Strategic Planning for Nonprofit Organizations - Case Study Example

Individual Case Analysis Student’s Name: Instructor’s Name: Course Code: Date of Submission: Executive summery This report discussed the main issues in strategic planning in relation to Starbucks. Strategic planning is the process of ensuring that the organization has formulated strategies. The main strategic which have affected the operations of Starbucks as discussed in this report include high competition, globalization, changes in consumer demand and technological changes. However, the management of the company developed strategies which helped to improve its performance and manage these strategic issues. The strategy applied by Starbucks Company is to customer oriented strategy which will take the company to destination. The report recommended that the management of Starbucks should apply management information systems to manage its resources, train the employees and also apply competitive pricing strategy so as to attract and retain customers. Introduction Strategic planning is an important aspect as it helps to improve the performance of the organization in the market. Strategic planning helps to set long term goals and objectives which should be achieved at long run by formulating tactics which should be applied to ensure the goals and objectives have been achieved like effective allocation of resources. Starbucks has been one of the leading companies in offering coffee products. The Starbucks Company has managed to create a competitive advantage because of the strategies it has put in place (Thompson 2001). However, Starbucks ‘has also experienced a number of strategic issues which should be addressed to improve the performance of the company in the global market. In this regard therefore, this report will discuss the strategies issues affecting the company which need to be addressed, the analysis and evaluation of the strategies out in place and finally provide recommendations on how to improve the competitive edge of Starbucks Company (Bill 2005). Starbuck was founded in the year 1981 and has been improving its performance and currently it operates globally and it’s among the leading companies in providing coffee products. Strategic issues affecting the Starbucks Company Despite the competitive advantage of the company in the global market, the Starbucks Company is facing some strategies issues and problems which need to be addressed. Failure to address these issues, the company will fail to achieve its set goals and objectives. The first strategic issue which should be addressed by the management of Starbucks is high competition. In any industry competition is necessarily however competition should be too rivalry (Michael & Jude 2005). In this effect, Starbucks has been faced with stiff competition from other coffee products manufacturers. The impact is that the productivity of the company has declined hence there is need for the management to formulate strategies which will improve the competitive advantage of the Starbucks Company. For instance, the management can effectively segment its target market so that the needs of each market segment can be addressed effectively and this could improve the performance of the organization (Markides 2009). As a way of increasing the competitive advantage of the Starbucks Company, Schultz made acquisitions in the year 1998 to improve the growth of the company. Changes in consumer preferences also pose a great challenge to the management of Starbucks. There are changing dynamics in the global market which has affected the operations of the company (Brian 2000). The customers keep on changing their preferences which implies that the company also has to be updated with the changes in the consumer market. What this implies is that the company has to change its production and manufacture coffee brands which can satisfy the needs of the customers. This comes with extra cost of training the employees and also purchasing the equipment. Failing to focus on the changes in the market will lower the competitive advantage of the Starbucks Company and also destroying the reputation of the organization (Canales et al 2000). It is therefore the responsibility of the management of Starbucks to develop a programme which will focus on the changes in the consumer changes and recommend effective strategies. Globalization has also been the greatest challenge for the Starbucks. There are many challenges which are encountered as a result of globalization. The first challenge is barriers to international trade. Due to faster rate of globalization, many economies have designed which should be followed by an international company (Brian 2000). This is aimed at safeguarding the local industries from stiff foreign competition. This has slowed down the expansion strategies set by Starbucks. In addition, globalization has improved competition globally. This has reduced the profitability of Starbucks as a result of the shrinking global market. Therefore this issue should be addressed by management by setting policies of going international like franchising and licensing. The changes in labor market have also affected the recruitment process of Starbucks. Labor laws changing from time to time and the company should uphold these laws. Starbucks has