
achievements of the company as their own accomplishments that improve the efficiency of the
firm. As high-quality customer experience brand, the Starbucks has positioned its brand. At
premium prices, the firm has been able to sell its high-quality services and products. The
excellent customer experiences and the high quality of the products are the major differentiators
of Starbucks' brand from other coffee brands in the hotel industry. The company ensures that its
clients feel at home by offering them home like experiences. The firm gives the initial priority to
client satisfaction to be able to create customer loyalty base for its brands (Han and Zhang,
2009). It prioritizes the management of customer relationship by integration of communication
with the clients.
The brand marketing is crucial in promoting the brand products in the target market. The
Starbucks utilizes word of mouth marketing to promote its brands in the market. The clients
appreciate the coffee shops environment of Starbucks as well as the taste of coffee. The
restaurant has used virtual art, messages on coffee cups, soft background playing music, and
elegant and comfortable furniture in its coffee shops (Hausman, 2008). The Starbucks is the
name of enjoyment, smartness, satisfaction, fascination, and comfortableness of life. The
company is identified as a cultural brand as it connects with the countries and regions cultures.
The brand of Starbucks cultural nature is the reason for the firm choice for review sake of
strategies of marketing of the company as well as its efficiency.
The guidelines of measurement should be created against previous outcomes in
determining whether a strategy is operating as required. Creating clear checkpoints and
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objectives is important in deciding whether the strategy formulated should be altered to
accomplish the desired outcomes (Drew, 2009). Starbucks utilizes metrics from customer
satisfaction, annual customers, revenue, and growth percentages as the measurement guidelines.
Starbucks has to break up its evaluation into regions to localize the outcomes since the company
is extremely large.
The guidelines applied by Starbucks allow the company to effectively determine the
outcomes of its formulated strategies and plans. For the last few years, the company has
experienced results improvement and it is continuously growing forward with its competitive
strategies (Drew, 2009). However, there have been some setbacks for Starbucks along the way of
implementation of competitive strategies. The company has however been in the position to
make appropriate changes due to detection of the problems via the control and evaluation
metrics. Therefore, Starbucks has been increasing its revenue and expanding globally.
Conclusion
Organizations should be in a position to analyze and scan their internal and external
business environments to ensure that they develop competitive strategies that can take advantage
of available opportunities to gain competitive advantages. Starbucks successfully developed and
designed competitive strategies that have ensured that it remains extremely successful within the
coffee market. Despite the stiff competition, the coffee giant has found its own niche and has
efficiently exploited its competitive edges through successful implementation of the strategy and
regular evaluation and monitoring.
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References
Drew, S. (2009). Building knowledge management into strategy: making sense of a new
perspective. Long range planning, 32(1), 130-136.
Han, G. K., & Zhang, A. (2009). Starbucks is forbidden in the Forbidden City: Blog, the circuit
of culture and informal public relations campaign in China. Public Relations Review,
35(4), 395-401.
Hausman, A. (2008). Innovativeness among small businesses: Theory and propositions for future
research. Industrial Marketing Management, 34(8), 773-782.
Running head: STRATEGIC MANAGEMENT
Strategy Formulation
Stacy Northcutt
MGT/498 Strategic Management
March 8, 2018
Alfredo Rodriguez
1
STRATEGIC MANAGEMENT
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Establish Long-term Goals and Objectives
Strategy formulation
Formulation of the strategy involves the decision-making and planning that leads to the
development of the goals of the firm and the establishment of a strategic plan (David, 2011).
Strategy formulation involves the identification of external threats and opportunities into their
long-term goals and hence, generating, evaluating and selecting the strategies which best match
strategically for the organization.
Starbucks is a firm which is in the food industry and for this reason; all of its plans need
to be geared towards accomplishing the goals of the company that should be offering healthy and
quality foodstuff to its clients. The managers of Starbucks should evaluate the current situation
of their business entity (Ergazakis, Metaxiotis, Psarras, and Askounis, 2007). They must
understand where they are the moment of the formulation of strategy through the application of
SWOT analysis. All the strengths, weaknesses, opportunities and threats of the firm need to be
identified to enable the management to easily establish the current scenario of the company.
Indicate the markets that the company will pursue.
Starbucks has designed a globalization strategy to enable the firm to establish franchises
and stores in the nations across the world. Starbucks is employing market research as the core of
its market entry strategies. The market research has strengthened Starbucks pursue and entry into
the new Chinese markets (Grant, 2016). The entry into the developed as well as emerging
markets by Starbucks is informed by the market research. The company conducts market
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research to enable the managers to deeply comprehend how capitalism works in the People’s
Republic of China (PRC) and the Chinese markets in general.
The unique value the company will offer in the selected markets.
The experience of Starbucks provides statues which are highly attractive and appealing to
the standards of its customers or to climbing the ladder in the culture of its clients. Market
research shows that the consistency of the brand is critical to the customers of Starbucks (Noe,
Hollenbeck, Gerhart, and Wright, 2003). The best baristas are usually sent when the company
opens new stores in the emerging markets like China for the launch as well as to carry out the
baristas’ training who will continue of the activities once the introduction has been finished.
Moreover, Starbucks will very deliberately bridge the gap the coffee drinking culture and the tea
drinking culture by offering beverages in their stores in the new Chinese markets which shall
include local tea-based ingredients.
Discuss the resources and capabilities that are required.
