Starbucks grand strategy – MakeMyAssignments https://www.makemyassignments.com/sample Sat, 06 Feb 2021 08:45:51 +0000 en-AU hourly 1 https://wordpress.org/?v=4.9.18 Implementation, Strategic Controls and Contingency Plan- Starbucks https://www.makemyassignments.com/sample/implementation-strategic-controls-and-contingency-plan-starbucks/ Tue, 01 Jan 2019 09:01:08 +0000 https://www.makemyassignments.com/sample/?p=1068 Introduction In the previous paper, we have discussed the use of strategic planning and recommended some strategies for the company to meet their set goals. Each of the strategies were evaluated and then the optimal strategy was chosen for the…

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Introduction

In the previous paper, we have discussed the use of strategic planning and recommended some strategies for the company to meet their set goals. Each of the strategies were evaluated and then the optimal strategy was chosen for the company which we fetch the best possible results. After selecting a strategy, the next step is to create an implementation plan. In this paper, an implementation plan for the company has been developed keeping in mind the strategies and the objectives of the company. The implementation plan along with the financial budgeting has been provided in this paper.

Implementation, Strategic Controls and Contingency Plans

The main objective of Starbucks is to get respected and recognized as a brand name worldwide. It the way of maintaining its position in the market, the company is required to develop an effective and efficient implementation plan that can help them to achieve their objectives. For a long period of time, the company has been operating successfully with their marketing strategies (PEARCE, 2014). They have been providing their customers, a quality of service and doing their best to meet the prevailing consumer demands.

Starbucks can be considered as an important brand name that is being used by its consumers for a variety of purposes. Consumers use the Starbucks stores to meet their friends, conduct business meetings, and most importantly to take some time out of their busy schedules to relax. All these factors contribute a lot to make Starbucks a profitable and a successful brand worldwide. In order to implement a successful plan, the company has to first set the short-term objectives that will contribute to achieve the long term goals of the company. No one in this world can predict future, thus in order to be successful, it is important that long term goals should be laid down in such a way that it can be achieved in the long run.

In a post, Mr. Schultz reported that “Since 1985 we’ve rewarded our customers with a discount when they bring in personal tumblers, and we have a goal to serve 5% of the beverages made in our stores in tumblers and mugs brought in by our customers” (Schultz, 2013).  This type of implementation has been made as a part of the goals of the company so as to reduce the waste by using the reusable cups (Roby, 2011). This goal brought some progress as the percentage of the beverages that are being served in the personal tumblers marked an increase of 0.5% during a year (Starbucks, 2014).

The goal of the company is to offer its consumers with the coffee products of the finest quality along with other products. In order to remain competitive, and keep itself in the front of the competition, it is important for the company to develop some new products that will in turn expand the product line of the company.

Over 80% of the residents of America that are of 25 years old or more, may consume on an average of around 3.5 cups of coffee per day. This creates a need for the company to maintain their standards of quality because several other competitors like “Dunkin Donuts” and “Mc Donald’s” are offering a similar king of products at lower prices, which in result poses a tough competition for Starbucks (Samson & Daft, 2012).

It is also recommended that the Starbucks should also open some new stores and joints along with taking the user experience of the consumers as their top most priority.  It is matter of fact that consumers do not like waiting to satisfy their needs. In a similar manner, with the increase in the number of Stores, the company would be able to serve the needs of the consumers in a much better way. They are also required to increase their funds for advertising by allocating some of its resources towards the print media. Moreover, the Starbucks is required to bring some diversity in their products by offering partnership to the local stores and shops or by procuring new coffee beans from different parts of the world.

They must bring in some new lines of products for the non-coffee drinkers. These product lines may include organic tea products and organic beverages.  Starbuck can also change the atmosphere or the ambience during the holiday seasons. Last but not the least; the company can improve its global presence by providing its service through online portals and “drive-thru services”.

It is better here to mark some deadlines and milestones which should be achieved simultaneously so as to make our implementation plan more effective. Here, milestones should be created on quarterly basis and their performance should be analyzed after the completion of every quarter. Any discrepancies found should be immediately be taken care of so that there will be no deviations in the future.   Moreover it will help to know that if the set goals are being achieved and if they are beneficial for the company or not.

