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Strategic Choices of Starbucks

Introduction

This paper explains the number of strategies that are available with Starbucks to maintain their position in the market. These strategies play an important role in assessing the objectives of the company and giving them a direction to attain those objectives with ease. These strategies can be referred to as a guide map for a company according to which they will have to perform. This paper will recommend the strategies that Starbucks can use to survive in the market with full efficiency.

Strategic Choice and Evaluation

In the way of fetching several avenues for growth, Starbucks is required to determine their weaknesses and should also implement several different strategies to overcome the identified weaknesses. Starbucks is required to take into consideration, a value discipline, generic strategy, and grand strategy to maintain competitiveness in the current economy.

Michael Porter identified three major generic strategies that are Differentiation, focusing, and low-cost leadership strategy.  Differentiation helps a business firm to achieve the required sustainable advantages which may allow the company to offer its buyers with the products or services that are unique and holds some value for them (Mangram, 2012). In our case of Starbucks, the customers believe that the overall cost they spend to make a purchase of a product from Starbucks, is comparatively higher than its competitors, including McDonalds, KFC, Dunkin Donuts, etc.

A generic strategy which can be implemented as an alternative approach is known as a value discipline. This value discipline involves three major concepts that are considered as the basis to make an organization successful. Starbucks will have to focus over a combination of operational excellence and customer service, because these are the best value disciplines that can be utilized here.

To ensure operational excellence in Starbucks, they will have to cut down their costs while maintaining the quality and their reliability of services to their consumers. One more important aspect of Customer intimacy can also be utilized.  In the way of retaining the loyalty of the customers, the Starbucks will have to ensure that they nurture their relationship with the consumers effectively.

Grand Strategy

Grand strategies refer to those strategies that can be used to achieve the set goals and objectives. A Grand strategy may be used for Starbucks to concentrate on improving the turnover of the existing products and services that are distributed by using several different channels. Since the economy is currently unstable and risky, it would pose several risks in front of Starbucks (Crossing).  They will have to face competition from several different competitors which are using a grand strategy (such as McDonalds, and Dunkin Donuts) in their respective market.  The chain that offers food products and services use several different techniques for advertising, and promotions to market the products and services that being currently offered by them. These chains distribute several different discount coupons, or offer’s coupon, that usually include buy one get one free coupons to the consumers.  These coupons can alone lure the customers to make a purchase of the products from these franchises. Most of the consumers prefer to purchase products based on their budget. Being a consumer, I will definitely buy a coffee from any good brand, if they will offer me two coffees at the price of one. In this way, it would be imperative for Starbucks to understand the needs, desires, and wants of their customers so as to retain the competitive position in the market.

Recommended Strategies

Though, the differentiation strategy has been adopted by Starbuck, but it is important for them to further expand themselves, so as to make the products differentiable from the competitors. This may involve the offering of different products and services on several different locations (Pearce & Robinson, 2011). For instance, Starbucks can open some more coffee shops that will be offering frappuccino’s, organic lattes, and organic food products at the major stores like Sears, Kohl’s Department stores, Wal-Mart. Starbucks can also go for joint venture and can form some more alliances so as to increase the turnover as well as income. As per the current economical conditions, Starbucks is required to differentiate its products that may in-turn will help to modify the minds of those consumers that are not willing to spend $5.00 on a beverage. Moreover, they can add some more new products that can be made available at cheaper prices so as to attract several other customers.

Starbucks is required to integrate the concept of value chain and should continue to engage its suppliers, and should try to make them realize that they are one of the important stakeholders of the company. Starbucks is using the horizontal integration that is helping them to be competitive and to be able to explore new markets. This may require them to continue to develop new long term contracts in association with several other coffee brands so as to create and penetrate other different product lines.

With continuous penetration of market, the company also has an option to expand its types of systems of delivery.  Starbucks has to increase its market share of the products that are being currently offered by them. This can be done by starting up of coffee shops inside the Wal-Mart stores and other retail shops, while providing drive-through services. The other option to expand their services includes online ordering system.  Starbucks can start up a drive-thru window that can be used to serve those consumers that have ordered on-line. This would help them to attract a large number of customers and will also facilitate market expansion (Makos, 2014).

Conclusion

Decisions that involve strategic choices should be taken carefully because it serves as a foundation of your future practices. While taking these decisions, you have to be very much clear about your objectives (long term as well as the short term). If you are clear about your goals, then only you can take such decisions. All the three generic strategies have influence over the business. However, Differentiation has been chosen for Starbucks.

By implementing this strategy, there would be several available avenues for the company. It is expected that the strategy that has been recommended above to add different products and taking care of the needs and the wants of the customers will help the company to retain its competitive position in the market and will also be able to increase their revenues overtime.

References

Crossing, C. (n.d.). Strategic Consulting for the Global Marketplace. Retrieved from Culture Crossing: http://www.culturecrossing.net/

Makos, J. (2014, October 15). SWOT Analysis & Strategic Planning – What’s the Difference? Retrieved from Pestle Analysis: http://pestleanalysis.com/swot-analysis-strategic-planning/

Mangram, M. E. (2012). The globalization of tesla motors: a strategic marketing plan analysis. Routledge, 20(4), 289-312.

Pearce, J. A., & Robinson, R. B. (2011). Strategic Management. New York: McGraw-Hill.

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