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Since its founding in 1971, Starbucks has been a well-known player in the coffee market. It is one of the biggest coffee companies in the world. It specializes on sandwiches with pre-packaged pastries and cold and hot coffee. Starbucks products can be purchased at several shops across the world. Its main offerings include bottled water, ice cream, and coffee (Foroohar, 2015).
Differentiation is the primary business-level strategy used by the company. Beyond merely a cup of coffee, Starbucks wants its consumers to look forward to something. Its main purpose is to establish a unique experience for the clients not just from their gourmet coffee however as the quality and store atmosphere services. The grocery stores of Starbucks are strategically located in order to enhance the close relationship that exists within the locality. It will help create a long-lasting environment for the business to thrive. The stores exist throughout the world and are increasing in numbers.
The Chief Executive Officer (CEO) of the corporation has great future plans for it. He is planning to transform Starbucks beyond the differentiation strategy he is using. Much of the focused plan of the CEO is designed to deal with the swiftly transforming middle class in the United States.
This specific strategy of the company is to climb the ladder in the market by concentrating on the personal history that normally transformed the CEO’s beliefs. The later constitute the issues ranging from race relations to the working poor. For instance, the company has opened various luxury reserve stones that allow customers to get the expensive and unique collection of coffee. Besides, the individual elite locations have started to offer wine products (Foroohar, 2015).
The focused anticipation of Starbucks is to establish numerous specialized formats that are designed for particular locations or places. One of the examples is the express stores established in New York on the mobile trucks in order to locate the college campuses. As a student, the idea to have one at the institution is good since the majority of the faculties and students would benefit from the corporation on-campus experience. The main task of transforming Starbucks over the next decade is to change and reshape its current experience to greater heights at several different levels of business. This mode of experimentation in the subsequent years will help determine various business models to attract more customers, especially the uncertain ones. It is my belief that the business-level strategy of the focused differentiation would promote accomplishing individual unique experience directly to the prospective clients. However, it will require broader picture to widen the aspect of the corporate organization. Starbucks has actually strategized in order to differentiate itself from other competitors in the market. Therefore, the differentiation strategy has proved to be the best option for the long-term prosperity of the company (Foroohar, 2015).
Analysis of the Corporate-Level Strategies for the Corporation
Corporation-level strategies refer to the approaches that acknowledge the various factors that presently affect the company and its competitors in the market, thus, in the future. As a result, the company creates different policies to develop creative and new roles. It will help manage such factors hence providing a competitive advantage to the company (Rangaswamy, 2007).
Each company must design and use a business-level strategy. However, companies might not use all of them. Some that firms can employ include cooperative, international mergers and acquisitions, and corporate-level strategies. Starbucks utilizes not just the focused differentiation strategy, but a diversified corporate-level one to compete and survive in the ever-changing global economy. It uses international and product diversity strategies to handle the geographic variety in the modern world. The core of prosperous business-level strategies is the customers. They should therefore not be taken for granted by the management of the company. It is evident in the case of Howard Shultz in 2008 during the major recession when the clients were not ready to pay higher prices for the gourmet cup of coffee sold (Rangaswamy, 2007). It was the indication of the upcoming changes in the company that resulted into Howard Shultz taking over as the CEO. The corporate alterations made constituted closing the 900 poorly performing grocery stores in the US. Howard Shultz was focused to recapture the experience of Starbucks. The corporate strategies spread to more than 17,000 stores internationally. For instance, in 2011 alone, Starbucks expanded its products to include instance coffee products. Nevertheless, the majority of the clients questioned why instant coffee was introduced by the company. Starbucks has realized diversification and continues to accomplish it by expanding its corporate-level strategies. The latter was done to include the acquisition of other businesses and restriction of the portfolio to enlarge globally (Rangaswamy, 2007).
