Starbucks - Porters Five Forces, SWOT, Strategies to Maximize Competitiveness and Profitability - Report Example

of the Number: Paper: Table of Contents Table of Contents 2 Introduction 3 Mission & vision of Starbucks 3 Porter’s five forces 4 SWOT Analysis 5 Strategy based on SWOT analysis 6 Strategies to maximize competitiveness and profitability 6 Communication Plan 7 Corporate governance mechanisms 7 Leadership within Starbucks 8 Efforts to be a responsible corporate citizen 8 References 11 Introduction Starbucks Corporation is an US based company and it carries its business operations globally as Starbucks Coffee. The company’s coffee house chain is headquartered in Seattle. With respect to the number of stores globally, it is the largest in the brewer industry. The sores of the company have outstanding ambience that is preferred by the young generation. The stores also have efficient facilities which cater to customer needs. The company has evolved with time and continuously updated itself with consumers demand (Starbucks Corporation, 2014). Mission & vision of Starbucks Mission of Starbucks: Starbucks aims at inspiring the current generation by nurturing their needs. The company has always been maintaining its exceptional quality by providing high quality coffee related products. Starbucks ensures the extraction of finest coffee beans. This in turn enhances the living standards of people who are associated with this industry. Starbucks efficiently associated with partners to enhance diversity. Starbucks always tries to remain connected with its customers by catering to their changing taste & preferences. The stores of the company provide excellent service and make the customers feel comfortable. Starbucks also tries to set outstanding standards by fulfilling its responsibilities. It tries to build a strong network between the community, customers & partners. Starbucks also emphasizes on nurturing the environment by following sustainable and environmental friendly practices (Starbucks Corporation, 2014). Vision of Starbucks: Starbucks continuously tries to meet the standards and policies of the company effectively. Its main focus is on maintaining outstanding quality in all the product ranges. Stakeholders: The shareholders are rewarded due to Starbucks performance. It is Starbucks’s responsibility to improve its experience with its shareholders. This would have an impact on the success of the company in the long run (Witcher & Chau, 2010). Porter’s five forces Threat of new entrants: In specialty Coffee industry, and particularly for Starbucks, threat of new entrant is not very high. Starbucks have already shaped its entry barriers and this has created problems for new entrants to establish themselves in the market. The company has utilized distribution systems to create economies of scale (Schultz & Gordon, 2011). Bargaining Power of Buyers: The products of Starbucks are expensive to some extent and as a result consumers fail to negotiate or bargain with prices. The high prices of the products are due to the exceptional quality. Consumers still have a preference over Starbucks’s coffee as it meets their quality standards. The specialized service provided by Starbucks leaves no scope for bargaining. Threat of substitutes: There is a high threat of substitute goods in this industry. There can be substitutes which include low price coffee. Consumers may shift their preference in such cases. The consumers may even make their own coffee by availing whole beans from stores and then infusing them (MacDonald, 2007). Bargaining Power of suppliers: With the rapid boom of the beverage industry over time, the powers of the suppliers have also increased. There is a high demand for premium quality coffee beans from the suppliers. Starbucks have taken measures for controlling variations in price by entering into long term association with the suppliers (Michelli, 2006).  Rivalry among competitors: There is soaring competition within the coffee industry. The companies have a conflict of interests and always fight to maintain their market position. Starbucks has therefore always concentrated on improving its promotional schemes and advertising policies. SWOT Analysis Strength Starbucks has experienced continuous increase in the sales of goods which has helped to expand its stores globally. Starbucks has productively enhanced customer services by training their employees (Ceo, 2004). Starbucks has developed an in-house sales group that helped them to cater hospitals, airlines, universities and restaurants (Dickinson, 2002). Weakness The financial crisis of 2008 affected Starbucks globally and as a result the sales and profitability of the company reduced. Starbucks continuously engages itself to product innovation. However, there can be problems associated with continuous innovation as it is a costly affair. Starbucks has failed to diversify its business operations to other sectors. It has only concentrated on retailing of coffee and other related products. Opportunities Starbucks has enormous scope