Starbucks Capabilities Strategies in Terms of Value Chain - Coursework Example

? Critical evaluation organization’s Resources and Capabilities of Starbucks in Thailand Table of Contents Table of Contents 2 Starbucks Resource Strategy 3 Tangible Resources 3 Intangible Resources 3 Human Resources 3 Starbucks Capabilities Strategies in terms of Value Chain 4 Inbound Logistic 4 Operations 5 Outbound Logistics 5 Marketing and Sales 5 Services 6 Conclusion 6 7 7 Reference List 9 Starbucks Resource Strategy Tangible Resources The physical resources of Starbucks include several retail stores, warehouse properties, infrastructure, modern manufacturing equipments, excellent designing of its retail stores and brewing machines as well as logistics and efficient transportation facilities. In terms of tangible financial resources, the company has the required monetary capital to invest in new product development processes. The cash assets acquired by the company helps it to channelize certain impending risks, which it might face in investment procedures in the new places of Thailand. The company’s high return from its new investments, made in the booming market of Thailand, helps to capture the confidence and loyalty of its value chain partners and shareholders (Hitt, Ireland, and Hoskisson, 2010). Intangible Resources The company has gained a strong brand image in the global market, since the last forty years of its establishment, which has helped it to win active support of its business stakeholders in Thailand for its business projects. The quality product and valuable diversification have transformed the individuals of Thailand into loyal customers of the company. The efficient marketing strategy used by the company, for delivering new coffee deviations in the market, has helped it to gain popularity in the market of Thailand (Zhang and McCornac, 2013). Human Resources In Thailand, Starbucks Corporation uses wholly owned subsidiary model to expand its business. Roby (2011) found that human resource strategy of the company differs significantly with the change of entry mode or mode of business operation. As part of wholly owned subsidiary model in Thailand, 3 member core Store Development team works for the company to analyze the market potential of a particular store location and supervise the entire retail chain expansion strategy of the company (Getchee, 2013). Training and development of staff in different Starbucks stores in Thailand is being done in human resource departments of the team. Capability and skill level of staff in various retail stores of Starbucks is being enhanced through periodic training programs. Consideration of research works of Roby (2011) reveals the fact that Starbucks Corporation focuses on capturing local talents and individuals while expanding business in Asian countries like Malaysia, Thailand or China because culture of these countries diverges significantly from western countries. To mitigate the cultural gap, in Thailand, the coffee retailing giant recruits more of Thai people who can understand local culture and customs and fulfil customer requirements in efficient manner. Therefore it can be said that Starbucks Corporation uses well defined human resource strategy develop talented and responsive human capital who can help the company to achieve business success in Thailand. Starbucks Capabilities Strategies in terms of Value Chain The value chain is the chain that denotes the various activities and services conducted by a firm in order to serve a valuable service or product in the market. Figure 1: Value Chain Diagram (Source: Porter, 2008) Inbound Logistic The company’s branch in Thailand offers a close-association among its investors, suppliers and customers in the market. Cocoa seeds have few cultivation fields worldwide. Thus, the company considers its suppliers to be very important as they supply the required raw materials to them at right time and place (Sridharan, Caines and Patterson, 2008). Operations The company claims that its primary operation in the market is to serve the world’s best coffee to the individuals. The Quality Strategy of the company states that it would serve the consumers with the best quality food and drinks. By increasing its number of stores and production scale, the company tries to reduce its production cost and enjoy economies of scale in production. The headquarters of the company is in Seattle, Washington, but it operates in 62 countries across the world (Pickup and Derbyshire, 2010). Outbound Logistics In the outbound logistics of the company, it is found that the organization has a good control over its distribution network. This system has helped the company to reduce its overhead costs and pay rolls in the market of Thailand. In order to execute certain new supply chain projects, the company has entered into strategic alliances with other Thailand-based firms (Starbucks, 2013). Marketing and Sales The marketing activities of the firm are efficient and have substantially helped the organization to achieve a wide customer base in Thailand (Wolnicki, 2012; Hill and Jones, 2009). In 1998, Starbucks Corporation entered in Thailand and as of 2013, the company has established more than total 130 stores in Thailand (Getchee, 2013). As part of marketing and sales activities, the company used wholly owned subsidiary model while 72% of the stores being located in Bangkok. A 3 member core Store Development team works for the company in Thailand in order to develop its retail chain across major cities in Thailand (Getchee, 2013). According to Lee (2010), for Asian countries like Thailand, China, Malaysia etc, Starbucks Corporation introduced VIA instant coffee which is low price variant