Analysis of the Competitive Environment to Determine the Most Significant Competitor to the Starbucks Company
Dunkin Donuts is the company that is considered to be the most significant competitor to Starbucks due to variation in their business-level strategies. It is the franchise that was established in 1950 offers the best all-day store for baked goods and coffee in the United States. It has over 11,300 restaurants established in 36 countries around the globe. It is considered as the best retailer of iced and hot coffee by the cup. Over the next two decades, it plans to increase the number of restaurants to 22,600. It uses franchise candidates to assist maintain America using Dunkin Donuts per year (Morphy, 2015).
The main question asked by many individuals is the strategies used by Starbucks in order to attract more prospective customers to its brand image of a “touching unique link to coffee.” Starbucks has to identify new innovative strategies to compete with the relatively cheap cup of coffee sold at $1 as well as the additional large amounts that are provided by Dunkin Donuts. As a matter of fact, Starbucks has not comprehensively made a decision on how to address this rising competition. Hence, its products will probably change in the future to attract more clients in the target market. The commencement of the provision of instant coffee by Starbucks is a business-level strategy to minimize the prospect of losing prospective customers that might not be able to afford a cup of coffee sold at $4. The main challenge with this business-level strategy is on how to convert the potential clients to make Starbucks as their preferred choice for a cup of coffee (Morphy, 2015).
Dunkin Donuts is actually the company that offers large volume operations for the food service. It employs between 25 and 30 individuals on each of its restaurants. Its business-level strategy is mainly directed towards the investors that have proven real estate experience and leadership abilities. It employs the use of a low-level diversification to achieve its vision and mission. The low-level diversification strategy is implemented through the use of a dominant or single franchise model of the business. However, the Starbucks Company employs the use of moderate-level of diversification to the high-levels of this strategy. For instance, Starbucks is considered as one of the best companies dealing in the provision of quality services to its employees and clients. It provides good benefits and wages such as tuition benefits. There are also other researchers who believe that Starbucks is the company that promises to accomplish the dreams of the United States of America. The company reached to various universities such as Arizona State University to offer full and part-time benefits to the eligible partners of the United States in order to get comprehensive coverage for their tuition. As a result, it provided coverage to students who pursued more than 50 undergraduate degree courses online (Morphy, 2015).
Besides, the Starbucks Company offers its Baristas with the free Lyft Rides from and to work. There is also free transformation for all the employees throughout the day hence enabling them to respond to the demands of the jobs at workplaces. It has ensures individuals who previously had difficulties to access the public transportation in the country. This strategy has helped to address the issue of flexibility of the shifts that were considered difficult. Consequently, it has enabled the disposable income to all its employees involved in the difficult shifts. The company also has the belief that it would make a vital difference in the provision of quality coffee to American citizens and how the employees of the company can accomplish their American Dreams. Howard Shultz previously initiated the accomplishment of the business-level strategy of the company to assist individuals in realizing their American Dream. It is a strategy that has been accomplished and many employees of the company have registered for different courses in the various colleges in the USA (Morphy, 2015).
Based on my personal opinion, it forms the distinction on why Starbucks is considered as the most prosperous long-term firm in the ever-changing worldwide economy. The company represents more than a mere success among the diverse competitors in the industry such as Dunkin Donuts. It is believed as the American Dream for all the employees at different levels starting from the lowest income earners and the highest income earners. In addition, it is the American Dream for all the prospective customers who would like to get the link to their personal experience. Therefore, the Starbucks Company will continue to succeed and survive in the current most competitive business environment (Morphy, 2015).
