THE APPLICATION OF COMPETITIVE STRATEGY DYNAMICS: A CASE STUDY OF STARBUCKS CORPORATION
Firms that earn persistently higher levels of profit than competitors have a competitive advantage (Grant, 2008; Porter 1985). Michael Porters famous five forces of competitive position model provide a simple perspective for assessing and analyzing the competitive strength of a corporation or business organization. The competitive advantage (CA) model of Porter learns that competitive strategy is all about taking offensive or defensive action to create a defensive action to create a defendable position in an industry in order to cope successfully with competitive forces and generate a superior return on investment. Starbucks is a notable company that can be useful to researchers and industry observers who want to understand the underlying factors for a company to achieve a sustainable competitive strategic position in an ever-saturating industry. Starbucks is an exemplary company that has continued to succeed with a new take on an established product, coffee. On July 21, 2016, Starbucks corporation reported 3rd quarter 2016 earnings of 0.49 per share. This result is in line with the consensus of the 27 analysts following the company and this exceeded 2015’s 3rd quarter result by 16.67%. Given this background, a case study of Starbucks is presented and analyzed in this writing to determine and evaluate their competitive strategic dynamics.
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Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks
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.
In this technique, internal strengths and weaknesses of a company and external opportunities and threats faced by it are closely examined to chart a marketing strategy for the future (Forsyth, 2010, pp. 102-106). Major strengths, weaknesses, opportunities and threats of Starbucks are analyzed below.
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.
Starbucks financial statements were analyzed for the fiscal year ended September 27, 2015. Like all public companies, annual and quarterly financial statements are required to allow regulators and other interested parties to analyze the financial status and management decision making of the company. This analysis focuses on the results of Starbucks most recent published annual report containing their balance sheets, statement of earnings and cash flows. These statements will be analyzed against the results of one of its competitors, Dunkin Donuts, to investigate how the two companies compare to each other. It was noted that Starbucks and Dunkin Donuts do not have corresponding fiscal year ends. The data therefore is not directly comparable since the reports do not reflect the same time period of data but should provide additional insight. The paper will attempt to provide a brief analysis of Starbucks operations in terms of its liquidity, leverage, activity, profitability and growth ratios used by analysts in the industry.
In this paper, I will talk about Starbucks Company. I will define the influence of the vision, and mission of the company and primary stakeholders along with their overall success. An examination will be conducted to categorize five forces of struggle and their effect on the corporation. I will carry out a SWOT analysis to determine the opportunities, threats, strengths, and weaknesses. Founded on the SWOT analysis, a technique of opportunities and advantages will be exploited while threats and weaknesses will be diminished. Several types and levels of techniques will be talked over to operate the profitability and competitiveness. I will outline a plan of communication to make approaches known to all investors. Two corporate authorities will be designated to assess the efficiency of the regulating managers. I will also assess the effectiveness of management within the Company and come up with sanctions for upgrading.
The Government is involved in almost everything that everyone does. They intervene in the business and personal lives of people all over the world. They put rules and regulations in place to help control certain aspects of the business and help the public in a way. Obesity has becoming one of the fastest growing problems with Americans due to the health and diets that there are in America. The government has invited McDonald’s by the Department of Health to help write government policy on obesity, alcohol and diet-related disease. The government has also helped ban bad oils and other ingredients in fast foods to reduce the health problems with heart disease, high cholesterol, and other problems that lead to obesity. The government is trying to control what we can and cannot eat. The government is trying to ban toys in the Happy Meals and considering passing other laws and regulations, taxes, and initiatives to limit how these restaurants prepare their foods. In Seattle and other restaurants in other states are required to post calorie information for all meals served. These rules have also lead to increasing taxes on sodas and fattening foods to prevent people from purchasing them anymore and making healthier choices.
Analysis on the marketing environment supports the market expansion and growth. Surviving in the global market is critical for any competitor due to the presence of many competitors. Starbucks is one of the most famous coffee producer and supplier around the world. This assignment is an analysis of marketing theories and different practical situations relating to the case study of Starbucks. The marketing policy of Starbucks is highlighted to identify its strength, weakness, opportunity and threats in this assignment. The marketing orientation is discussed and analysed with the scrutiny on the customer
“Competitive strategy involves positioning a business to maximize the value of the capabilities that distinguish it from its competitor’s” (Porter 1980:47). A successful business plan requires first and foremost the formation of an appropriate strategy. Through the implementation of a suitable strategy, the company is able to obtain its own industry niche and gain an understanding of its customers (Porter 1985). Whichever strategy is adopted it must be adequately integrated within the firms goals and missions to achieve a competitive advantage (Parker and Helms 1992).
Michael E. Porter, associate professor published the article titled “How Competitive Forces shape Strategy” in Harvard Business Review in 1979. This article is retitled as “The Five Competitive Forces That Shape Strategy” and published in Harvard Business Review in 2008. Michael E. Porter developed the model of Five Competitive Forces which is defined as “Competitive Strategy – Techniques for Analyzing Industries and Competitors”. It has become a main device for analyzing an organizations structure in strategic practices.
The Apple IPhone Company has created quite a name for itself through the creation and sales of the phone that is leading in innovation, technology, and consumer popularity. With many large cell phone competitor companies, such as T-Mobile, Verizon, At&t, and Sprint, the IPhone has managed to continually create a product and service that continues to beat the competitors in technology and innovation. The smaller cell phone companies such as Cricket, Metro PCS, and Boost Mobile are able to stay in business only because they sell somewhat of a different marketing strategy, which
According to Kourdi (2009) ‘Business strategy is the set of activities where business combines mission, vision and goals of business and goes forward to achieve them’. Every business combines strategic plan and activities to achieve their goals. In other aspect it can be said business strategy is the subject by which an organisation make their roadmap
Corporate Strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business. In the case of Starbucks the corporate strategy they have implemented is unique to their industry which has allowed them to differentiate from their competitors and is summarized best by Howard Schultz CEO of Starbucks, “We’re in the people business serving coffee,” high quality specialty coffee and related products in a European café environment. It is clear Starbucks is in a growth strategy utilizing three key techniques that support its Mission, “to inspire and nurture the human spirit – one person, one cup and