for expansion. Starbucks has successfully expanded not only in the United States but also in other international markets. Starbucks has the prospect of partnering with other beverage companies to reach and cater to a wider market (MacDonald, 2007). Threat Dunkin Brands, Costa Coffee, McDonald’s, Pete’s Coffee are some of the big threats for the company. It is sometimes difficult to keep pace with changing taste & preferences of consumers (Schultz & Gordon, 2011). The price of the products of Starbucks will increase with increase in the cost of dairy products and coffee related products. Strategy based on SWOT analysis Starbucks should make strategies that would help it to capitalize its strengths and opportunities, which would later on have a potential impact on its profitability. It should strategically expand in those geographical regions which would help it to increase its market share. The company should utilize the skills of his employees productively to provide its customers with exceptional service. Thus management of human resource becomes imperative. Starbucks should have a clear understanding of its sales situation. This would help it to widen its market and meet increased customer needs. The company should build an efficient network between all its stores and it should ensure that all the stores globally offer similar high quality food. It should concentrate not only in the US market but also to the developing and emerging economies (Harrison, et al., 2005). Starbucks should take efficient steps to minimize its weaknesses and threats. The company should identify the global risks and make efforts that would effectively mitigate them. Starbucks should understand the costs associated with expansion and innovation. Innovation should be carried out in a cost effective manner. The company can minimize risk by diversifying in other sectors. This would help the company to effectively manage its expenditures. It is also vital to identify the potential threats of the company. Starbucks should also keep a track of the moves of its competitors. The company should upgrade its product line keeping pace with consumer requirements (Harrison, et al., 2005). Strategies to maximize competitiveness and profitability It is difficult for the competitors to imitate a premium brand like Starbucks. This position has been achieved through rigorous product differentiation. The brand has always maintained its quality and customer service. The company should continuously enhance these strategies over time. Apart from the above, Starbucks should make strategic plans of acquisitions. The company should also efficiently expand its business operations in the emerging markets. Starbucks should foster its operational strategies to improve its competitiveness. It should establish good relationship with the coffee exporting countries. Starbucks should also focus on its marketing policies. The company should develop affable relation with its licensing partners. There should be effective communication between the partners. Competiveness can be strengthened by nurturing well built business customs (Gulati, Huffman & Neilson, 2002). Communication Plan Starbucks should design an effective communication plan to inform its stakeholders about the business operations. The new strategies should be clearly shared with the stakeholders to increase transparency within the organization. This would ensure increase of company value and restore consumer’s confidence on the company. The annual report of the company should precisely discuss all the details regarding upcoming products, profitability situations, sales condition and other important business related issues. The company should provide its stakeholders with an effective web experience. The company’s website should include all necessary details and information that the stakeholders can use it for making decisions related to investment. Presence in the social media will also ensure effective communication of plans. With the advancement of technology, it is now easier to reach stakeholders via various applications (Gallaugher & Ransbotham, 2010). Corporate governance mechanisms The Board of Directors of the company has the responsibility of promoting the company’s interest. It also caters to stakeholders’ needs. The Board members abides by two legal obligations which would help to effectively control managerial actions are: 1. The Board members should take effective decisions. This is the duty of care. This would help to supervise the management of the company appropriately. 