Determination on Whether the Choice from Question 3 would be Different in Fast-Cycle and Slow-Cycle Markets
Essentially, in the slow-cycle markets, the competitive advantages of the corporate are normally protected from copying or imitation from other parties. It has occurred for a very long period of time. It is therefore my individual opinion that Starbucks will be able to survive in both the fast and slow-cycle markets. In the latter markets, the company uses strategic alliances in order to gain entry into the new markets or restricted markets. For instance, there was the case where Starbucks partnered with Keurig Coffee to promote Starbucks K-cups. It was the strategy that was intended to help gain entry into new target markets. It was very genius due to the fact that it allowed the company to enhance their ability to effectively compete with the other competitors in the international markets. Historically, Starbucks is actually not comparable to other companies such as Disney. Nevertheless, it can employ the use of corporate strategies in order to have competitive advantages in the market. It is partnering with various educational institutions to ensure that its employees are properly trained and educated. Besides, the company partners with various transportation firms to make sure that the employees of the company maintain their jobs for a very long period of time. It is a very important strategy that has long-term success of the company in the slow-cycle market that ensures its stability in the market is maintained (Hitt & Ireland, 2015).
In addition, Starbucks can be able to survive in the fast-cycle markets. The latter refer to complex, unpredictable, and unstable markets hence providing serious competition to the company. Nevertheless, the company has actually proven that it can be able to transform itself in difficult circumstances. Any form of competition might not have substantial negative effects on the company. Starbucks has effectively founded sources of the new competitive advantages through the introduction of instant coffee. It was the strategy that was introduced to rival its competitors in the market such as McDonalds and Dunkin Donut (Hitt & Ireland, 2015).
The Starbucks Company is establishing a value through the provision of free Wi-Fi to its customers at the different coffee houses. It is a strategy that would attract more clients who would visit the coffee houses and drink coffee while enjoying the free network. There is also the launch of the mobile trucks and express stores the New York City to reach a wider base. It has also introduced retail stores and new roasting factors that are within the customers’ neighborhood. Hence, it could expand its objective for the middle-class individuals who would like to accomplish their American Dreams. Starbucks has been able to partner with the other rival companies in the market such as Keurig Coffee to buy the other products that are in high demand. It would help the company to prosper during the fast-cycle markets (Hitt & Ireland, 2015).
Finally, the Starbucks Company maintains the leadership position in the market and enhances the process of developing its products with the new markets and services to manage the level of uncertainties that might be occurring. The company mainly depends on the late makers and late drinkers without any room. According to the former CEO of Starbucks, Howard Shultz, he depended on both the late makers and late drinkers in order to ensure that the coffee empire survives in the future. It is from this perspective that I agree with the philosophy of the corporate that various organizations have vital tasks of assisting individuals in accomplishing their American Dreams (Hitt & Ireland, 2015).
Foroohar, R. (2015). Howard Schultz wants to change the country with. Time Inc. Retrieved from http://www.bing.com/cr?IG=EB329773B3EF441CAECBA56A77B5D403&CID=13342C708D3467953C2E27408C3266B9&rd=1&h=I_1O7wtHbXanRHXwBuzmaG2ZbJ22tQDefsTAeMr2pgk&v=1&r=http%3a%2f%2ftime.com%2f3696865%2fstarbucks-for-america%2f&p=DevEx,5058.1
Hitt, M.A., & Ireland, R.D. (2015). Strategic entrepreneurship. In Wiley Encyclopedia of Management (Vol. 3), 1-3. doi:10.1002/9781118785317.weom030091
Morphy, E. (2015). Lyft makes Starbucks an offer it couldn’t refuse. Forbes. Retrieved from https://www.bing.com/cr?IG=27725CC73A214912AF297840119BE626&CID=049195893680602A191B9EB9378661F7&rd=1&h=uZvBLS8gY-uxsG7-II2TPvbuPduH3Q8TJqLwOXJAVm0&v=1&r=https%3a%2f%2fwww.forbes.com%2fsites%2ferikamorphy%2f2015%2f07%2f26%2flyft-makes-starbucks-an-offer-it-couldnt-refuse%2f&p=DevEx,5045.1
Rangaswamy, P. (2007). South Asians in Dunkin’ Donuts: Niche development in the franchise industry. Journal of Ethnic and Migration Studies, 33(4), 671-686. doi:10.1080/13691830701265644
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