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Starbucks: Maintaining principles as we grow case Study for MBA - Research Paper Example

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The coffee industry in which Starbucks operates belongs to “Specialty Eatery Industry” . It belongs to the largest segment of the disposal income spending i.e. food and beverages. This industry has seen steady and rapid growth since the 1990s…
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Starbucks: Maintaining principles as we grow case Study for MBA
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Download file to see previous pages Market structure is monopolistic and there are a lot of companies operating in the same marketing making the competition extremely fierce. Low to moderate costs are incurred for most location and in startup property and equipment are the only expenditures.
The recommended strategy for Starbuck’s survival and success would be Focused low-cost strategy. In focused low-cost strategy, the companies serve market niches and targets smallest buyers in the industry which other competitors in the industry cant afford at such a low-cost. Through this strategy Starbucks will be able to retain its brand equity and will also be able to keep itself in line with the economic down turn. It will be able to offer the same experience at prices, its consumers can afford. Secondly, all low performing stores should be shut down and instead of expansion the strategy should be to revive business in current operational outlets.

b. Critically examine the new strategy and its likely impact on the brand (Tip: Impact on brand)
Starbuck’s new strategy as announced by Schultz would focus more on low-cost value. Under this strategy Starbucks would close all under-performance stores and re-invigorate the coffee experience. Beans would once again be grinded in stores for drip and free drip refills, Wifi to registered consumers and latte upgrades would be given. It will also roll out a low-rise espresso machine; launch its own VIA ready brew brand and introduce value meals. The focus of this strategy lingers around on “value” than “experience”. These moves would change the brand perception of Starbucks which was central to unique experience before. It will take Starbucks to crowded and competitive convenience market. As a result, brand equity of Star bucks is expected to dip while its overall revenues will increase over time due to low-cost operations that are in order. c. Critically evaluate the internal environment of the firm and recommend change The internal environment of a company is defined by the 5 Ms that govern it. These include the following: 1. Management 2. Manpower 3. Machine 4. Material and 5. Money The work culture that prevailed at Starbucks played an important role in helping the company recruit and retain top employees. The culture of the company was well recruited. The Management at Starbucks was thus grounded in modesty. The company would retain and give the impression of a small company even as Starbucks expanded world-over. Starbucks had one of the lowest turnover rates. It was 70% against the industry average of 300%. This was because the manpower at Starbucks enjoyed a lot of perks of being associated with the company. “Equality” was one of the most crucial values of employees at Starbucks. It was for this reason all employees at Starbucks were called partners. The organizational structure was decentralized and employees were encouraged to be as innovative as possible. Starbucks offered a lot of material and money benefits to its employees. Employee benefit program was extended to both part time and full time workers. There were other employee perks for instance 30% discount on Starbucks branded merchandise, discounted beverages and free pound of Java coffee every week. It was also the first company to offer stock options to its part time employees. The Bean stock plan was one of its most ...Download file to see next pagesRead More
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