History and Growth of Starbucks Stores - Case Study Example

Starbucks History and growth Starbucks stores have an operation base in 62 countries across the world. It wasestablished in 1985 and trades in the common stocks trade market. The company offers a wide variety of coffee and tea products that are sold through their stores and other licensed stores and national food service.it has four operating segments that are in America, Europe, Middle East, Africa, and China / Asia Pacific. New factors emerge from time to time in a competitive and rapidly changing environment and predict the impact that these factors have on the business, financial condition or results of operation cannot be predicted. This can however be analyzed using the SWOT method (Lussier, 2012).  Strengths Trademarks, patents and copyright –Starbucks has numerous copyrights for items like packaging and patents on certain products and designs. This gives them complete autonomy on these products, brands and internet domains that cannot be owned by other companies. Global Responsibility- the company is focused on reducing negative environmental impacts and contributing positively to the society. It has created employment globally and established youth leadership initiatives. They have established a green program that is aimed at recycling and reusing waste materials and reducing water usage. Profitability-Starbucks is one of the fastest growing brands globally, it has opened numerous stores all over and its profits have been on the rise outmatching their close opponents and getting returns on their investments Quality experience- the selling point of Starbucks is in its quality of products that enhances the customers experience, with a wide range of products the customers are spoilt for choice and the quality and customer service is deemed excellent. Employee management- Starbucks has created employment opportunities worldwide in their stores and support facilities. Most of the employees have joined unions that represent them and offered a wide range of benefits and a pay rate that is higher than that offered by the competitors. Weaknesses Pricing - the products offered by Starbucks are high quality and this affects their pricing which is considered high as compared to some of their competitors. Negative publicity- The Company has received some negative reviews regarding its treatment of employees and suppliers, there has been some lawsuits filed against them that does not portray them positively. There has also been criticism about its green program and tax evasion scandals. Opportunities Emerging economies-Starbucks has the opportunity to expand its operations to the emerging economies all over the world especially in Africa and Asia. This will increase its customer base and maximize its profits because of less or no competition. Increase products- The Company offers a wide range of products from coffee, tea to various accompaniments. There is an opportunity to increase the products offered in their stores that may be in high demand like wine among others. Training – As the Starbucks operations become more modern with the use of technology there is need to offer training to its staff in order to enhance customer service and handling of demand. Technology- there is a widespread use of technology by companies in their operations today. The use of modern technology and innovation enhances customer service by avail products to them online, data management and logistics are made easier for the staff and the overall performance is improved. Threats Competition- There is competition from local cafes that offer much cheaper products, and specialized coffee houses in the international market that offer premium coffee at cheaper prices and get favorable reviews. This may affect the profit margins and customers base. Increased cost of raw material- The price of high-quality coffee beans and related coffee products is subject to significant instability due to multiple factors in the producing countries like weather, natural disasters, or crop disease. The political and economic conditions of the producing country an also affect the pricing of the materials. Economy- Economic conditions in the USA and certain international markets could adversely affect the business and financial results. Negative economic conditions may affect the consumer’s preferences and purchasing behaviors. Corporate and Business Level Strategy The business and corporate level strategy of Starbucks is identical because the company is a single business company, which is focused on only coffee-related products and retail stores. Its firm principles are upheld by maintaining a great work environment for its staff members in their stores. Its motto to provide diversity and give the highest standard of products is also highly upheld to satisfy the customer and give back to the community. Innovative concepts provide sustainable growth that requires the preservation of the integrity of core business as expansion of products and expertise into new channels, brands, and markets.The expansion into various stores globally has contributed positively tothe company’s performance as a result of ongoing efforts to transform business. Starbucks has continued to invest in their partners and offer high quality health benefits to its staff.it has increased efforts to provide employment opportunities to veterans and military spouses based on their demonstrated leadership, discipline, and operational skills. The company has launched to serve the community through long-term improvement of various neighborhoods in the world. The company has distributed certain leadership functions in the areas of retail marketing, global store development and partner resources to help support and ensure distribution of workload as well as increase responsibility to the respective operating segment presidents. International development goals include taking advantage of emerging economies and establishing new products in these markets (Hitt 2014). The company’s competitive strategy is based on the quality of the variety of products they offer to their consumers both locally and internationally. Customers choose among specialized coffee retailers mainly on the basis of quality, service and price. Their competition is direct and indirect against other coffee and tea products in the world. Its stores are typically located in strategic areas with high traffic of people and easy visibility, this is to provide great and easy accessibility to people and for the convenience for people driving and the shops have drive-through window in some areas (Hitt 2014). Starbucks is involved with co-branding with other manufacturers of various products and brands. It has partnered with other companies in providing a variety of good for their customers as well as in helping distribute their products. Most Starbucks shops offer free wireless internet for their customers. In line with the use of technology, Starbucks has a value card program that is designed for convenience and gifting of frequent customers. Customers may access their card balances by using their Starbucks Card or mobile phone applications in retail stores and they can win various rewards through the innovative loyalty programs. Statistics show that customers using the Starbucks mobile payment apps make, on average, more than 4 million transactions per week in the America. Implementations Starbucks has no elaborate hierarchical organizational structure or a formal organizational plan, it has both functional and product based divisions.Licensed Starbucks stores that are controlled by Starbucks Corporation must adhere to the company’s guidelines. All items sold must first be approved by Starbucks corporate offices. This is done to maintain control and ensure quality of the products. The most valued principle by Starbucks is the provision of quality product, esteemed customer service and great work environment and benefits for their staff, all its objectives are aimed at fulfilling these principles at all stages of management. Greater investment has been made by moving the business from a domestic platform to an international one. Starbucks has the necessary resources and capabilities to effectively serve an attractive market opportunity. Recommendations Starbucks needs to expand their operations further in other areas of the United States and internationally especially in emerging economies so as to advance its growth. They may look at joint ventures that will expand their products into grocery and convenience stores through simplified products like bottled beverages of the same quality. They have started on the expansion into other areas like selling alcoholic products and this may be a successful venture if well implemented in the global market. As the company expands, the culture and values that it is known for and its organized corporate strategy must be maintained for success. The company can reduce the price of their products by using cheaper coffee beans or come up with promotional discounts to help increase sales. They can also adopt advertisements for their products through various Media platforms available to the consumers like the internet; give the brochures, television among others (Daft, 2014).  Reference list Daft, R. L. (2014). Management. Australia: South-Western Cengage Learning. Hitt, M., Ireland, D., Hoskisson, R. (2014).Strategic Management: Concepts: Competitiveness and Globalization. Cengage Learning. Lussier, R. N. (2012). Management fundamentals: Concepts, applications, skill development. Mason, Ohio: South-Western. Read More