Strategic Issues and problems of Starbucks - Essay Example

This is because such firms are found to generate higher revenue than Starbucks in the market. The company was forced to change its marketing strategy as it could not compete with advertisement investments made by McDonald’s. Moreover, since the economic downturn, financial analysis shows that gross profit of the company has fallen. The company since 2012 has ceased operations of more than 500 underperforming stores across markets of U.S. and many other nations. Currently, the firm lacks adequate finances to expand business in the long run.

It is also found that McDonald’s has, unlike Starbucks, gained competitive advantage in business through outsourcing, R&D, distributions and sponsorships activities. At this juncture, it is analyzed that the company can only sustain in such competition by introducing new innovation process in business and product differentiation perspectives. For such expansion programs, the company needs to develop new fund raising strategies. In the contemporary world, extent of business complexity has significantly increased.

Profit and revenue generation a strategy of firms in the not only depends on internal and external factors, but are also highly influenced by effectiveness of its strategic management. Presently, the restaurant industry is dominated by giant global firms like, McDonald’s and Starbucks. It is found that scope of business internationalization of these firms has increased remarkably since last few years. Through business expansion, these firms have gained impressive global market demand shares as well as augmented brand value in business.

However, since the global financial crisis, McDonald’s has won over Starbucks in terms of market competition McDonald’s has invested huge amount of capital in business, thereby generating severe barriers to expand for Starbucks. From the case study is found that Starbucks is facing financial crunch in its business, at present.