Starbucks has resources that its competitors can hardly imitate or copy (Noe, Hollenbeck,
Gerhart, and Wright, 2003). It has tangible assets such effective and efficient human resources,
efficient management to timely and right decisions, as well as strong financial health that
contributes to medical benefits, grants and the stock option of its employees that its rival
companies cannot imitate or copy. Onto its intangible resources, the firm has superior customer
services, perceived value atmosphere, quality knowledge of service orientation, very unique
styles of shops, more experience that contribute to higher efficiencies level of both employees
and management as well as prudent decision making power of management which none of its
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competitors can match (David, 2011). The company has the ability to add more services in the
coffee service line, capability to offer higher incentive levels to employees that lead to higher
efficiency level, premium location choosing strategy, capability to operate and manage stores
outside the United States, ability to create a new coffee shop format unique to market, better
suiting the foreign cultural setting and the ability to enter the foreign markets ahead of its
competitors.
How the company will capture value and sustain competitive advantage over time.
The market research shall support the development of competitive internationalization
strategy of Starbucks to capture value and sustain competitive advantage over time. The
company will build a path to protection. As the company work to capture value and sustain
competitive advantage over time, it will build walls around its target customers (Ergazakis,
Metaxiotis, Psarras, and Askounis, 2007). The existence of walls would make it difficult for the
competitors to reach the clients within the walls and therefore the company would establish
competitive advantage which is difficult for the competition to imitate. The company shall
establish admirable job of creating an enormous competitive advantages wall to protect itself and
its clients from the rival companies in the coffee industry.
Business Management Strategy
Cost and Differentiation Advantages.
Starbucks seeks to provide unique goods which are broadly valued by its clients
following a differentiation strategy (Grant, 2016). Starbucks shall offer quality products at the
relatively affordable process. However, the management of the organization understands that
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differentiation attraction over low costs as a foundation for competitive advantage is its strength
to capture value and sustain competitive advantage over time. The attraction of differentiation is
more difficult to replicate and less vulnerable to be overturned by the external environment
changes. The source of differentiation advantages would be an unusually positive brand image,
technological capability, innovative design, extraordinary services, and exceptionally highquality products (Noe, Hollenbeck, Gerhart, and Wright, 2003). The strength to this strategy of
competition is the fact that whatever the service or product features are selected for
differentiation will set the company apart from its rivals and be possible enough in justifying
price premiums which exceed the differentiating cost.
Describe the Corporate Strategy.
Starbuck Coffee mission according to its 2010 website is "to inspire and nurture the
human spirit - one person, one cup and one neighbourhood at a time". The company claims that
it is not in the coffee business to serve people but it is in the people business to serve coffee. The
company uses the positioning strategy in ensuring that it is at the convenient and right location
for its target market and potential customers (David, 2011). Moreover, the firm uses product line
and differentiation that basically creates lots new drinks that bombard the clients with different
choices and flavours.
Investigate Vertical Integration.
Starbucks has various inputs and suppliers as it best known as a coffee shops chain. The
company purchases coffee bean to make coffee and uses customized products and mugs to sell in
its shops. Because usually, Starbuck would have to purchase coffee beans from coffee bean
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suppliers, it backwards vertically integrated when it acquired a coffee farm in China (Ergazakis,
Metaxiotis, Psarras, and Askounis, 2007). The company chose to purchase a farm of coffee in
China, a target market which indicated a tremendous increase in the coffee drinkers' number.
Starbucks ensures that it will have a steady supply of coffee beans at reasonable through
backwards vertically integrating by purchasing a coffee farm.
Strategic Alliances.
Starbucks and its Noble Starbucks and Strategic Alliance Barnes joined Noble and
Barnes and establish shops of coffee within their stores. Starbucks and PepsiCo work together
help generate the Frappuccino which is the most popular Starbucks coffee-based product (Grant,
2016). The two companies gained as many customers were in a position to purchase the drinks
causing PepsiCo to produce more, generating profits through Starbucks and Starbucks generated
more profits as result of increased sales. Starbucks is assisted by the Kraft Food Kraft foods to
packaging its products to be sold in grocery shops. By packaging the products, Starbucks sells
more goods that enable the two companies to earn better profits.
Company Competitive Advantage.
Starbucks builds its competitive advantage by creating close relations with the vendors
and the chain of supply (Noe, Hollenbeck, Gerhart, and Wright, 2003). As the coffee industry is
greatly fragmented, the company has ensured consistency in quality of the products it supplies
within the industry. The management of the organization understands that differentiation
attraction over low costs as a foundation for competitive advantage is its strength to capture
value and sustain competitive advantage over time. The attraction of differentiation is more
STRATEGIC MANAGEMENT
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difficult to replicate and less vulnerable to be overturned by the external environment changes.
The source of differentiation advantages would be an unusually positive brand image,
technological capability, innovative design, extraordinary services, and exceptionally highquality products (Ramaswamy and Gouillart, 2010). The strength to this strategy of competition
is the fact that whatever the service or product features are selected for differentiation will set the
company apart from its rivals and be possible enough in justifying price premiums which exceed
the differentiating cost.
Generate an Organizational Chart of the company you selected.
Chief Executive Officer
HR Director
Chief Technology
Officer
Chief Financial
Officer
Chief Operating
Officer
Chief Regional
Manager
Global Chief
Marketing Officer
America Regional
Manager
Global Chief
Strategy Officer
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References
David, F. R. (2011). Strategic management: Concepts and cases. Pearson/Prentice Hall.
Ergazakis, K., Metaxiotis, K., Psarras, J., & Askounis, D. (2007). An integrated decision support
model for a knowledge city's strategy formulation. Journal of Knowledge Management,
11(5), 65-86.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2003). Gaining a competitive
advantage. Irwin: McGraw-Hill.
Ramaswamy, V., & Gouillart, F. (2010). Building the co-creative enterprise. Harvard business
review, 88(10), 100-109.
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