Competitive Strategy Of Starbucks

Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.

Starbucks utilizes a differentiation business model by offering an overall unique and high quality experience for the consumer. From the high-quality food and drink options, to the uniquely roasted coffee and supreme customer service, Starbucks aims to provide an experience unobtainable anywhere else. Starbucks also focuses heavily on rapid expansion by seeking out profitable geographical areas and overcrowding those areas with stores in order to exploit profits and slow down competitors. Starbucks’ compliments this with its horizontal acquisition strategy, extending their product line through acquisition of competitors. This provides Starbucks with a differentiation strategy focused on providing a diversified product mix

"External factors influence a firm 's choice of direction and action and, ultimately, its organizational structure and internal processes. These factors, which constitute the external environment, can be divided into three interrelated subcategories: factors in the remote environment, factors in the industry environment, and factors in the operating environment… In combination, these factors form the basis of the opportunities and threats that a firm faces in its competitive environment," (Pearce & Robinson, 2004, p. 78). To create an experience unlike its competitors, Starbucks must constantly evaluate all areas of their business while capitalizing on economies of scale and eliminating redundancies.

Starbucks is an American company based in Seattle, Washington, that offers coffee products and café services throughout the world. The company was founded in 1971, and is now the largest coffeehouse company in the world. It now has a total of 23,132 stores in 65 countries and territories, including in the United States, China, Canada, Japan and United Kingdom. Starbucks sells high-quality whole bean coffees from different parts of the world along with other types of freshly brewed coffees, expresso beverages, premium teas, sodas and juices, pastries and confectionery, coffee-related accessories such as the Starbucks mugs, and coffee making equipment. The company sells its special products through its retail stores, warehouse club chains, office coffee distributors, hotels, mail-order catalogs, and online (“Starbucks Company Profile”, 2014).

In the north, Starbucks entered a joint-venture with Beijing Mei Da coffee company. In the east, Starbucks partnered with the Taiwan-based Uni-President. In the south, Starbucks worked with Hong Kong-based Maxim’s Caterers. Each partner brings different strengths and local expertise that helped Starbucks gain insights into the tastes and preferences of local Chinese consumers.

Starbucks have been able to create a sense of brand loyalty with their loyal customers. Despite their inflated prices, they have established a monopolistically competitive market structure because they found out how to benefit their customer, leverage the company widely to many products and markets, and create ideas that are different from competitors. Starbucks’ logo, quality, and various trademarks differentiate their brand from their competitors. In order to focus on their primary competencies by differentiating themselves has made Starbucks become drastically succeed. Product differentiation offers differentiators such as premium product mix, locations, coffee beverages reputation and supreme customer service that promote to establish a premium valued brand. Starbucks also has an astute strategy of strategic alliance and

Under today’s ever-changing market, strategic marketing planning has become more and more significant whether of the functional or the fundamental. Especially, although financial crisis leaded economy growth slowdown, it did not cause a serious influence for chain coffee shop. As Howard Schultz said, CEO of Starbucks, “I don't think we had a business plan for the severity of what has taken place. History demonstrated to us that a downturn in the economy would not affect us, and in fact, we would be recession-proof.” (Katie Couric, 2008) Based on Financial Times, Starbucks revealed that strong earnings of $242m of 2008, a jump from the $64m it recorded during the comparable period last year and total revenues for the quarter

* Starbucks expanded to pursue sales of products in a variety of distribution channels and market segments. Products were marketed to restaurants, airlines, hotels, universities, hospitals, business offices, country clubs, and select retailers. In the airline industry, Starbucks coffee was served in flights United Airlines and United Airlines. Packets of Starbucks coffee along with coffee making equipment were made available in each room in Hyatt, Hilton, Sheraton, Radisson and Westin Hotels. Coffee service was also provided in several Wells Fargo banks in California. Foodservice distributors such as Sysco Corporation

I. The company that I will be working on is Starbucks. The company's business is based on coffee. The core business is in the quick service food sector, with a coffeeshop focus. QSR Magazine ranks Starbucks as the 3rd-largest firm in the US in the industry, and the largest with a coffee focus. The company also has retail and institutional businesses, marketing coffee in a variety of formats both to consumers via grocery outlets and to hotels and other institutional buyers.

De Wit and Meyer (1998) refer to market tendency towards homogeneous variety and tighter international linkages as globalization. The need for global strategy is outlined by the fact that companies are subject to global forces and consumer demands. As a consequence, firms are faced with a challenge of modifying their existent strategies to gain and sustain their competitive advantage in a rapidly changing environment. A well-designed global strategy can help a firm to gain a competitive advantage, that as identified by Sumantra Ghoshal of INSEAD can arise from Efficiency, Strategy, Risk, Learning and Reputation (Appendix1). Therefore, to create a successful global strategy, managers first must

What was once a small coffee shop opened by Gerald Baldwin, Gordon Bowker, and Ziev Siegl in 1971, Starbucks Coffee Company has grown into the number one specialty coffee retailer. With over 10,000 coffee shops in more than 30 countries, of which 4,200 are licensed and franchised and 6,000 are owned, the company’s main objective is to establish Starbucks as the “most recognized and respected brand in the world,” (Moon). Currently, Starbucks is relying on retail expansion, product innovation, and service innovation to achieve a long-term goal once set by current chairman Howard Schultz: “The idea was to create a chain of coffeehouses that

The purpose of this essay is to prepare a strategy formulation analysis required by the company. The company selected is Starbucks Corporation, commonly known as Starbucks, when they first started in Seattle, Washington in 1971, founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker; and became an American multinational company which started from scratch (Garza, n.d.). It was then incorporated on November 4, 1985, and is a roaster, marketer, and retailer of coffee. Starbucks offers a range of exceptional products include coffee, handcrafted beverages, merchandise, and fresh food. The company 's mission is "to inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time" (Starbucks, 2012).

most coffee drinkers because it is where most of the educated professionals are located as

Compared to the other coffeehouses, Starbucks has a greater augmentation layer. Now, Starbucks has provided ice creams, alcoholic beverages, teas and juices in addition to coffee. Not many companies has this wide range of products sold in the market.

According a research carried out by John Dudovskiy (2017), Starbucks business strategy is based on the following four pillars: