Need help!!! Strategy Implementation PT 3

Starbucks Strategy

Strategy Formulation

Ratusione Tuuhetokalasike

Management 498

April 24, 2017

Professor John Olmstead

Long term Goals and objectives of Starbucks

Starbucks operates in a highly competitive market having several strong competitors in the market, so the management team should figure out the inherent and operational risk to plan properly the goals and objectives for Starbucks. Starbucks is one of the best coffeehouses on the planet, which began its journey from 1970 and till 2005. Starbucks built up their branches in more than 15,000 areas throughout the world. Also, Starbucks research and development department works hard in several researches and introduced new products and enhance the quality of the other to remain ahead of their competitors in the industry.

Main objectives of Starbucks are to make Starbucks the world best coffee selling brand and setting certain principles, which cannot be compromised during their growth and achievements. Starbucks is looking forward to concentrate on customer’s centric goals for getting long term benefit because in such a high competition it is the customers that will ultimately take the final decision to choose the coffee brand of their choice and taste (Garthwaite, 2017). Thus, Starbucks management has decided to put themselves into customer shoes and to focus on customers demand and suggestions from feedback taken from customers to achieve their long term economic goals.

After the successful opening of Roastery and Tasting room, Starbucks has touches the heights of glory and success and customers appreciated its quality and taste. After successfully launching Roastery, now Starbucks is looking forward to expand its business across the globe and set out a plan to expand its business of Roastery throughout the world and set their goal to open new stores in more than 1,500 new locations.

Main objective of every business is to increase its profit and Starbucks has also the same objective. Starbucks management has defined their goal that they are planning to raise their revenue in the upcoming 5 years only from food industry in U.S to over $40 million, which is now only $20 million because all its operations and future planning are depended on the revenue they generate. In example, generating more revenues will enable it to operate and allocates its resources more efficiently.

For generating more revenues Starbucks has planned to diversify its operations by extending the time of its evening operations, providing more recreational facilities to customers. Introducing new drive thru, launching entertaining facilities for kids and candy shops for them. Also, renovating their stores to catch the customers and offering discounts at their new cafes and on special events. Starbucks has also planned to expand the usage of its mobile application for ordering and payment purposes, which the analysts are calling a game changer plan. This enables the customers to place their order online before going to café to save their precious time. The customer can also pay their charges online through this application (Chua, 2013). After success of mobile application and loyalty program now Starbucks has planned to launch remote delivery services in selected areas, which will be expanded to more locations across the world over the time. By successfully achieving the creative goals and objectives set out by Starbucks management the company will be able to sustain its competitive advantage and will capture the market.

Business management Strategy

The CEO, Howard Schultz, strategy is to recruit the world best managing team and motivators, which will provide the best leadership to the company and for this he selects the ex-employees of top most companies of the world like Disney and Microsoft that possess extra visionary qualities and have great track record. Starbucks is planning to diversify its operations and products. Management has a clear vision to adopt the culture and taste of the locality in which Starbucks start operation like in China, Starbucks renovate its interior and adopt Chinese wooden style innovations. Likely Starbucks has clear strategy to introduce new brands that suits the taste and culture of the locality (Cole, 2008). CEO of Starbucks has also planned to adopt a flexible structure for its organization and delegate some authority to his highly competent managing team to play their role in planning and setting goals and objectives and monitoring the work of their subordinates. All these strategies were aimed to increase revenues of the company.

Vertical integrations Strategy

Starbucks has also implemented vertical integration strategy and has introduced Roastry stores, which buy and collects the world’s best coffee beans, roasts it and stores it. Then it supplies roasted beans to all Starbucks stores thus insuring the world’s best quality and taste for its products and this has considerably increased revenues of the company by reducing per unit cost of coffee. Research and development department are still working hard to enhance the quality of the coffee and to produce the finest coffee beans, so that they could achieve the long term financial goals as set by the company.

Starbucks strategic alliance

Starbucks strategic alliance has performed a great role in improving the quality of the Starbucks products and plays a vital role in success of the company. Starbucks have alliances with National Associations of the advancement of colored people, Kraft foods, United Airlines, PepsiCo, Barnes and Noble and Tata coffee (Cravens ∗, 1993). All these alliances are aimed to generate more revenues from their products. In these alliances, not only Starbucks but the other companies of the group had also got much benefit. In future Starbucks is planning to enter alliance with some other airlines and major companies to promote its business and generates more revenues.

Starbucks competitive advantage

Starbucks has sustained its competitive advantage over its competitors in the market by the creative thinking of its CEO and his team. Starbucks has produced world best coffee beans and launched customer’s loyalty program. Other differential qualities that give Starbucks competitive advantage over its competitors are the establishment of the Roastry and tasting room department, internal organizational structure of Starbucks and customer’s centric policies. Starbucks has also launched reward card for customers by which customers can avail discounts and other bonuses. Combined effect of all above mentioned points has given the Starbucks a considerable advantage over other brands in the coffee industry.

Organizational chart of Starbucks

CEO

Supply chain operations.

Executive vice president

Regional retail president

Finance

CFO

Legal and corporation affairs

International Retail president

Customers services representative.

Senior Vice president

Legal advisor

Marketing

Senior vice president

Human resources. Senior vice president

Worldwide public affairs.

Senior vice president.

Coffee

Senior Vice president

References

Chua, A. a. (2013). Customer knowledge management via social media: the case of Starbucks. . Journal of Knowledge Management, 237-249.

Cole, G. (2008). Cole, G. (2008). Grande Expectations: a Year in tGrande Expectations: a Year in the Life of Starbucks' Stock. Loughton: Piatkus 2007. Cole, G. (2008). Grande Expectations: a Year in the Life of Starbucks' Stock20081Karen Blumenthal. Grande ExpeManagement Decision, 673-675.

Cravens ∗, D. S. (1993). Cravens ∗, D., Shipp,Analysis of co-operative interorganizational relationships, strategic alliance formation, and strategic alliance effectiveness. . Cravens ∗, D., Shipp, S. and Cravens, K. (1993). Analysis of co-operative interorganizational relationsJournal of Strategic Marketing, 55-70.

Garthwaite, C. B. (2017). Starbucks: A Story of Growth. . Kellogg School of Management Cases., 1-20.