been faced with the challenge of attracting and retaining competent and skilled employees (Campbell et al 2000). This is because there are companies which are coming up which are better paying then Starbucks and the end result is that the employees will be attracted to the companies. This has increased the employee turnover rate in the company. The management of the Starbucks therefore has to address this issue by improving the welfare of the employees like compensating them appropriately and also improving working conditions so that it can maintain the employees. Another strategic issue which is affecting the operations of the company is change management (Campbell et al 2000). In the year 2006, the prices of the company declined by 75% because of the strategic issues which affected the company. This implies that the company should be able to develop new strategies so that the shareholders could understand the downturn. This is one of the biggest challenges that the management of the Starbucks faces since it is hard to explain to stakeholders why the value of the shares is falling (David 2001). In this respect, the management of the Starbucks should design strategies to ensure the value of the shares does not fall. Unpredictable business environment on the other hand has impacted on the operations of the company. Changes in economic conditions and political systems have made it difficult for the company to expand its operations globally (Coulter 2001). Changes in economic conditions affect the purchasing power of the customers which lower the productivity of the company. Changes in political systems affect the operations of the company like the changes in the channels of distribution which the company should abide by. To manage this strategic issue, the management should formulate an organizational structure which is flexible to meet the changes in the global business environment (Mulcaster 2009). Analysis and evaluation of the strategy applied by Starbucks The strategy which is applied by Starbucks is based on its mission statement which is to inspire and nurture the human spirit. The overall strategy which is applied by Starbucks is to take the company into a desired destination (Coulter 2001). To achieve this strategy, the company has put in place strategies to improve the quality of coffee products manufactured and engaging customers at all levels of making decisions. This is the strategy which is customer oriented implying that customers are given the priority compared to other stakeholders (Moore 2005). This strategy has improved customer experience through several ways. In the first place the company sources for high quality beans which helps to improve the quality of the coffee products. The experience of the company is also based on the relationship it builds with the employees. The employees are engaged in decision making and because of the good reputation of the company, it has been able to attract and retain qualified and competent employees (Erica 2012). There is good communication between the management and the employees which is both upward and downward communication. This has improved the relationship between the management and the employees has it has improved the satisfaction of the employees. The end result is that the company has managed to attract and retain employees thus lowering the employee turnover (Michael 2003). Community relations and social purpose has also improved the performance of the employees. The company provides healthcare scheme to all employees despite their race or where they come from without discrimination (Porter 2010). This is one way of motivating the employees so that they can offer their best skills to manufacture quality products which improve customer satisfaction. In addition, the Starbucks Company practices diversification by providing a range of coffee products which help to improve the satisfaction of the customers. Since the company focuses on customers and their needs, the feedback from the customers is taken with greater emphasis (Porter 2010). For instance, the customers demanded the iced coffee and the company responded quickly to satisfy the demand of the customers. Diversification has enabled the company to satisfy the demands of the customers better by providing a range of products. The company has managed to improve its competitive advantage due to the strategy of focusing on the customers and them the priority (Patrick 2002). The strategy of focusing on the customers therefore has enabled the company to remain competitive globally. Licensing of the company has been made possible by licensing the shops and kiosks to sale the coffee products and this improves the delivery of the products to the customers. The Starbucks Company also distributes the products through the supermarkets. Starbucks experienced decline in its profitability especially in the years of 2000. In order to bring back the company into track, the management had no option but to retrench some of the employees who did not add much value to the Starbucks. The company also reconnected with its customers and also reaffirmation of the values of Starbucks (Johnson & Scholes 2002). Reconnecting with the customers implies that the company conducted extensive promotions through the social media like facebook and