Starbucks Strategies Recommendation - Assignment Example

Starbucks Strategies Recommendation Introduction Starbucks has purchased, roasted and sold high-quality coffee beans through retail outlets and commercial wholesale accounts (Startup-marketing 36). Coffee is the core product of Starbucks although they deal with other products such as Tazo tea, Ethos water, Hear Music, Starbucks Liqueurs, various dairy and food items as well brewing equipment and merchandise. Starbucks is committed to offering quality products and ensure they source their supplies from socially and environmental friendly sources (Schreck 54). In order for the Starbucks to achieve its mission that is “to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time” (Findarticles 11). The company cannot achieve its mission with engaging adequately strategies to ensure development and maintenance of superior quality products and services, maintaining affordable prices for the products, ensuring consumer have adequate knowledge about the products, strategies to outcompete the rivals, etc. (Steers et al., 34). Motivating Workers and Improving Product Quality Improving the productivity of workers can help the company to reduce the cost of production, increase quality of products and improve productivity of the company (Schreck 24). I recommend Starbucks to focus on streamlining the workforce in order to ensure the competent workforce. Furthermore, the company should motivate employees by giving them better remunerations and other benefits in order to reduce workers turnover and cost of replacing the employees who have already left the organization. Well-motivated employees are more productive and will take more time to improve the quality of services and products offered by the organization (Wetherly & Otter 253). One of the core objectives of Starbucks is to produce quality products and services to the consumers (Ahlstrom & Bruton 9). The company should obtain feedback from the customers regarding what users need in order to devise strategies that can lead to better products and services. In the recent, the company has increased its presence in the society through social media (Bicky & Kwok 201). Therefore, the Starbuck management should ensure consider the consumers information and engage them in providing accurate information that can increase product improvement. The company should research on various product designs needed by consumers through effective communication and ensure they offer innovative products to the customers in order to provide increase client’s satisfaction (Wetherly & Otter 267). Expansion of Business Operations in UK Starbucks experience stiff competition from other companies dealing with beverages such as Costa coffee and Caffe Nero with a market share of 42.8% and 14.6% respectively. Since the three companies have a total market share of 88.3% Starbucks should come up with strategies to strengthen its market share relative to the competitors (Starbucks 1). Competitors may offer attractive products in the market and attract consumers from other companies. However, when companies engage in stiff competition they tend to engage in strategies aimed at improving performance in order to out-compete their rivals (Robbins et al. 146). For example, Starbucks introduced ‘Sorbetto’ in 2008 in order to counter the influence of Pinkberry introduced by frozen yogurt company. Therefore, I recommend Starbucks to focus on increasing market share through acquisition and mergers. Starbucks should continue diversifying its products in order to expand the market segments (Palmer & Koenig-Lewis 9). The company has opened up new outlets word wide and by 2008 there were about 3721 from 2,299 in 2004 outlets in UK, and the same is projected to reach 7000 by the year 2018. Though acquisitions strengthen monopoly power, the Starbuck will achieve much by increasing their market share through opening up new retail outlets and acquiring other existing firms (Grant et al. 213). Source: (Starbucks, 2013). Reducing Product Prices Starbucks’ products are highly priced in relation to the competitors’ products even though they are of high quality (Bryman & Bell 27). Offering products at high price can limit the low-class income earners from accessing those products. Once consumers view a company as being exploitative in terms of prices they may boycott the company’s products and shift to the rivals’ products. However, quality goes along with prices such that consumers are willing to offer higher prices for better quality products (Ahlstrom & Bruton 17). As one of the leading providers of quality products and services Starbucks has large clients for their products. However, Starbucks has two objectives that could hinder them from reducing the prices for their products. The company’s corporate responsibility to ensure a fair price for the suppliers as well as consumers may conflict (Schreck 29). In order to achieve these objectives Starbucks should contract suppliers in order to have steady price for their products. This will help them to offer suppliers reasonable prices for their products and stabilize the production cost hence be able to offer consumers fair and steady market without deteriorating the quality. Despite high price for the Starbucks products, the company has relatively wide market in UK. Its products and services are highly differentiated in terms of quality and pricing (Ahlstrom & Bruton 19). Also, the company should adopt innovative technology that can help them reduce the cost of production in order to offer products and services at affordable prices. Starbucks should introduce rewarding system in which they reward consumers for their loyalty. The loyalty reward system will attract and retain more customers as more of consumers yearn for the reward (Kim & Mauborgne 164). However, the reward system should identify consumers with repeat purchase and as consumers continue to purchase the products repeatedly the reward increases. Furthermore, the company should introduce referral points whereby the existing consumers are given reward points for the new customers they refer to the company. Ensuring the Steady Supply of Produce One of the challenges Starbucks is facing is the threat of increasing prices of the supplies. In as much as the company focuses on offering high quality at affordable prices, increasing the cost of supplies will push the cost of production high and limit the company from achieving its objective of reducing the prices of its products (Ahlstrom & Bruton 19). One of the approaches the company can ensure the price of products is maintained stable is by controlling the supply of resources. The key Starbuck suppliers include bread factory, plantation farm, paper cups and other processing firms who provide about 50 million pints of milk annually. The company has