Corporate Strategy for Starbucks Coffee - Essay Example

? Running Head: Corporate Strategy Inserts His/Her Inserts Grade Inserts Inserts Here(Day, Month, Year) Every business organisation operates its activities and environment with the help of various strategies and functions. It tends to manage its plans and goals in such a way which assist the organisation in the accomplishment of its major business objectives. Considering the significance of the corporate objectives, this paper discusses the concept of the strategy implementation and implications in the Starbucks Coffee. This strategy pertains to the introduction of a free reward card system. Starbucks Coffee Starbucks Corporation is a global coffeehouse chain originated from Seattle, Washington. The company is the largest coffeehouse across the world having more than 17,000 stores in over 56 countries. This includes over 1,000 stores in Canada, 11,000 in the United States, more than 150 in Turkey and over 700 in the United Kingdom (Starbucks, 2011). The major products of Starbucks comprises of the espresso-based hot drinks, drip brewed coffee, coffee beans, other cold and hot drinks, hot and cold sandwiches, salads and Panini, snacks, pastries, and items such as tumblers and mugs. Besides these eatables, the company has also diversified itself to create a Hear Music brand in the Starbucks Entertainment division, and also markets books, films and music (Bolton, Ruth, Kannan, & Matthew, 2000, pp. 95). Many products of the company’s products are only specific to the store’s location or the season. Starbucks-brand ice cream and coffee are also offered at grocery stores. Corporate Strategy at Starbucks The diversified and well managed company, Starbucks, manages its operations with the help of its corporate strategies. The company guides its scope and direction through its strategy in the long term and fulfils the expectations of its stakeholders successfully (Sharp, Byron & Anne, 1997, pp. 473). The corporate strategy of any organisation is also usually termed as its "mission statement". Requirements for the Implementation of a Strategy Before the implementation of any strategy, the organisation needs to analyse and understand whether the desired strategy is required within the company or not. In order to give life to the mission and vision of the company, the strategies are implemented which provide a far-sighted view and a correct direction for the activities of the organisation. Thus, for the purpose of formulating a new strategy and implementing it effectively, it is essential that the style, structure, leadership, resources, change management and the entire system of the organisation act like a supporting block. A new strategy in an organisation would need the assistance of change management the most, for the reason that it would demand new resources, different management style and an entirely modern viewpoint of execution. It would require: Effective leadership; Additional tangible and non-tangible resources; Change management system; New processes and methods; Skilled human resources; and Modern system implementation. All these elements constitute the requirement of introducing a new strategy in an organisation. Implementation of the free reward card system The free reward cards pertain to the loyalty cards and such incentive coupons which are offered to the customers in order to increase their loyalty and the retention rate in the organisation (Lewis, Michael, 2004, pp. 281). The implementation of the free reward cards would assist Starbuck’s corporate strategy and marketing strategies in many ways. If we consider the 7S model given by the Mintzberg and Quinn, the effect of the strategy implementation of Starbucks can clearly be analysed through the seven factors. It is explained as follows: 7S Framework by Mintzberg and Quinn The 7S framework was given by Mintzberg and comprises of the following elements: 1. Strategy: this pertains to the set of connected activities which are chosen to be applied as a course of action in the organisation; 2. Structure: the company has its tasks divided in accordance with the ladder shown in the organisational chart; 3. Systems: the system of the organisation refer to the flow of activities and the processes which indicate the working of an organisation: 4. Style: pertains to how the management inside the organisation behaves: 5. Staff: these are the people who work in the company; 6. Shared-values: the norms and beliefs shared by the people in organisation; 7. Skills: the abilities that the people possess. Keeping this model in mind, the new strategy will fit in the strategy section of this model and will benefit the overall direction of Starbucks. The introduction of free reward cards will prove to be a good incentive to attract customers, build brand loyalty, retain the customer base and create product positioning in the market (Verhoef, Peter, 2003, pp. 30). It will, to some extent, improve the conventional systems of advertising the company’s products and will change the style of company’s working. Due to the introduction of new loyalty schemes and incentives, the skills brought and applied into the company may also be increased (Besanko, David, Jean-Pierre & Sachin, 2005, pp. 123). According to the introduction of the new strategy in the 7S framework, its implementation would effect the organisation in the following areas: Impact of the new strategy on existing strategy The new strategy implemented at Starbucks would affect its existing marketing and customer retention strategies in a positive manner. It will result into more brand loyalty and customer retention. Moreover, it would enhance the satisfaction of customers by providing them an ease of use in utilizing the products of the company. Thus, the revenue generation can possibly boost while enhancing the company’s customer base at the same time. Impact of the new strategy on Systems Every organisation works with a certain system and standards for the performance of tasks. The introduction of free reward card systems may have implications on the systems and processes of Starbucks. It might transform the entire process