Strategic Management: the Commoditization of Starbucks - Case Study Example

1. Commoditization of a product or business brand is defines a situation where highly valued products of a company or a business enterprise lose their state of uniqueness and instead become nothing but simple products just like other products produced by the company’s competitors in the same industry. Starbucks has been one of the most recognized companies with several coffee shops in different countries. However, due many factors in its internal operations, Starbucks products are at a risk of commoditization. Many decisions initially made by the management with the intention of improving its services have caused damages to the company with little benefits (Enz, 2010). For example, the implementation of flavor locking packaging was intended to meet the need of fresh roasted coffee in its wide market turned out to be very costly to the company. According to Enz (2010), Starbucks has even went ahead to sell lunch in its stores instead of sticking to the coffee business. This has then made them to lose its loyal customers exposing the company products to risk of commoditization. Starbucks should then reflect back and try to work on their strategies afresh. Starbucks should also discourage the ordering of its products for consumption outside its stores as much as possible. This will make the customers drink or have any other of their orders within the coffee stores. Starbucks should also ensure that they have qualified personnel and work on corporate social responsibility projects to uphold its image. The services offered by Starbucks should then be limited to coffee products as it has always been. It is never too late for them to work the issues that risk its products at all. 2. Due to the potential competition from McDonald’s, Starbucks should work on implanting a human resource strategy which is likely to be sustainable and will not be easily imitated by its competitor. Starbucks should see that it empowers its employees and involve them in making decisions of the company. The employees should also be treated well so that they may enjoy good work environment and thus deliver high quality services to the best of their ability. However according to Enz (2010) , if Starbucks does not become more innovative with good strategies, the company runs the risk of losing its customers to McDonald’s which currently stands as a real threat competing with Starbuck’s business. 3. The decision to fire CEO Jim Donald can be said to have been a wise decision. However, this can only be true in the perspective that a change is always better to allow innovation and creativity in business operations (Enz, 2010). Therefore, this means that one of the pros of changing senior mangers is that it allowed someone else to take over and bring new ideas for the business. The idea that Schultz introduced change in culture on employees and create family environment is also a pro of firing Jim Donald. On the other hand, firing CEO Jim Donald had its cons too. One of the disadvantages of changing senior officers is that the new senior officers who do not the current traditions and main goals of the business may interfere with the business operations. This is clear in the case of Schultz and Jim Donald. Under the management of Schultz, Starbucks started to serve lunch as part of their business which contradicted with the initial purpose of the business (Enz, 2010). 4. Starbucks has always worked to ensure that a friendly environment is maintained. It has also ensured the maintenance of culture that respects its employees well and takes employees’ opinions and suggestions into a count. This has been unique and created better personal experiences for customers. It has therefore, remained to be a strong point for the corporation against its competitors. As much as Starbucks products are at a risk of commoditization, Starbucks has not lost its competitive advantage at all. Enz (2010) explains that the step by Starbucks to introduce wireless internet put them at better competitive ground also. This has given them an advantage to win more customers over McDonald’s. However, it is necessary that Starbucks should focus on training its employees on new skills to cope up with the changing tastes and preferences of customers with time. Starbucks was first opened in 1971. It has been several years of its operation and the fact remains that the tastes and preferences of customers then in 1971 have changed over years. The employees should then be trained to keep pace with the changes to ensure that the competitive advantage of Starbucks remains sustainable. 5. Despite the decline in the market for Starbucks coffee in the United Sates, Starbucks stands at a better position to focus on international operations. It is a fact that for any business to stand competition in its industry there must be continuous innovation, adequate marketing and expansion (Enz, 2010). Therefore, if the United States market is not performing well, Starbucks should explore other markets. Global expansion of the business will widen the company’s market and is likely to raise profits and the image company brand will also be boosted as many people get to have a test on the products. Starbucks being among the top coffee companies in the industry is well informed about the level of competition in the industry. According to Enz (2010), Starbucks financial performance has been well over the past few years and this means that they are able to explore other global markets easily. There are many potential markets like India and China which have been proved to be among the largest coffee markets in the world. This then is promising to Starbucks if it decides to enter the markets. Furthermore, Starbucks ahs very good transnational strategies and this assures them of better performers in future. References Enz, C. A. (2010). Hospitality strategic management: Concepts and cases. Hoboken, N.J: John Wiley & Sons. Read More