Starbucks Case Analysis - Essay Example

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This paper presents brief report on the management strategy of Starbucks and gives detailed analysis of both the internal as well as external environments. The paper presents challenges Starbucks is facing and some internal capabilities of the company that make its operations smooth…
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Starbucks Case Analysis
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Download file to see previous pages The firm that is analyzed in the paper is Starbucks coffee company that ventured into the market in 1971 because of three business people who had love for coffee and tea. They felt it was important for the people of Seattle, Washington to have access to their coffee. They organized themselves, and ten years later this company had four retail stores and a roasting plant selling genuine bean coffee within Seattle only. As time went by, this company expanded to other cities like Vancouver, Portland, and Chicago, and by 1991 Starbucks had more openings within airports. It had also expanded into the mail-order catalogue, then further to the state of California. Having grown this far, the company initiated distribution of successful products and brand extensions that included offering coffee to passengers on United Airlines flights. This boosted their potential that later witnessed them start offering people the option to purchase the company’s products at the comfort of their homes through Starbucks’ online services. Currently, Starbucks strategic position is to provide premier purveyor of the finest coffee around the world while at the same time maintaining its uncompromising principles as the company continues to grow. Its efforts generated by sound decision-making are helping the company attain the best quality of the products. Their main product, which is coffee, has always been of the best quality and above all made by employees who are passionate about coffee. They maintain ethical standards as they source for the finest coffee beans that are they then roast it with great care2. Regarding their market, this company has a great strategic position when dealing with their clients as they promise a perfectly made beverage that they deliver at a human connection level. Starbucks treats its stakeholders with respect and dignity hence creates a profitable place for each other. External Analysis Starbucks is facing challenges just like any other company. The most of all challenges that this company is battling now is the current financial crisis that is affecting America. Due to funds turmoil that the current state of economy is posing to companies, Starbucks has not only reduced its total expenditure, but also forced to close most of its stores. In 2008, the company announced that it was going to close six hundred stores in different parts of United States of America3. Financial based reasons like income tax, risks related to third party finalization agreements, and benefits associated with the closure of stores within the anticipated period as well as cost of saving expected led to this fatal draw to the company’s expansion plans. Additional challenges facing Starbucks comprise of dealing with competitors. Currently, there are numerous coffee shops within major cities across around the globe and are posing total threats to Starbucks, as they are all competing for the same customers. 2. Flamholtz, E. & Randle, Y. Corporate Culture: The Ultimate Strategic Asset, (California:Stanford University Press), 20. 3. Thompson, J., et. al., Strategic Management 6th. (California:Cengage Learning EMEA, 2010), 382. Some of these competitors include: Nestle, McDonalds, and Dunkin Donuts. Standing out to generate customers is important yet a hard task to perform. Therefore, in order for Starbucks to alleviate competition wisely, it is of great importance for this company to identify their competitors and know what they are currently doing and how they can be at the top of the game despite stiff competition. Internal Analysis Starbucks has internal capabilities that make its operations smooth. For instance, due to Howard Schultz’s efforts to make Starbucks a better working place, Starbucks now has knowledgeable employees who are conversant with the company’s products, prepare the company’s espresso drinks without missing any detail, motivated, skilled, deliver consistent and ...Download file to see next pagesRead More
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