2. The Board members should not make their decisions based on personal interests. The decisions should be designed to facilitate the company and the shareholders (Starbucks Corporation, 2014). Leadership within Starbucks Starbucks is managed by outstanding leaders. The leaders of the organization focus more on serving the community and the society. This fact has been supported by various events where Starbucks have given their assistance for improving societal needs. The leaders genuinely follow the mission and vision of the company. Leaders in the company continuously motivate the employees to understand the objectives of the company. They help the company maintain its brand value and thus ensure effective growth of the company. However, there is scope for improvement in the leadership style. It would be thus recommended to the company to upgrade its leadership style to meet the changing customer needs. A dynamic and more flexible leadership style should be followed. The leaders should be agile in decision making. Leaders should be technologically advanced. The leadership style should focus on understanding customer needs and thus work on business expansion strategies to cater a wider market (MacDonald, 2007). Efforts to be a responsible corporate citizen Starbucks is renowned for its ethical practices. The company has always focused on making decisions that would be sustainable to the society and the environment. The company’s mission is guided with respect to ethical concerns. Starbucks has taken various measures to be a responsible corporate citizen (Ceo, 2004). Starbucks has regularly taken efforts to understand and identify issues related to environment. There has always been sharing of information between the company and its partners. This ensures that there is no ambiguity within the company. The society also remains informed about the operations of the company (Ceo, 2004). The company has taken outstanding efforts in developing innovative products that would help to continuously modify business operations. The solutions that are designed by the company are not rigid. Therefore the business solutions can be modified with respect to community needs and requirements (Dickinson, 2002). Starbucks has always focused on promoting environmental friendly products. The company has bought its primary resources without harming any environmental regulations. Starbucks has recognized and realized the value of financial accountability towards maintaining sustainable environmental needs in the long term. The company always supports causes which are financially weak but has huge potential for growth. Starbucks has instilled the concept of environmental responsibility within the organization to maintain ethical conduct in its business operations. This serves as an essential corporate value for the company and its employees. Every single project has been effectively evaluated and scrutinized to achieve goals that would serve in the betterment of the community. The company has always focused in delivering outstanding service to its customers without compromising on the product quality. The company has encouraged its partners to promote its missions. Partners thus have confidence in the strategies taken by the company. This has helped Starbucks to build an effective relation with its customers and partners (Starbucks Corporation, 2014). The above statements can be justified by instances which show Starbucks efforts to be a responsible corporate citizen. The company has strived to eliminate homelessness to support the United Way of King County. Is has volunteered at the Community Resource Exchange. Starbucks has also tried to build a habitat for humanity. The company regularly publishes Global Responsibility Report where it mentions all its undertakings for betterment of the society. Starbucks has also worked towards setting of schools for making progress in education for small children. The company has brought about difference in the lives of many families by providing basic necessities whenever required. All the above efforts has worked efficiently and helped in sustainable growth of the company (Starbucks Corporation, 2014). References Ceo, S. (2004). How starbucks works with NGOs. California Management Review, 47(1), pp. 92. Dickinson, G. (2002). Joes rhetoric: Finding authenticity at Starbucks. Rhetoric Society Quarterly, 32(4), pp. 5-27. Gallaugher, J. & Ransbotham, S. (2010). Social media and customer dialog management at Starbucks. MIS Quarterly Executive, 9(4), pp. 197-212. Gulati, R., Huffman, S. & Neilson, G. (2002). The barista principle: starbucks and the rise of relational capital. Strategy and Business, pp. 58-69. Harrison, J. S., Chang, E. Y., Gauthier, C., Joerchel, T., Nevarez, J. & Wang, M. (2005). Exporting a North American Concept to Asia Starbucks in China.Cornell Hotel and Restaurant Administration Quarterly, 46(2), pp. 275-283. MacDonald, K. (2007). Globalising justice within coffee supply chains? Fair Trade, Starbucks and the transformation of supply chain governance. Third World Quarterly, 28(4), pp. 793-812. Michelli, J. A. (2006). The Starbucks experience: 5 principles for turning ordinary into extraordinary. New York, NY: McGraw-Hill. Schultz, H., & Gordon, J. (2011). Onward: How Starbucks fought for its life without losing its soul. New York: Rodale. Starbucks Corporation. (2014). Annual Reports. Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsannual Witcher, B. J. & Chau, V. S. (2010). Strategic management: Principles and practice. Connecticut: Cengage Learning. Read More