Starbucks: Planning for Success - Essay Example

It is the case that Starbucks has a global brand image. According to Helm (2007), it is the case that the organization has dedicated a great deal of energy to streamlining its operations by vacuum packing the coffee for long-distance transportation, and by implementing automatic espresso shot makers. The company also has a wide product offering from savory sandwiches to desserts, CD’s to about every variety of coffee combinations available, as such the company is able to offer something to accommodate almost all tastes. As it is the case that the firm focuses on using extremely high-quality coffee products in many ways the company has segmented itself in the market as a premium brand. In this respect, the company has semi-positioned itself as a company that offers affordable luxury.

Weaknesses: As the company is not franchised and simply utilizes a successful business model, it may be a bit ambitious for the company to project opening an additional 26,500 stores whilst still maintaining a high degree of control over product quality and individual store financial success.
In a number of markets, there is very little restriction on the establishment of small business entities such as a coffee shop. As such it may be the case that Starbucks may not face any strong opposition by pursuing a policy of expansion into new markets in places such as Asia and Latin America.

Threats: According to McRoskey (2008) it is the case that there is increased competition from traditional café based coffee vendors but also McDonald's and Dunkin Donuts. As it is also the case that there is a high degree of new entrants in the coffee market, furthermore a massive new expansion policy may prove to be financially unfeasible in already heavily saturated markets. Lastly, it is the case that as Starbucks is an American company, sales could be influenced by influenced in some countries by the current political climate.

In terms of Howard Schultz actually achieving his goal of reaching 23 billion in sales I personally believe that this goal is achievable owing to the fact that there is a growing demand for coffee in the global marketplace. However to achieve this goal it is the case that the company is going to have to massively expand the number of markets that they have a presence in whilst simultaneously expanding the number of stores they have in already established markets, ultimately having a total of 40,000 stores. To achieve the goal of 23 billion in sales, this translates to annual sales of only $575,000 per outlet which does not seem like an overly ambitious sales target given the pre-existing revenue stream from pre-existing individual outlets in the organization.

The question then remains how the company can achieve this ambitious store growth. This could be aided by offering to franchise the operations into some markets, however, the tradeoff is that this could offer a smaller degree of control in these particular markets. Secondly, it may be the case that to achieve the goal of annual sales of 23billion the company would have to increase the amount of revenue gained in each particular store. This may be achieved by diversifying the breadth of product offerings that can compete with other vendors at a price point. For example, by having a lower-cost simple drip-coffee the company can directly compete with vendors such as McDonald's whilst gaining a newer client base.

In the long term, the outlook for the company still seems optimistic, however, only time will tell if Starbucks will be able to achieve this ambitious short-term goal. Read More