Description of Starbuck’s operations
Starbucks Corporation is an American coffee company and coffeehouse chain. It was started in 1971 in Seattle, Washington. Starbucks is a premier roaster, marketer and retailer of specialty coffee around the world (Starbucks Coffee Company, 2016). It has employed about 182,000 people across its 19,767 stores in more than 62 countries. It products includes roasted and handcrafted coffees, tea, and other beverages and food items. The Corporation also markets its products mix with other brand names within its portfolio of companies, which include Teavana, La Boulange, Tazo, Starbucks VIA among others (Starbucks Coffee Company, 2016).
Starbucks Corporation, therefore, is in the coffee retail and snacks store industries. An industry where demand is mainly determined by factors such as disposable income, attitudes towards health, per capita coffee consumption, global coffee prices, among other variables.
Starbuck’s strategy
The key strategy that Starbucks Corporation has always used since its inception in the product differentiation strategy. By differentiating their coffee products Starbucks has been able to stay put in the competitive world market. The company uses differentiators such as premium mix, locations, coffee beverages reputation and supreme customer service. This has enabled it to create a premium coffee brand that is so hard for competitors to imitate (Growth, 2014). The coffee offered by Starbucks Corporation has been unanimously agreed upon to be the finest quality by most Americans and the world over, and this has been the key determinant of their market dominance. Through their clean and well-maintained stores, product differentiation and good customer service, Starbucks Corporation has attained a very high level of brand loyalty in the industry that very few competitors in the same field can match.
Currently, the organization is building a new brand for the market. The new brand according to Howard Schultz, the chairman, president, and chief executive officer of Starbucks Corporation is "Starbucks Reserve- an opportunity to get access to rare micro lot coffee that we are going to roast to perfection in this new industry." The new brand as per Mr. Schultz will be a golden opportunity in the industry, and thus, Starbucks would once again be doing what they do best-product differentiation. The corporation, therefore, will set up more Starbucks reserve stores worldwide to increase their sales and market their new product mix in the market.
Another key strategy that is currently used by the organization is human resource management which is more of value based so as to help build a strong internal and external relationship with the workers, suppliers, customers and the management. With good internal and external relationships, Starbucks can deploy successfully its business strategy of organic expansion into global markets, horizontal integrations through smart acquisitions and smart alliances that enable them to remain relevant in the global market. Good human resource management also ensures quality work output, increased output and customer satisfaction.
The company also uses innovation in technology to gain a competitive edge. It launched the Mobile Order & Pay system with prepaid Starbucks cards (Growth, 2014). By December 4, 2014, the company had seven million mobile payment transactions. In 2014 alone, more than $4 billion were loaded onto the firm’s prepaid cards in North American market (Growth, 2014). The system enhances customer convenience.
It also undertakes channel expansion into the global markets. This has enabled it to increase its market base and diversify its revenues. The expansion into China and the Asia-Pacific market has offered it high-value opportunities for growth (Growth, 2014).
The above key strategies that have catapulted Starbucks Corporation to its current success as the leading brand in the industry. However, currently, the Corporation is deploying the product differentiation strategy.
Starbuck’s market position
Starbucks Corporation is the leading organization in the industry. It dominates the industry with a market share of 36.7%, Dunkin Brands with 24.6% and the remaining 38.7% shared amongst other competitors like McDonald's, Costa Coffee, Tin Horton's and other brands respectively. Starbucks Corporation has maintained this lead due to the large economies of scale it enjoys through superior distribution channels and superior relationships, a large market for coffee of over 62 countries and the low costs of production.
In terms of human resource development and company culture, Starbucks Corporation has a competitive advantage over the other brands in the same industry. The organization has the best knowledge based employees, great human capital management which when coupled with great corporate culture translates into good customer service and the employees are also provided with great employment benefits like a stock option, retirement accounts plus good treatment. These coupled with other factors made Starbucks Corporation the 91st best workplace among 100 best places to work for as voted by Fortune magazine.
Starbucks is also a leader in this industry due to her good corporate social responsibility image. Their stores are community friendly, focused on recycling and reducing waste. They build goodwill among communities they operate in, and they undertake strong social responsibility initiatives.
Techno-wise, the corporation is leveraging technology and mobile outlets through their applications for IOS and Android and investment in technology. The above-discussed factors, therefore, make Starbucks Corporation a leading player in its industry.
References
About Us. (2016). Starbucks Coffee Company. Retrieved 20 March 2016, from http://www.starbucks.com/about-us
Growth, S. (2014). Starbucks Details Five-Year Plan to Accelerate Profitable Growth. Starbucks Newsroom. Retrieved 20 March 2016, from https://news.starbucks.com/news/starbucks-details-five-year-plan-to-accelerate-profitable-growth
