Need help!!! Strategy Implementation PT 3

Strategy Part 1

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Starbuck Corporation competitive advantage

Starbuck Corporation is a multinational company leading in coffee outlets worldwide by providing hot and cold beverages as well as snacks in their restaurants in different locations in the world. For the company to survive in the market, it must establish some strategies that will enable it to gain a competitive advantage over its competitors. This starts by carefully screening the market environment to determine its internal and external environment. The following are the analysis of the environment of Starbuck Company.

Internal Environment

The internal environment is made up of all factors that a company can control (Sekhar, 2009). They include the strengths and weaknesses of a company toward its competitive strategies to gain competitive advantage. By use of the resource based view, which categorizes a company’s base for competitive advantage into the types of resources a company owns, the resources that determine the strengths and weaknesses of the company are categorized into tangible and intangible resources as well as the company’s core competence (Varbanova, 2013).

Tangible resources

Starbuck Company has maintained a strong financial position and strong asset base in the last decades. This gives the company an opportunity to utilize opportunities in the market more effectively than its competitors. The strong asset base that includes the equipment and reserves in the company increases its capital access.

Intangible resources

Starbuck Corporation has a large workforce of 200,000 employees who gives the company advantage in terms of innovation. The size and diversity of the workforce make it easy or new idea generation and ways of operations. Therefore, the company increases its innovation in meeting the needs of its customer and in dealing with challenges arising in the company. However, the large workforce puts the company at risk of issues such as industrial strikes which are threats to a company. Also, Starbuck Company has worldwide recognition for its coffee quality, which makes it easy to market itself due to the product’s popularity. The company easily expands into new markets and grows without necessarily investing a lot in advertisements.

Core competencies

Starbuck has great ability to deliver high-quality products to various customers by ensuring their availability and locations accessibility. The company’s large scale operations ensure that customers get a guarantee of high-quality products by buying them at premium prices. The company is also committed to social responsibilities by ensuring that the strategy it develops favors the farmers’ profitability from sale of the role materials to the company.

External environment

These are the factors that are beyond the company’s control. Using the PEST model to evaluate the external environment, the following is Starbuck’s company external environment. A political environment that comprises of all factors that relate to government interventions in the business and their effects. They include tariffs and government restrictions. In the recent, Starbuck has been experiencing difficulties with its strategies for sourcing raw material which attracted attention from the politicians making the company wish to hold on to the social and environmental norms stipulated in sourcing for fair trade practices. The company must respond to various enactments made at international levels with different jurisdictions since it’s a multinational organization and adjust its policies accordingly.

The economic environment comprises of the factors that affect a company’s business operations. They include factors such as economic growth and inflation. The economic environment of the company is threatening due to reducing employment rates and economic growth which reduces the buying power of the company’s customers. Thus, Starbuck customers have switched to cheaper coffees making the company experience low revenues.

Social environment that comprises all the population related issues such as age, career, and family income as well as all the cultural (Maresova, 2015). The company is facing threats due to the negative economic climate of reduced income of individuals and aging population. It experiences high cost of labor due to smaller and less willing workforce.

Technological environment determines the barrier to entry. Technological factors are both threats and opportunity to the company since the innovation of new technology gives the company a chance to advance the efficiency of its operations and quality of its products. However, changes in the technology give its competitors an opportunity to be more efficient in their production than Starbuck Company.

Strategies

Starbuck Corporation has gained a great competitive advantage over its competitor due to its ability to use its resources, both tangible and intangible and its competence in an effective manner in meeting its customers’ needs. This has enhanced its expansion and recognition worldwide.

The strategies that Starbuck Company uses to create value and gain competitive advantages include.

1. Product innovation by the development of new products which expands the company’s market and increases its revenues.

2. The company capitalizes on the changing customer taste and preferences hence increasing its target population.

3. Stores opening in low and medium income communities, giving the company an opportunity not only to grow its businesses as well as solving the social problems in the regions.

4. Refusal of company franchising. Despite the many advantages a company enjoys from franchising, Starbuck has been against it. The company believes in its values and culture as the main drivers towards its success. They do not want anything to come between them and their customers what the franchisees do.

5. Changing of the expansion strategies. Starbuck Company has been opening stores that act as walk-truss in various regions in New York and Boston to increase the company’s penetration.

6. Focus on food. Starbuck Company focuses on the production of food stuff in their restaurants hence expanding their market niche. This way, they target all restaurant customers.

Guidelines

The company uses the following measurement guidelines to verify its strategic effectiveness.

1. Annual customers, the increase in several customers the company has offered its services in a year determines its success.

2. Customers’ satisfaction, strategies are said to be effective if the company has met the need of the customers as they wished.

3. Growth percentage, expansion in the company’s operations is an indicator of strategy effectiveness.

4. Revenue, increase in the revenue that a company earns after adopting certain strategies indicates the strategies effectiveness.

The measures haves been so effective in Starbuck as the company uses the annual customers, customer’s satisfaction, revenues earned, and growth percentage to determine its progress in the industry and compare to its competitors.

References

Maresova, P. M. (2015). Economics aspects of ageing population. . Procedia Economics and Finance, 534-538.

Sekhar, G. S. (2009). Business policy and strategic management.

Varbanova, L. (2013). Strategic management in the arts.