Management of Information Technology. How can you improve Starbucks with the use of IT (you have to use Porter's 5 and Porter's - Essay Example

Download file to see previous pages ... 5. Conclusion............................................................................................................... References EXECUTIVE SUMMARY Starbucks operates in a market environment where competitive rivalry is intensive and where differentiation of product offerings characterises market position. Starbucks is currently challenged by major competitors such as Costa and Pret-a-Manger that are each positioned differently depending on service conceptions and emphasis placed on satisfying customers. Starbucks currently utilises a premiumisation strategy, built on years of brand establishment and the ability of the business to express quality and human capital talent to make this business stand out from competition. In a market environment where changing consumer attitudes and lifestyles dictate the level of competitive responsiveness from key market players in this industry, the company must remain focused on the marketing function as the primary competitive advantages. Research into Starbucks identified many opportunities for where information technology could provide competitive advantages. These opportunities include linking technology to the marketing and branding functions, to improve human resources efficiency and training, and by opening lines of real-time communication with internal staff members and external supply chain partners. It is recommended that the business establish IT systems in areas of brand development, procurement, and for human capital development to achieve better market presence and brand reputation. How to improve Starbucks with IT 1. Introduction Starbucks is a global coffee company that has, in recent years, diversified its business strategies, procurement models, and market positioning in order to gain competitive advantages. Starbucks currently maintains 793 stores in the United Kingdom selling coffee beans, hot and cold beverages, snacks and sandwiches, as well as books, music, and a variety of Starbucks branded merchandise offerings (Starbucks 2012). The company, in 2011, boasted revenues of approximately 14 billion USD, a significant accomplishment for a business that operates in very saturated competitive marketplaces and offers products that have reached their maturity against the product life cycle model. 2. Five Forces Analysis In the United Kingdom, Starbucks maintains very powerful competition with such major coffee houses as Costa and Pret-a-Manger. Costa, the second largest coffee house in the world, currently holds 37.6 percent of market share in this industry in the UK, backed by the notable cash and capital resources of its parent company Whitbread Plc. These main competitors continue to use their strong brand positioning to maintain consumer loyalty in key markets, representing significant competitive threats to Starbucks. Under Porter’s Five Forces model, there are several threats to maintaining current market leader position for this mature business model. The most significant threat in this market is the degree of rivalry that exists between main competitors, associated with brand personality and associated promotions to gain consumer loyalty. Starbucks operates in an oligopoly, a market characterised by only a handful of major competitors and where competitive promotions and branding strategies influence competitive responses (Boyes and Melvin 2005). In this market, switching costs for consumers are very low, thus the intensity of competitive promo ...Download file to see next pagesRead More