Starbucks Company: strategic management - Research Paper Example

Starbucks Company: strategic management Thesis statement Starbucks seeks to inspire and nurture the human spirit through principles such as making sure that their coffee is of the highest quality possible. Vision and mission Starbucks aims at making their services seem like a partnership between them and the other stakeholders in making the society a better place (Kapferer, 2012). They also engage their customers in their production through seeking their feedback and acting on them. The company has a mission of actively involving themselves in creating a good neighborhood through the provision of a venue where people can convene and improve their social relationships (Winter & Szulanski, 2001). They also aim at making sure that they involve their stakeholders in all their advancements and success. Their vision involves enhancing the feeling of belonging among their customers whenever the visit their stores. They also have a vision of being a depiction of quality in this industry through making sure that their products and mode of presentation of their products are unmatched in the market (Rowe, 2001). Background organization Starbucks have its headquarters at Washington D.C in the United States of America from where the company’s executives manage the company (Hill & Jones, 2012). District managers are in charge of the store within the regions that they are in charge of. Each store is managed by a store manager who is helped by shift supervisors. The company does not use franchising but allow licensing of store fronts. They commonly licenseto store fronts to groceries and book shops. The licensed stores are still under the management of the Starbuck Corporation (Helfat & Winter, 2011). The entire items sold by these stores must be approved by the company. The company does not refer to their employees as workers but partners. This is done with the main aim of making sure that the employees own the company’s vision and mission. This makes the achievement of the company’s mission and vision easier (Anderson, Day & Rangan, 2012). . Industry analysis The coffee cafe industry has rapidly improved over the past decade. The industry is no longer about just offering coffee to customers. The industry has changed from providing convenient and affordable coffee to offering coffee of high standards(Verbeke, 2013). In the past people did not care much about elegance or the quality of coffee that they take (Gong, 2013). The industry has also grown from offering just coffee but coffee and other related meals. This has further led to the growth of the industry in terms of number of people who are employed by the industry and the returns (Mahrokian, Chan, Mangkornkanok & Hee Lee, 2010). Lately there have been many new entrants into this industry. Despite the fact that this is an industry that has been dominated by a few players for a long time things are now changing. Other restaurants who did not specializing in coffee are also adding that to their services (Peng, 2014). A good example of such a company is Mc.Donald’s. Competitive analysis Over the past decade Starbucks Corporation has acquired other competitors. A good example is a chain of cafes by the name Seattle's Best Coffee. This has helped them in eliminating the company’s competition while at the same time improving their global competitiveness (Thompson & Arsel, 2004). Starbucks has extensively invested in innovation in order to gain advantage over their competitors. This is innovation helps them in bringing into the market products and services that their competitors have not yet been able to produce (Hill & Jain, 2007). Starbucks coffee company has over the years known to exhibit a high level of creativity when it comes to the way in which they produce. The other strategy that they have occasionally used is the buying out of leases of their competition (Wheelen & Hunger, 2012). Through such activities they aim at making themselves more relevant in the market while at the same time killing the effect of these competitors to the market (Pahl, 2008). Starbucks Corporation has settled on majoring on the upper scale of the industry’s market. This gives them the ability to base their productions and services on comfort instead of convenience (Pham-Gia, 2009). Such focus has helped them to focus on enhancing the quality of their product. Financial analysis The year 2013 was a busy year for Starbucks as the company’s net revenues rose to 12.0% to which they totaled to $14.9 billion up from $13.9, which was an increase in sales. In terms of cash flow, the company’s registered an increase to $2.9 as compared to the financial year that had passed while its capital expenditures were $1.2 billion. According to Starbucks, the operational cash flow after deducting the capital expenditures generated in the fiscal year 2013 aimed at compensating its shareholders by using dividends (Morningstar, 2014). On the other hand, the company registered a 5% increase in transaction levels, which led to the expansion of Starbucks’ global sales in their stores to 7%. The growth in revenue percentage was significant for the company as Starbucks was able to fund the growth initiatives that it had introduced without seeking external funding. One of the key regions that attracted high profitability for Starbucks is the North American region with a percentage of up to 11, which also included a significant increase in store sales. Based on this, Starbucks attributed its CAP segment results from the company’s rapid growth rate with the opening of stores in far regions such as China and Japan hence translating to a solid performance track. Therefore, the expansion into far markets has served as an advantage to the company and also predicts is growth. Strategic management technique analysis of Starbucks Essentially, Starbucks operates in a highly competitive market, hence making it vital for the company to devise ways of staying relevant in the beverage store industry (Strehle & Cruickshank, 2004). In applying the Porter’s 5 forces framework, Starbucks should formulate strategies that are able to counter competition, both from new entrants such as Burger King and products that can substitute those that the company sells (Lussier, 2008). The relevance of Porter’s 5 forces analysis is that illustrates the external and pulling forces within the industry that Starbucks is engaged in (Lebel & Lorek, 2009). This will help the company in unearthing the forces that are underlying that influence delayed growth. The next step after determining the forces from outside that surround Starbucks would be conducting a SWOT analysis, which is relatively the internal forces (Clouston & Westcott, 2005). Conducting this analysis will help Starbucks to discover its abilities from within through the key elements of strengths, opportunities, weaknesses and threats (Lussier, 2011). For one, the company’s strength lies in the reputation that the brand has built over the years based on the quality products that they offer and the valuing of their customers (Goldbatt S, 2011). The opportunity presented here would be that it can expand into untapped markets in the East based on its strong brand (Kurtz & Boone, 2011). One principle area of weakness for Starbucks is its highly overpriced coffees and the market segment that the company targets, meaning that its products are not affordable to everyone (Kelley & Jugenhemeir, 2011). As mentioned earlier, the entrance of two new rivals, namely: Dunkin and McDonalds into the beverage and coffee sale industry would mean that Starbucks would have to invest heavily in promotional strategies (Wahlen et. al, 2010). This is Starbucks’ greatest challenge. By looking at the external and internal forces surrounding Starbucks, the company will be able to influence its revenue percentage further based on the knowledge gathered during this process. Conclusion Starbucks, seeks to inspire and nurture the human spirit through principles such as making sure that their coffee is of the highest quality possible. References Anderson, E., Day, G. S., & Rangan, V. K. (2012). Strategic channel design. Sloan Management. Clouston, T., & Westcott, L. (2005). Workers in health and social care. Edinburgh: Elsevier Churchill Livingstone. Goldblatt, S. (2012). The complete guide to greener meetings and events. Hoboken, N.J: J. Wiley. Gong, Y.(2013). 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