Prevention of Starbucks Commoditization - Research Paper Example

Howard Schultz was critical of the use of automatic espresso machines and the gradual elimination of in-store coffee grinding. In addition, several of the stores had laid greater stress upon automation, which had deprived them of their neighborhood café ambiance (Enz, 2009, p. 564).

This commoditization of its product can be prevented by Starbucks if it resumes its traditional methods of in-store coffee grinding, which would restore its erstwhile ambiance.

Question Two

It is essential for Starbucks to adopt the following strategies, in order to obtain a competitive advantage over McDonald’s. The latter constitutes a serious competitor for Starbucks. This is discussed in the sequel.

Approximately, 80% of orders in the US, are consumed outside the premises of Starbucks outlets. In addition, 66% of the company-owned stores sell lunch. These developments have produced a debilitating effect on the ambiance. Moreover, there has been a significant reduction in the education and average income levels of its customers. On the other hand, the customer base of McDonald’s has remained stable. Starbucks has resorted to selling lunch at many of its locations in the US, in order to gain entry into the area of food. As a consequence, the fragrance of coffee has been supplanted by that of food. The aim of this company is to remain one of the most recognized brands in the world, without sacrificing its unique status. Although there has been a fifteen-fold expansion in its stores, there are misgivings regarding its ability to grow in the face of stiff competition from McDonald’s and other fast food providers (Enz, 2009, p. 565).

Obviously, it is indispensable for Starbucks to increase its food outlets, in order to compete with McDonald’s. In addition, it has to reduce the price of its products. With reduced financial levels among the customers, the latter prefer cheaper fast foods to coffee. Therefore, Starbucks has to sell fast foods that cater to the requirements of customers.

Question Three

Jim Donald had been removed from service, at Starbucks. This dismissal of its CEO was crucial and a wise decision, as he had failed to be innovative. His lack of vision had produced an adverse effect on the growth and development of Starbucks.

The increasing and intense competition, diminishing stock price, and qualms regarding the US business compelled the Board of Directors to discontinue the services of Jim Donald in 2008. The latter had joined Starbucks in 2002 and had brought in his experience as a grocery executive. He embarked upon excessive expansion in the US, without innovation. This brought about his removal (Enz, 2009, p. 575). Howard Schultz, who had been the CEO until 2000, resumed this role. He concentrated on global strategies and the expansion of Starbucks, which had made its mark in 43 nations (Enz, 2009, p. 577). Being the CEO and Chairman, enabled Schultz to plan the overall strategy of Starbucks, with a primary focus on the customer.

Pros and Cons of change in Senior Managers

Senior leadership changes could influence staffing plans by reducing or enhancing the employee base of the company. These changes could destabilize the workplace and generate problems with employee satisfaction, morale, and turnover, thereby compromising the goal of the company to possess a positive and engaged workforce. At the same time, senior leadership changes affect business operations and have the capacity to streamline operations and make the company function optimally (Mayhew, 2015).

Question Four

It would be incorrect to surmise that Starbucks has been deprived of its competitive edge. The following discussion establishes this.

Since its very inception, Starbucks had adopted the strategy of product differentiation. Thus, it provided a premium product mix, locations, coffee beverages reputation, and excellent customer service. The outcome was the creation of a premium-valued brand that competitors found to be very expensive to replicate. Moreover, Starbucks engaged in strategic alliances and smart acquisitions. Instead of adopting the franchising model, it conducted its operations from company-oriented stores and joint ventures. As part of its product diversification strategy, Starbucks acquired Teavana, Bay Breads, and Evolution Fresh. Moreover, this company expanded its operations into the principal developed and emerging markets, thereby achieving geographical diversification. These endeavors had been extended to 60 countries (Nithin, 2013). These strategies provided a substantial competitive advantage to Starbucks, vis-à-vis its competitors.

Question Five

It is the considered opinion of several analysts that Starbucks should concentrate on its international operations. The saturated state of the domestic market requires it to foray into foreign locales if it is to improve its growth and profits. This company commenced in 1971, when Jerry Baldwin, Zev Siegl, and Gordon Bowker launched a coffee bean-selling store. These budding entrepreneurs had named their store Starbucks. There were five such stores by 1981, and this company started a coffee bean roasting facility in Seattle (Subhadra, 2003).

Starbucks’ core competency consisted of its ability to take advantage of its basic product differentiation strategies, by providing a premium variety of high-quality beverages and snacks. The value of this brand has been based upon the sale of the best quality coffee and related products, and the provision of the Starbucks Experience to its customers. The latter connotes unsurpassed customer service and clean and properly maintained stores that mirrored the culture of the communities that purchase from these stores (Nithin, 2013). Another major feature of Starbucks has been the value-based approach of its human resource management, which has created very powerful internal and external associations.