in order to compete with local brands. In Thailand, the coffee retailing giant also offers standard product variants like Frappacinos, White Chocolate Mocha, Caramel Macchiato, Iced Caffe Mocha, and Espresso Con Panna etc in order to fulfil demand of local customers (Starbucks, 2013). As part of marketing strategy, primary target market for the company is customers in the age group of 16-44 years (Getchee, 2013). As part of sales strategy, a single store of Starbucks serves food to 250 to 300 customers every day in Thailand and therefore, stores are being placed in congested metropolitan places, near sports centres and popular streets with heavy footfall. As part of promotional strategy, Starbucks Corporation spends very little on promotional activities. Promotional activities such as in stores displays, banners, standees, billboards, sales discounts, cross selling, free gifts, social media campaign in Facebook and Twitter are being mostly used by the coffee retailing giant to promote its offering in Thailand. Services The retail services of the company have helped to include the perceptions of its customers in its further business development processes. The visitors are asked to give feedback in the Starbucks stores on their every visit. The company actively undertakes steps to rectify any faults in its services. The services of the company have substantially helped it to augment its brand value in the market of Thailand, despite the existing competition (Arslan and Altuna, 2008). Conclusion According to Porter (1991), sustainable competitive advantage for companies depends on its ability to use its tangible and intangible resources to achieve product differentiation or cost advantage over competitors. In such context, it can be said that analysis resources and capabilities strategies of Starbucks Corporation has provided three types of advantages such as, 1- the company gets the summarized idea about its resource capabilities which would help them to develop differentiated product offering in comparison to competitors, 2- direction of value chain integration for Starbucks Corporation being understood which would help the company to compare efficiency of the existing strategic model with various theoretical models and 3- finally, analyzing resource capabilities helps the company to identify resources that can satisfy VRIN (valuable, rare, inimitable and non-substitutable) criterion which are being necessary to give long term or sustainable competitive advantage. In this paper, the researcher conducted value chain and resource capabilities analysis of Starbucks Corporation in order to understand how it has achieved sustainable competitive advantage and business success in Thailand by addressing both internal and external factors (Laeven and Giovanni, 2009). In conclusion, it can be said that the researcher has found significant amount of symmetry between business successes of Starbucks Corporation in Thailand and the company’s ability to deploy its resources and capabilities to overcome strategic challenges. Figure 2: GDP of Thailand (2008 to 2012) (Source: World Bank, 2013) Figure 3: Forecasted GDP of Thailand (2013-2018) (Source: World Bank, 2013) The above figures 2 and 3 of the Gross Domestic Product of Thailand, from 2008 to 2018, depict a rising trend in the country’s gross and per capita income thresholds. The rising income of the country is also a vital supportive factor for the company’s business in Thailand (New Foresight, 2012). Reference List Arslan, F. M. and Altuna, O. K., 2008. The Effect of Brand Extensions on Product Brand Image. Journal of Product & Brand Management, 19(3), pp. 170-180. Getchee, 2013. Case Study: Starbucks Coffee Thailand. [pdf] New Foresight. Available at: [Accessed 26 December 2013]. Hill, C. and Jones, G., 2009. Strategic Management Theory: An Integrated Approach. Connecticut: Cengage Learning. Hitt, M. A., Ireland, R. D. and Hoskisson, R. E., 2010. Strategic Management: Competitiveness and Globalisation, Concepts. Connecticut: Cengage Learning. Laeven, L and Giovanni., M. 2009. Loan loss provisioning and economic slowdowns: too much, too late? Journal of Financial Intermediation, 12(2), pp 178–97. Lee, K., 2010. Case Study: Starbucks Coffee. [pdf] Its Mekathleen. Available at [Accessed 26 December 2013]. New Foresight, 2012. Coffee Barometer. [pdf] New Foresight. Available at: [Accessed 21 December 2013]. Pickup, B. and Derbyshire, W., 2010. Home Truths: A Practical Guide to Buying, Selling and Investing in Property. London: Spiramus Press Ltd. Porter, M. E., 1991. Towards a dynamic theory of strategy. Strategic Management Journal, 12, pp. 95-118. Porter, M. E., 2008. Competitive Advantage: Creating and Sustaining Superior Performance. New York City: Simon and Schuster. Roby, L., 2011. An Analysis of Starbucks as a Company and an International Business. [pdf] Liberty University. Available at [Accessed 7th December 2013]. Sridharan, U. V., Caines, W. R. and Patterson, C. C., 2008. Implementation Of Supply Chain Management And Its Impact On The Value Of Firms. Supply Chain Management: An International Journal, 10(4), pp. 313-318. Starbucks, 2013. Starbucks in Thailand. [online] Available at: [Accessed 21 December 2013]. The Conceptualizing Innovation Implementation. Competitiveness Review, 17(1), pp.8 – 25. Wolnicki, M., 2012. Restoring pragmatism in American governance. International Journal of Social Economics, 39(7), pp.490 – 502. World Bank, 2013. World Bank Data. [online] Available at: [Accessed 21 December 2013]. Zhang, R. and McCornac, D. C., 2013. The need for private universities in Japan to be agents of change. International Journal of Educational Management, 27(6), pp.562 – 577. Read More