formed corporations with about one thousand suppliers in over 200 countries in UK (Hubbard et al. 523). In order for Starbucks to control the cost of production, they should engage in vertical and horizontal integrations. In horizontal integration, the company should strive to acquire the competitive firms offering similar products in the same industry (Sparrow 67). This approach will increase the market share for Starbucks and enable them to enjoy low cost of production due to economies of scale (Hill & Jones 316). This will also enable the company to regulate the market for by increasing its presence and reducing the competitors influence in the market. It will be able to increase the quantity of outlets in line with its mission of increasing neighbourhood (Combe 387). By vertical integration, Starbucks should acquire other firms at various stages of production such as suppliers of raw materials and other companies offering relating products (Hill & Jones 318). Furthermore, contracting with suppliers and other stakeholders are a cushion against unforeseen environmental, social and political risks that may determine the performance of the company. Communication Interaction between consumers and producers play a critical role in improving sales and customer loyalty (Hill & Jones 112). Starbucks should intensify communication with consumers through social media such as Facebook and twitter. The company should obtain feedback from the consumers through interaction in social media and use that information to deliver specific customer requirements. Communication is very critical in developing the brand name of the product and company (Hill & Jones 124). Through intensive advertisement, the company will differentiate its products by popularizing its products to the consumers. Furthermore, the company can reach more consumers by increasing their presence in various social media. I would recommend the Starbucks to introduce reward system that recognizes the referrals made by the customers for new customers. This will contribute to the market expansion in UK since customers will share product information with their colleagues based on personal experience (Ahlstrom & Bruton 276). Innovation through research and development I recommend Starbucks to invest in technology in order to reduce the cost of production and improve product quality and designs (White & Bruton 10). Innovative technology can help the company to reduce production cost because it can help the company to come up with superior low cost production techniques that will not only translate to lower price for the consumers but also increased earnings for the company (Porter, 2008). Through use of innovative technology, the company will be able to attract young clients hence increase in market share and earnings. A company should establish a department that can deal with research and development and determine the flow of innovation within the organization and among the employees (Yu, & Fang 29). The company should be ahead of others in terms of technological advancement so that they can always come up with products and services that meet specific needs of the consumers. Corporate social responsibility Business entities engage in various activities that recognize the society in which they business is established, the needs of the community and how it interact with rivals. The organizations activities should be focused on promoting environment, general social welfare and organizations’ stakeholders (Wetherly & Otter 296). I recommend Starbucks to engage in corporate social responsibility in order to promote the welfare of the community. They should promote environmental welfare by reducing adverse effects on the environment such as reducing global warming, reuse of various materials used for packaging the company’s products (Schreck 38). The concept of corporate social responsibility is dependents on moral standards of the society. I therefore recommend Starbucks to engage in activities that promote the welfare of the society such as offering health foods and beverages, environmental protection and any other activity that will contribute to improvement of the social welfare and make the community feel respected. This will make the organization more acceptable in the society and reduce legal cases that would otherwise contribute to decline in business profitability (Schreck 89). Improve distribution channel Starbucks is known for to use different distribution channels to obtain supplies for their products and redistribute them to their customers. The choice of distribution channels and strategic locations of stores affect the production cost and the quality of goods and services they offer to their customers (Hubbard, Galvin & Rice 342). Therefore, I recommend Starbucks to establish centralized warehouses for various regions in UK in order to reduce the distribution cost. This will enable them to import various products from different and store them in the centralized store as they wait for redistribution to the retail outlets close to the consumers (Starbucks 1). As part of distribution strategies, Starbucks should form contracts with well-established grocery stores and shopping centres in order to reach more clients and raise the company’s revenue. Furthermore, they should target existing distribution outlets such as offices and hotels in order to increase distribution of products and reduce the distribution cost (Wetherly & Otter 314). Source (Palmer & Koenig-Lewis 2009). Conclusion Starbucks is a highly innovative market leader firm in coffee and other beverages. Its focus is to ensure clients satisfaction at an affordable price. However, the company experience stiff competition from rivals in terms of prices of the products as well as market share. However, Starbucks has strong brand name and quality products compared to their competitors. It can increase their market share and earning through a variety of approaches such as intensifying communication, conduct thorough market and competitors’ research, ensuring steady supply of resources, improving product quality and adopting better pricing strategies to increase consumer satisfaction. Furthermore, Starbucks should focus on corporate social responsibility and streamline the distribution channels in order to reduce the cost of operation.   Works Cited Ahlstrom, D. & Bruton, G. "International Management." (UK: Cengage Learning, 2009):1-528. Bicky, S. & Kwok, L. “Social Media as an Employee Recruitment Tool.” (2011). Bryman, A. & Bell, E. “Business Research Methods: 2nd Ed.” (Oxford University press, 2007). Combe, Colin, “Introduction to Management.” (UK: Oxford University Press, 2014): 1-568. Findarticles. “Starbucks Rewards Shareholders with Record Breaking Numbers for Fiscal 2004, “(2010). 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