The paper 'Strategic Management at Starbucks" is a good example of a management case study. Starbucks has gone through three important stages during its development. The first stage was that of continual growth that was fuelled by the popularity of the special coffee products that were offered and development of a strong culture guided by strong core values and a focus on the customer and the society at large. This stage was followed by a drop in sales and later, its fortunes were restored with the return of former CEO, Schultz.
Starbucks developed various strategies that enabled it to begin its restoration. These strategies included the introduction of new products and the elimination of some of the stores across the world market. Despite the success attained by the returning CEO, there were still concerns about the strategy used by the company. These were concerns on the same issues that had caused worry among investment analysts back when the company started declining in sales. This paper analyzes issues facing the strategy developed by Starbucks. The paper shall identify the issues facing the company, analyze and evaluate these issues and make recommendations on the best way forward. Identification of strategic issues and problems Current situation The strategy used by Starbucks involves the creation of a global presence for the company’ s empire through engaging in diversifying its products by use of vertical and horizontal integration and at the same time, keeping its high corporate strategy.
The company has been investing in expanding its reach beyond the coffee bar sector and working towards more diverse sectors like instant coffee, tea, music, confectioneries, books, mugs and many other sectors.
Through this, the company was able to maintain a steady stream of revenue from various fields while maintaining coffee as its core business. This strategy of diversity was through the revelation that the company was a core coffee firm but not an only coffee firm. In a world where new market segments are turned out every day, this strategy is one that can help the growth of a company. Through diversity, the company has developed new products that are used to keep up with the changing market trends that are the source of profit for certain segments.
An example of the advantage of this strategy was seen during the healthy trend of living that developed between 2007-08, where Starbucks developed yoghurt parfaits, fruit cups and skinny lattes. This strategy enabled the company to get into a customer segment that had been wary of Starbucks’ caffeine-based products. With the ability to react to the changing environment, Starbucks can be defined as an innovator in the industry (Schultz, 2011). To attain a competitive advantage over its competitors, Starbucks uses a broad differentiation strategy (Abraham, 2006).
The company has ensured that one needs not to love coffee for them to visit Starbucks because of the wide range of products that are offered extending beyond coffee. The company is able to reach a variety of market segments because of the high-quality products. In addition, the company has used the strategy of vertical and horizontal integration. The company created a great reputation with high-quality products that have enabled it to translate the loyalty of its customers into a customer base that is loyal to each of its products.
The company conducted extensive research on the needs and future trends of its customers and this enabled the company to meet the changes that occurred ahead of time, giving the company an advantage as a first mover in the market. Every product sold by the company has been seen as an extension of the company. Through these strategies, the company was able to expand and widen its market share, making it a leading service provider in the beverage industry (Bensoussan and Fleischer, 2008).
Abraham C. S., 2006, Strategic Planning: A practical Guide for Competitiveness Success,
Bingley: Emerald Group Publishing.
Bensoussan E. B., and Fleisher S. C., 2008, Analysis without paralysis: 10 tools to make better Strategic decisions, USA: Pearson Education Ltd.
Grant, R. 2012, Cases to Accompany Contemporary Strategy Analysis, USA: John Willey and Sons.
Meangreen, 2014, Starbucks Strategic Analysis and Assessment (New economic strategies to stay ahead of coffee competitors), Retrieved on 2014-06-08 from:
Quelch Y. M., 2006, Starbucks: Delivering Customer Service, Boston: Harvard Business
Peng W. M., 2008, Global Strategy, USA: South – Western Cengage Learning.
Schultz, H., 2011, Onward: How Starbucks Fought For Its Life without Losing Its Soul, USA: John Willey and Sons.
Thomson A. A., Shah J. A., and Thomas F. H., 2006, Starbucks’ Global Quest in 2006: Is the
Best Yet to Come? UK: McGraw-Hill.