ORGANIZATIONAL ENVIRONMENT
Starbucks vs. Competition
Organizational environment is defined as all elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization (Daft, 2009). One organization that has faced environmental factors which required them to change their current organizational strategy, is the Starbucks Corporation.
Starbucks Corporation is considered the top provider of premier coffee products in the world (St. Johns, 2007). Their coffee buyers travel to coffee farms in Latin America, Africa and Asia to select the highest quality Arabica beans (Starbucks Coffee Company, 2011).
Circumstances that brought changes in Starbucks
Starbucks have been
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McDonalds has also increased its customer service by having its employees add the cream and sugar to the coffee for the customer. This additional service is an attempt to equalize itself to the personal service provided by Starbucks baristas (Dockett, 2008). Dunkin Donuts is trying to recreate the meaning of coffee to the consumer as being a part of their day. With its advertising campaign labeled “America Runs on Dunkin,” Dunkin Donuts is selling the idea that coffee is fuel, rather than a “lifestyle,” as it is marketed to be by Starbucks. It now offers a variety of coffee blends, chai tea, and espresso products (Dockett, 2008).
Why did Starbucks need to change?
The current impact of the industry rivalry force created by the competition between specialty coffee retailers is very high, especially as contrasted to what it was at the time of Starbucks’ rapid expansion twenty years ago. The growth of the industry has slowed while the number of competitors within the industry has increased (Starbucks Strategic Analysis, 2008). Both of these factors have caused this change from weak to strong industry competitiveness. The economies of scale within the specialty coffee industry have increased as the size of the top players has increased (Larson, 2008).
Results of the change
With all of the competition in the coffee industry, Starbucks sets itself apart from all other coffee manufacturers through their ability to brand their products through product
Starbucks is an American coffee company and coffeehouse chain which founded in Seattle and Washington from 1971, Starbucks already operated more than 20000 locations worldwide. (Starbucks Coffee Company, 2016) As one of the bestselling coffeehouse chain, Starbucks need to find a long term corporation supplier to provide coffee beans. Costa Rican coffee beans are considered among the best in the world. (Kummer, 2003)
The “Coffee Wars – The Big Three: Starbucks, McDonald’s and Dunkin’ Donuts” article focuses on the company analysis of the Starbucks brand and how its main competitors, McDonald’s and Dunkin Donuts, has affected their brand and driven competition higher. Even though there are many companies trying to enter the specialty coffee market, these three companies own the majority of the market share. With Starbucks’ top quality and above average prices they hold a different market than the fast coffee/food market of Dunkin’ Donuts and Starbucks; yet the competitive moves Dunkin’ Donuts has made over the years in order to compete with Starbucks and surpass McDonald’s has driven competition up between all three companies. The competition has stiffened ever more in the past ten years due to the changing economy. This led to “the big three” to come up with different techniques to gain competitive advantage over the other. Although the competition between these companies is to gain most of the market share, consumers are still loyal to a certain brand; this makes it difficult to gain each other’s clientele. McDonald’s continues to appeal to customers who want value and speed, Dunkin’ Donuts focuses on the middle-class, while Starbucks a customer who desires a higher quality product along with being recognized for using the brand.
Seattle based, Starbucks Corporation is the leading coffeehouse chain in the world. The company has its operations in more than 44 countries. The main products offered by Starbucks various kinds of drinks, snacks, coffee beans. The company also operates in the field of marketing of music, books (The Company, 2008).
Starbucks has developed a brand image that has revolutionized coffee drinking experience. It has created an ambiance that is designed to attract customers and keep them coming back to Starbucks stores. It offers wide varieties of services such as comfortable seating areas with unique music and free wireless Internet for their customers while sipping their favorite coffee. This distinctiveness sets Starbucks apart from most of its competitors and has allowed the company to successfully grow and profit while charging premium prices for their products.
It’s a known fact that Starbucks is one of the leading brand in the market.When we analyse the market we find that Mcdonald 's and Dunkin are the competitors in the same product segment. So comparing Starbucks with these competitors will throw light on its grey areas, process and competitive edge in the market.
1. In the beginning, how was Starbucks different from other coffee options for coffee drinkers in the United States? What activities and assets did Starbucks leverage to differentiate itself from competitors?
Starbucks is one of the most recognizable coffee retail chains in the world. Their brand focuses on high quality coffee using specialized roasting of beans from many countries around the world.
Moreover, most of the people know the brand Starbucks as the leader of the coffee industry. It is enormously successful and it comes out with no surprise that this will be used as benchmarking against the study of Dunkin’ Donuts.
McDonald’s, in addition to several other fast food vendors like Burger King, Dunkin’ Donuts, Panera Bread and independent coffee houses remain Starbuck’s toughest competition (Adamy). McDonald’s began introducing its espresso beverage products in 2001, and offers its product at a price between two and three dollars to compete with Starbucks between three and four dollars a cup coffee (Adamy). Similarly, Dunkin’ Donuts has recently implemented a plan to expand nationally (Adamy). On average, Dunkin’ Donuts coffee products cost approximately 20 percent less than Starbucks’ (Ball and Leung). In response, Starbucks has announced recent
Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?
Starbucks Corporation is an American global coffee company and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 20,366 stores in 61 countries, including 13,123 in the United States, 1,299 in Canada, 977 in Japan, 793 in the United Kingdom, 732 in China, 473 in South Korea, 363 in Mexico, 282 in Taiwan, 204 in the Philippines, and 164 in Thailand.
In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.
Many coffee companies are currently in the market, making competition fierce. Although Starbucks has a strong reputation in North America, direct and indirect competitors still pose a threat. To establish market niche, competitors use location,
In terms of competition and the forces, which could limit the success of Starbucks it is important they stay ahead or even with other companies concerning innovative products. Many more micro companies are coming up with new products with a similar quality and a lower price/cost. It is important that Starbucks continues to search for innovative products to continually satisfy their customers. At the same time “rivalry” amongst Starbucks and smaller providers of coffee will continue to increase as the demand for coffee continues. The buyers bargaining power is significant as they can determine the cost, type of product, quantity and ultimately
The Organizational environment refers to the forces that can make an impact. Forces made up opportunities and threats. Organizations do not exist in isolation. It works with the overall environment. Scholars have divided these environmental factors into two main parts as.