Starbucks Corporation - Business Plan Example

THE IMPORTANCE OF INFORMATION TO ORGANIZATIONS Contents Summary……………………………………………………………………………….2 2. Introduction……………………………………………………………………………2 3. Strategic, tactical & operational decisions………………………………………..3 4. Examples of competitor intelligence……………………………………………….6 5. Significance of B2B V/s B2C………………………………………………………7 6. Conclusion…………………………………………………………………………..8 References…………………………………………………………………………..9 1. Summary: Starbucks Corporation is an internationally acclaimed coffeehouse chain headquartered in Seattle, Washington, U.S.A. It boasts of an international presence in over 43 countries through 15,700 outlets1. It offers a range of products with over 30 blends and single origin coffee, handcrafted beverages, merchandise, fresh food and entertainment. (49 words) 2. Introduction “To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time” The mission statement of the company reaffirms its corporate principles which depict their passion in serving the customers and improving the lives of people across the globe. The company offers a complete package designed to engage and entertain its customers such as the the Starbucks Entertainment division which is engaged in promoting and marketing of popular books, music and films. It’s outlets spread worldwide are equally popular in local as well as international markets. Owing to the ongoing environmental crisis and the heightened awareness of global warming, the company contributes its share by adopting environmental friendly measures. Starbucks was ranked at #17 by the U.S. Environmental Protection Agency as one of the Top 25 Green Power Partners for the purchase of renewable energy2. The environmental mission statement3 of the company is mentioned below: “Starbucks is committed to a role of environmental leadership in all facets of our business” The company strives to establish itself as a market leader by promoting business practices which would assist them in engendering social, environmental and economic assistance for communities where they operate. It centers its efforts in offering excellent work environment for its employees, making positive contribution to its communities, establishing long term and cordial working relations with the coffee farmers and taking stringent measures in reducing their environmental footprints4. Starbucks Entertainment comprises of a selection of finest quality music, books and films aimed at offering maximum ease and satisfaction to its customers and has several strategic alliances with some of the major players in the entertainment industry and has teamed with Apple iTunes which offers exclusive soundtracks which can be downloaded from the site. 3. Strategic, Tactical and Operational Decisions: Strategic decisions involve the choice of alternatives which has the potential of having a significant impact on the company’s success in the long term. Tactical decisions on the other hand involve decision making in the day to day process that are required to reach the ultimate strategic goals of the organization. Operational decisions involve decision making in the routine decisions that affect the functioning of the organization such as planning, production sales, staffing, adjusting production rates, as well as controlling the overall quality of the products. 3.1. Strategic Decision “Starbucks to expand Technology Relationship with AT&T: Agreement signals a transition to AT&T Wi-Fi service at Starbucks beginning in Spring 20085” Starbucks Corporation has entered into a strategic alliance with AT&T with an aim to enhance customer satisfaction. Under this program Starbucks will receive network connectivity for the purpose of point to point sale and managing store operating systems while the customers will be offered the ease of browsing the net at more than 7000 of the company’s outlets. This arrangement is likely to enhance the in store customer experience by way of delivering quality entertainment right at the customer’s convenience. 3.2. Tactical Decision “Starbucks to Close Stores and End Sandwich Sales6” According to the Howard D Schultz – chairman, Starbucks, careworn coffee giant has announced its plan to discontinue the sale of warm breakfast since it supposedly “interferes with the coffee aroma” in their stores and focus on high quality healthy breakfast options. The company also announced plans of closing off around 600 underperforming stores in several locations in the United States especially in the wake of the ongoing financial crisis. The decision to close stores and slow down its investment drives has been taken in the wake of the weak performing stock markets which led to an overall reduction of 40% in the company’s stock price since the previous year. 3.3. Operational Decision “Starbucks announces it will close 600 stores7” The current economic depression has led the coffee giant to take stringent measures to close its underperforming stores in several locations throughout the United States. The company has been experiencing negative sales owing to the global economic slowdown and forcing the world’s leading coffee chain to close stores leading to lay off of over 12,000 employees. 4. Competitor Intelligence: i. “Columbian Coffee Growers Expanding Direct Channel to American Consumers8” The Columbian Coffee Federation which comprises of a significant proportion of coffee growers have expressed their intention of establishing coffee chains in the United States. This move could seriously affect / damage the competitive positioning of Starbucks in the long run since the entry of new players in the market leads to mounting pressures in terms of retaining the existing customer base and capturing the new untapped market segment. ii. “Dunkin Donuts Facial Recognition Technology – progress or privacy issue9” Dunkin Donuts considered to be one of the closest competitors of Starbucks have announced their plans to implement Facial Recognition Technology in their stores which will enable its customers to browse ads targeted at their age, gender, personality as well as demographic group while waiting in queue. iii. “Dunkin Donuts Offers 99 cents Lattes10” The Dunkin Donuts which was ranked #1 in customer loyalty in the coffee category is offering special prized coffee as a promotional campaign at all its leading stores across the country. This move has been intended to take advantage of its closes competitor Starbuck’s announcement to close shop laying off thousands of employees and is likely to prove immensely beneficial to the former. iv. “Starbucks competitor prices closer to $1 average11” With the increase in cheaper alternatives available and the foray of other big players such as McDonalds and Dunkin Donuts offering a variety of coffee, Starbucks is facing the threat of competitors eating into its market shares. According to the information made available through The Wall Street Journal, Dunkin Donuts and McDonalds along with other low cost competitors offer coffee at a little over $1 and hence Starbucks to ward off competition has come up with an offer of charging $1 for its small cup drip coffee with an option of refilling it free in its hometown outlets. 5. Significance of B2B v/s B2C: The product, brand as well as customer service have undergone a drastic change and factors like low cost, high product variety and quality decide the competitive strength of a company. With the increase in number of players in the industry the signs of product – feature burn out are becoming increasingly apparent. The B2B marketers should therefore focus on delivering value to its customers by largely focusing on value creation and offering solutions to their problems. Starbucks also have entered into profitable strategic alliances with the coffee farmers that would help them in transforming themselves as mere manufacturers to providing solutions that are difficult to replicate. References: This is a draft copy for your approval. I shall add the references once the paper is approved and finalized. Read More