Financial Forecasting and Budgeting

Financial forecasting is very important for the prediction of the future financial performance of the company. Three steps can be proven useful for determining this. The first step that can be used is to estimate the revenues and the expenses that are relative to the period of current planning. This can be used to forecast the sales of the company. This method is referred to as (percent-of-sales method of forecasting financial variables).

The sales of Starbucks are expected to increase in the upcoming years. The major idea behind this increase is their innovation and customer service. It is anticipated by the company that their sales may grow by at least 4.5% in 2015, as it is expected that the economic crises may come to a halt. If the economic crises will come to a halt, obviously more people will have more jobs, and the earnings of a person will also increase, which equates that they will have more money to spend more on leisure activities and products. This may lead them to shift from cheap products to sophisticated products.

The second step requires the estimation of the investment the company would like to make in the fixed assets and the current assets that may help to meet the anticipated sales. An estimation of a sustainable growth rate can be very helpful here. The expenses that are faced by Starbucks in relation to the operations and functions in their stores need to be considered here.  Currently the company is operating with long-term debt, research and development expenses, advertising expenses, and several other expenses (Starbucks, 2014).  Starbucks also believes that their expenses might increase during the holiday season because people go out for shopping which will in turn increase the number of visitors in the store and they would like to buy the gift cards to present them to their acquaintances.

However, on the other hand, the company will experience an influx of people after the termination of the Holiday seasons as they would like to use those gift cards. It is also likely that they will be accompanied by any other individual as well, which will in turn results in more sales as they will have to spend more, while exceeding the limit of their gift cards.

The third step will help to identify the financing needs that are relative to the period of planning. This can be done by using the method of formulating cash budgets, as it will create a layout and a detailed plan of the receipts, cash reimbursements, new financing need, and the net changes in the working capital over a period of time.

While considering the break-even point of Starbucks, it is important to note that the company has forecasted average revenue of 12 billion for the next 3 years.  If the revenue of 12 billion and divided by $4.00 (an average price of a beverage at Starbucks), it will come out to 3 billion cups of the drink that will be sold every year for the next 3 years.  If an average variable cost of 5 million will be divided by the total sales, a variable cost of $0.40 cents per cup will be figured out.  Since the average price of a drink is $4 and we deduct the variable cost of $0.40 then a profit margin of $3.60 will be figured out (Possehl, Vankley, Ensing, & Roggow, 2010).

Now if a fixed cost of 15 million is divided by the profit per drink that is $3.60, we will get 4.10 million cups that needs to be sold out by the company to attain the breakeven point at the price of $4. The break-even point can now be calculated by using the following equation:  4.1 million cups X $4.00 = $16.4 million. Thus, Starbucks has to generate revenue of at least $16.4 million, to operate on the breakeven point.

In order to be successful, the company is required to keep their costs low while improving the quality of services, offering innovation by developing new products and providing the best quality of customer service to satisfy the consumers.

Risk Management Plan

As per my understanding, the plan is not risky. The company is trying to give priority to its consumers. The main aim of the company is to satisfy the needs and the wants of the consumers. The proposed plan helps the company to convey a message to its customers that what is their value in the eyes of the company. The proposed plan includes the opening of new stores, and this is the only area, where the company requires the allocation of resources. Even that cannot be considered as a risky investment. Hence, there is no need for a risk management plan and in case any risk arises, then I believe that the company is well eligible to overcome those risks.

Conclusion

The implementation plan provided above has a lot of worth to be executed in the company. The consumers usually measure the value of the products on the basis of the products as well as the intangible services provided to them along with the products. In this case, the company wants to make consumers aware that what is their value for the company and the company wants them to visit the store again and again. By communicating and providing the best of the services and that too at a reasonable price, the consumers would not mind to purchase the products.

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Strategic Choices of Starbucks https://www.makemyassignments.com/sample/strategic-choices-of-starbucks/ Tue, 01 Jan 2019 08:51:18 +0000 https://www.makemyassignments.com/sample/?p=1066 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…

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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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