of assessing customer’s feedback and appraising the products’ success from conventional to modern methods. Since, the strategy of free reward card systems will serve as the part of company’s CRM, it might impact the other departments of the organisation in an indirect manner. Due to this strategy, the nature of controlling targets may shift from a formal mechanism to more interesting modern method with fruitful results of a growing customer base (Mike, 2008, pp. 153). Impact of the new strategy on Structure The strategy of every company, including Starbucks, is generally shaped by the structure with which it operates. In the recent years, Starbucks has reviewed and rearranged the structure within which the company was operating. It ha expanded its matrix organisational structure, thus, enhancing it flow of communication, and supporting operation, goals and strategies of the organisation. Thu, the introduction of new reward cards system will be more viable and appropriate in the organisation. However, it would require the company to expand further due to the reason that customer retention would increase and thus, demand for the company’s products can possibly grow. Impact of the new strategy on Style The servant leadership at Starbucks makes the implementation of the new strategy possible. These leaders work to take the strategy ahead and make it applicable in the organisation in order to compete amongst rivals. The leaders enjoy serving their companies as well as their customers; thus, the strategy of introducing the free reward cards is aimed at creating more customer loyalty and retention, and it would further be assisted through the servant leadership style within the organisation. The new strategy might affect the company is a way that it changes the style of leadership and working (Satya Sekhar, 2009, pp. 72). The servant leadership might have to shift from its originality to a transformational leadership; under the new strategy, it would require new changes to be made in the customer services method and a transformational leader can assist the change management more than a servant leader. Impact of the new strategy on industry and competitors The introduction of new reward card system will have potential impact on the competitors in the industry. The new strategy would serve the customers of the company in a much better manner and this program will serve to be the part of the company’s customer relationship management. The perceived value of the products will increase and this will attract more potential customers for the company by offering them the ease of shopping (Liu, Yuping, 2007, pp. 19). This would threaten the competitors and let the company capture more market share and growth. It is known about the loyalty programs that they cannot function in isolation. In order to implement the new strategy of the free reward card systems, the organisation needs to have the target market and the competitors at place (Meyer-Waarden, Lars 2007, pp. 223). Through these two factors, the effectiveness of the programs can be assessed. For Starbucks, the major rivals including Green Mountain, Coffee Roaster and Costa Coffee can be easily competed with through the implementation of the free reward card systems. These loyalty cards will create a unique positioning in the mind of customers regarding the products of the company and the competitors can lag behind in their sales. Impact of the new strategy on Change Management In order to manage the new strategy at the company, it is necessary to analyse its impact on the change management. According to the management experts, every new strategy implied within the organisation changes its processes, systems, methods, styles and resources to some extent. Starbucks would also need a strong collaboration towards a change management process for the purpose of the new strategy implementation. It will require a more skilled workforce, more financial resources (cash flows), additional material, and extra time to manage and implement the strategy (Mike Green, 2008, pp. 153). It might also need to amend its hierarchal structure and change the responsibilities of come of its employees. The company will have to switch its mission towards serving customers more. Conclusion Every new strategy introduced in an organisation takes time and material resources to be implemented. It requires a good change management systems and resilient processes so as to make the strategy more successful and applicable in all the departments of the company. Starbucks, following a matrix structure and servant leadership, will also have to switch its conventional methods to the modern ones in order to implement its new strategy of free reward card systems. REFERENCES Anthony D. Manning, Tony Manning, (2001). Making sense of strategy, pp. 46 Bolton, Ruth N., P.K. Kannan, and Matthew D. Bramlett (2000), “Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value,” Journal of the Academy of Marketing Science, 28 (1), 95–108. G. V. Satya Sekhar, (2009). Business Policy and Strategic Management. IK International Publishing House, pp. 72-75 Lewis, Michael (2004), “The Influence of Loyalty Programs and Short-Term Promotions on Customer Retention,” Journal of Marketing Research, 41, 281–92. Liu, Yuping (2007), “The Long-Term Impact of Loyalty Programs on Consumer Purchase Behaviour and Loyalty,” Journal of Marketing, 71, 19–35. Magi, Anne W. (2003), “Share of Wallet in Retailing: The Effects of Customer Satisfaction, Loyalty Cards and Shopper Characteristics,” Journal of Retailing, 79 (2), 97–106. Mike Green, (2008). Change management masterclass: a step by step guide to successful change. Replika Press Ltd., pp. 153 Starbucks, (2011). About Us. Accessed online. Retrieved from http://starbucks.co.uk/ Verhoef, Peter C. (2003), “Understanding the Effect of Customer Relationship Management Efforts on Customer Retention and Customer Share Development,” Journal of Marketing, 67, 30–45. Verhoef, Peter C. (2003), “Understanding the Effect of Customer Relationship Management Efforts on Customer Retention and Customer Share Development,” Journal of Marketing, 67, 30–45. Read More