Business Policy and Strategic Management - Essay Example

Starbucks follows a differentiation strategy where its basic aim is to produce a brand image within the eyes of its through the unique taste of coffee and the exclusivity of all its other products. Starbuck’s major competitors such as Dunkin’ donuts and McDonald’s have approached the market with a low cost leadership strategy. Currently, Starbuck’s competitors are being favored by a global economy that is slowly recovering from a recession. Starbucks needs to work much harder to retain its customers now more than any other time.

Here two types of strategic control come to mind: special alert control and premise control. Special alert control is more straightforward to explain. A special alert control is the thorough, and often rapid, reconsideration of the firm’s strategy because of a sudden, unexpected event (Pearce II and Robinson, “Chapter 13: Strategic Control” Slide 13-10). The economic and financial recession of 2008 greatly affected Starbuck’s key market segments in America and Europe. Surprisingly, the Asian markets were fairly more stable and have continued to grow.

Starbucks executives must have been rued that they had not expanded more rapidly globally because they would have been able to balance their portfolio with the Asian outlets if they were many enough. Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid (Pearce II and Robinson, “Chapter 13: Strategic Control” 13-8). From the lessons learned through the recession, consumer behavior in the Western world is bound to change, even if only by a small degree.

This constituency of “changing” consumers includes Starbucks’ market segment and therefore the organization will have to redefine who their new target market is, and what their new behaviors are. This may call for, probably, a change of direction in the new products that the company will produce in future. Starbucks will have to re-think the assumptions on which they based their pre-recession strategies: environmental and industry factors have changed. Differentiation strategies can only be sustained through continuous innovation.

For Starbucks we propose the use of the following techniques: (1) increase the number of healthy alternatives at their coffee shops such as sandwiches and salads to broaden their market base and to strengthen their “eco-friendliness” brand; (2) localize their shops so that they become more appealing to the local customers. This could be done through incorporating a few local specialty offerings on their menu such that Starbucks New York’ menu does not necessarily have to be exactly like Starbuck Beijing’s. (3) Starbucks should slow down on their global expansion program and focus on enriching the experience at their current shops.

This will not necessarily increase the number of customers that visit it, but it could increase the amount its loyal customer would be willing to spend at every visit. (5) Finally, the firm should stick to its incremental way of coming up with business process innovations rather than aiming for breakthroughs. Pearce II and Robinson (“Chapter 14: Innovation and Entrepreneurship” 14-13) state that incremental innovations generate more revenue gain or cost savings with less risk than breakthroughs.

Works Cited Pearce II, John A, and Richard B Robinson. “Chapter 13: Strategic Control.” Strategic Management: Formulation, Implementation and Control. 12th ed. McGraw-Hill / Irwin, 2011. Print. ---. “Chapter 14: Innovation and Entrepreneurship.” Strategic Management: Formulation, Implementation and Control. 12th ed. McGraw-Hill / Irwin, 2011. Print.