Twitter to communicate with the customers. The company developed new distribution channels and new products to satisfy the needs of the customers so that they can improve their experience. The company also developed international expansion strategy so that it will attract new customers (Kvint 2009). For instance expanding to China enabled the company to attract more new customers to hence bringing back the Starbucks Company into its initial position. The greatest consumer of the coffee products is USA with 1,428.30 million kilograms while Australia provides the least market with 79.80 million kilograms. From this statistics, it can be indicated that the company has great competitive advantage globally. Recommendations In order to improve the performance of the organization, the management of the Starbucks should formulate effective training and development programme (Lynch 1999). This is the programme which could be used to improve the skills of the employees so that they can manufacture quality coffee products which could met the needs of the customers. In addition, the company could adopt competitive pricing strategy so that it can be able to attract and retain customers. Through competitive pricing, the company will be able to meet the needs of the customers and this will develop loyalty among the customers. In this regard, the company will be able to improve the satisfaction of the customers (Lorenzen 2006). On the other hand, the management of the Starbucks Company should adopt appropriate technology in order to improve the quality of coffee products. Through application of management information system could help to minimize the input while maximizing the output (Max 2012). In addition, management information will improve the way the company communicates with its stakeholders especially the customers. This will help to collect adequate feedback from the customers which can be used to make decision. The management of the company should also review the mission and vision statement of the Starbucks Company. This will help to formulate effective goals and objectives which can enable the company to improve its performance (Brian 2003). The objectives should be systematic, measurable, attainable, realistic and timely. Conclusion Strategic planning is the process of developing strategic plans which could improve the performance of the organization. Starbucks has been one of the companies which provide coffee products to the customers and it is among the leading companies. However, there are strategic issues which have affected strategic planning of the organization. These strategic issues include high competition, changes in customer demands, globalization and changes in technology. However, the Starbucks Company managed to restore its position in the by developing growth strategies by focusing on the satisfaction of the customers. The management of the company also developed effective distribution channels like distributing the products through supermarkets and kiosks. In order to improve the strategic management of the Starbucks, the management should apply management information systems, train the employees and review its mission and vision statement. References Brian, T 2000, The 100 Absolutely Unbreakable Laws of Business Success, Berrett, Koehler Publishers. Bill, S 2005, Think like your customer: A Winning strategy to maximize sales by understanding how and why your customers buy, Oxford University Press. Brian, T 2003, Turbo Strategy: 21 powerful ways to transform your business, Edward Elgar Publishing Campbell, D., Storehouse, G., Houston, B 2000, Business Strategy-An Introduction, Oxford, Auckland, Boston, Johannesburg, Melbourne and New Delhi: Butterworth Heinemann. Canales, J. Kibble, B. D & Terk, N 2000, "One Step Beyond Strategic Planning." Foundation News & Commentary, Vol. 41, No. 5, pp. 30-87. Coulter, M 2001, Strategic Management 2nd Edition, Prentice Hall. David, A 2001, Getting Things Done: The Art of stress-free productivity, Routledge. Erica O 2012, Strategic Planning Kit for Dummies, 2nd Edition. John Wiley & Sons, Inc. Johnson, G & Scholes, K 2002, Exploring Corporate Strategy, Prentice Hall. Kvint, V 2009, The Global Emerging Market: Strategic Management and Economics, Oxford University Press Lynch, R 1999, Corporate Strategy, Prentice Hall. Lorenzen, M 2006, "Strategic Planning for Academic Library Instructional Programming." In: Illinois Libraries, Vol. 86, No. 2, pp. 22-29. Max M 2012, The Strategy Book, FT Prentice Hall. Markides, C 2009, “A dynamic view of strategy” Sloan Management Review, Vol. 40, No. 2, pp. 55–63. Michael A & Jude K 2005. Strategic Planning for Nonprofit Organizations. Second Edition, John Wiley and Sons. Michael, W 2003, The First 90 Days: Critical success strategies, Edward Elgar Publishing Moore, M. H 2005, Creating Public Value: Strategic Management in Government, Cambridge: Harvard University Press. Mulcaster, W.R 2009, "Three Strategic Frameworks," Business Strategy Series, Vol. 10, No. 1, pp. 68 – 75. Patrick, L 2002, The Five Dysfunctions of a Team: A Leadership fable, Oxford: Blackwell Porter, M. E 2010, Competitive Strategy: Techniques for Analyzing Industries and Competitors, London: Routledge. Thompson, J. L 2001, Understanding Corporate Strategy, Thomson Learning. Read More