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MGT510 Management | Corporate Level Strategies of Starbucks

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In this assignment, you are required to write a mini-report, including a brief executive summary.

Your Report should cover the following:

1. Identify and evaluate the suitability of the organisation's current CORPORATE level strategies. You are required to use the same organisation you analysed in assignment 1.

(a) Identify and discuss the corporate level strategies that the organisation is implementing/has implemented.

(b) Evaluate the suitability of the organisation’s current strategies. Recommend no more than two alternative strategic initiatives that the organisation should pursue to improve its effectiveness and justify your recommendations.


Answer:

Introduction

The paper discusses about the corporate level strategies adopted by the globally leading coffee industry Starbucks. It has 182000 employees operating currently in 62 countries. Corporate strategy includes the listing of all the strategic decisions taken by management of the organization for business growth and overall revenue. Starbucks has never failed to lead the beverage industry by adopting the product innovation strategy. It is holding the track record of successful business and the corporate strategy includes a list of factors like high quality maintenance, excellent customer support and service, unique steps to beat other competitors, expansion of the Starbucks brand globally and many more (Fontaine, 2013). The competitive strategy is the prime focus of the management of Starbucks along with the aggressive adaption with the changes in the nature of the market to gain competitive benefit.

Discussion

(a) Evaluation of Corporate level strategies

Founded in 1987 in Seattle, Starbucks reached to every corner of America with its innovative marketing strategy and product’s goodwill and in 2007, it gained a profit of $9.4 billion globally. In 2010, the company proceeded with the tagline of “to inspire and nurture the human spirit - one person, one cup and one neighbourhood at a time” that showed the company’s confidence on its product quality along with the flavour and variation of coffee they are offering. The target market of Starbuck is worldwide large customer base that made Starbucks a global brand (Grant, 2016).

The corporate level strategies implemented by the company needs to be identified in terms of providing third place experience. These are seen with various types of the initiatives such as providing comfortable environment for the friends and family. In addition to this, the added features of the pace incudes providing free Wi-Fi services and other services which meticulously increase the duration of stay at the shop. Some of the other initiatives taken by the company are discerned with maintaining highest standard of quality in their products. This has been depicted with the main considered of the product differentiation. The coffee chain giant was able to consider on improving the quality of the products by refining the customer services through bringing about more innovative strategic opportunities as a retailer of coffee (Warren, 2015).

The international expansion is seen as another important strategy which is adopted by the company. This initiative by Starbucks needs to be depicted with the long-term perspective. The share of the company revenue needs to be also included in the revenue of the company from China/Asia Pacific (CAP) and segmental increase of profit by 14% in 2016 from 7% in 2015. As per the strategy of international expansion pertaining to the emerging economies the total number store outlets of the company increase to 2719 new stores, with the expansions measures adopted in 2015 and 2016 (Grant, 2016).

The consideration of the integrated technology in the different types of the processes of the business. It needs to be also considered that Starbucks has declared that the implementation of the new technology not only includes improvement of the website but also processing of the payment with more swiftness. The company has been also seen to discern the achievement of the technological aspects with the integration of wide range of tech driven business procedures and policies (Pangarkar, 2015). These improvements are considered to be based on wide range of areas pertaining to the fields of communication of the marketing message, new product development, monitoring of the customer satisfaction and completing the sales procedure. The most significant instance of the value creation is evident with the launching of the strategic programs such as Mobile Order & Pay feature. This feature allowed the customers buy any product without standing in the queue. Moreover, the launch of voice ordering app and sending of the message service was able to notify the customers for the orders made with mobile (Aiello & Dickinson, 2014).

(b) Evaluation of the Suitability of the Current Strategies of Starbucks

For every business organization, the management considers the adopted business strategies as suitable when they lead to the development of overall business and there is not any exception of this fact in case of Starbucks. From the time of its inception, the most important strategy of Starbucks has been product differentiation along with offering differentiation like the premium product mix, different coffee beverages, exclusive locations and others. This aspect makes the products and offerings of Starbucks unique from its other competitors and it contributes towards the high amount of revenue for the company (Rothaermel, 2015). Another major strategy of Starbucks is the acquisition of some major coffee and beverage related product companies like Teavana, Bay Breads, Evolution Fresh and others; and the adoption of this strategy of Starbucks supports its product differentiation strategy. The success of this strategy reflects from the large popularity of the coffee as well as beverage products of Starbucks all over the world and this aspect helps the company in gaining the highest market share in the operational areas (Rothaermel, 2015).

Another major strategy of Starbucks is their strategy to expand in the key development as well as emerging markets in order to expand their business share. The suitability of this strategy can be seen from the expansion of Starbucks more than 60 countries all over the world. At the same time, it needs to be mentioned that the adoption and implementation of all these strategies have provided Starbucks with major competitive advantage over its competitors (Lasserre, 2017). Thus, the above discussion indicates towards the suitability of the adopted strategy of Starbucks in their business.      

Recommendation on Alternative Strategic Initiatives

The alternative strategic initiatives are provided below:

  • It needs to be mentioned that one of the current strategies of Starbucks is to sell their coffee on discounted price with the aim to increase the number of customers for their business. However, this strategy can lead to degradation of the brand image of Starbucks along with the inception of price war with the major competitors like McDonalds and Dunkin Donuts. For this reason, the alternative strategic option for Starbucks is the implementation of a more elaborative discounting technique in the form of reward program (Bettis et al., 2014). The adoption of the strategy of reward program will encourage the customers to visit the stores of Starbucks more often. At the same time, the presence of lucrative award program will deter them from visiting the competitor’s stores.
  • In February 2008, the magazine called Consumer Reports considered the coffee of McDonalds testier than Starbucks. For this reason, the alternative recommendation for Starbucks is to ensure the continuous improvement of the quality of their coffee. For this reason, it is required for Starbucks to continuously inspect as well as analyze the brewing system so that scope of renovation can be identified (Harrison & John, 2013). Moreover, Starbucks should analyze their brewing system based on their ability for creating distinctive and complex flavors of exotic specialty coffees.

Conclusion

From the above discussion, it can be concluded that Starbucks is trying to be represented as the neighbourhood coffee shop to grab the most customer visits to all the high-traffic areas. The building of Starbucks mobile application, delivery application proves excellence in the marketing strategy. Moreover, it offers customers the state-of-the art place for enjoying the coffee. The expert team of Starbucks is also focusing overseas expansion. The branding empowerment, nurturing a sustainable growth creates unique position of Starbucks in the marketplace.

References

Aiello, G., & Dickinson, G. (2014). Beyond authenticity: A visual-material analysis of locality in the global redesign of Starbucks stores. Visual Communication, 13(3), 303-321.

Bettis, R., Gambardella, A., Helfat, C., & Mitchell, W. (2014). Quantitative empirical analysis in strategic management. Strategic Management Journal, 35(7), 949-953.

Fontaine, M. (2013). Corporate social responsibility and sustainability: the new bottom line?. International Journal of Business and Social Science, 4(4).

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Harrison, J. S., & John, C. H. S. (2013). Foundations in strategic management. Cengage Learning.

Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.

Pangarkar, N. (2015). Performance implications of strategic changes: An integrative framework. Business horizons, 58(3), 295-304.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

Warren, K. (2015). Strategy Dynamics Essentials. Strategy Dynamics Limited.

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