Starbucks is “Juicing” Its Earnings per Through Technological Innovations | Case Study Solution | Strategic Management
Please write a minimum of four pages APA formatted paper. Please read the “mini case” on page 29 of your textbook. Provide explanation and analysis by answering the following questions”.
Please provide at least six (6) peer-reviewed resources in support of your arguments.
● What competitive advantages do you believe Starbucks seeks to establish? What are the main challenges the firm faces as it tries to maintain the advantage or advantages you identified?
● Please research about Starbucks Inc. and identify three or four capabilities you believe Starbucks possesses. Please explain your opinion if any of these capabilities are considered as core competence and justify your reasoning.
● Starbucks’ mission is “To inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.” According to your research and (may be personal experience as well) what actions do you recommend the firm take to reach this mission?
● Please read about Starbucks’s new chief executive officer Kevin Johnson. Do you believe he is a strategic leader? What would be your recommendations to the CEO in terms of challenges he is facing in strategic management?
What competitive advantages do you believe Starbucks seeks to establish? What are the main challenges the firm faces as it tries to maintain the advantage or advantages you identified?
Competitive Advantages are regarded as the factors or attributes that are allows the companies to produce goods and services in a better way than their rivals. As compared to their rivals these competitive advantages helps the firm to increase the sales and earn extra-ordinary profit for the long-run. Companies can gain competitive advantages in many aspects like adopting new technology, by differentiating their product, etc (Mathews, 2002). As mentioned in the given case, Starbucks has been also able to achieve growth and profit by adopting technological innovation in their business processes.
It has been mentioned that there has been increment in 5% of store operation of the company from the increase in the online traffic. The company (Starbucks) has also adopted the various payment modes like mobile payments that will facilitate in easy placement of orders for the customers ultimately decreasing the waiting time for the customers and improving high level of customer satisfaction.
Nowadays, the concern for the employees by the organization has been increasing day by day because of the high percentage of employee turnover which ultimately affects the functioning of the business operations. For motivating the employees to work in an efficient way, the company has been providing various benefits to its employees like trainings, health related benefits, stock ownership choices, etc. (Chua & Banerjee, 2013).
This all methods that the company has been adopting either it’s related to adopting innovative techniques is helping Starbucks to gain competitive advantage over the other firms as a whole. Being a multinational company and having the operations around the globe, it becomes very important for the firm to have some competitive advantage which will place the company sustainable among other competitors in the long run.
Along with adopting mobile payment mode, providing different facilities for the employees the company has also opened retail outlets for the customers which is based on the concept of “Reserved Roastery and Testing Room”. This new techniques allows the customers of Starbucks to look in a real time how the preparation of their favorite coffee takes place along with the interaction with the master which ultimately gives the customers the facility of coffee roasting. Various stores have been established in New York following this concept to enhance customer satisfaction and experience. The company has also adopted some product differentiation techniques as they also provide their services at afternoon to attract customers.
Therefore, in my opinion the company considering all these factors should try to gain competitive advantage in terms of innovation, employee satisfaction and customer experience, product differentiation, decreasing waiting time and easy processing (Ahlstrom, 2010). Gaining competitive advantages in these factors is not an easy task in this world of cut-throat competition. To maintain these competitive advantages and succeed in the long run, business like Starbucks which is operating around the globe has to go through very several challenges. Some of the challenges that the company might go through are:
• Maintaining quality and price. As we know that the company offers premium coffee which is costly compared to other brands. Therefore, it is very important for the company to focus on quality if not it will not take much time for customers to switch for another brand.
• As mentioned above the company has been providing lots of extra benefits to their employees compared to their rivals but the company must look on whether they will be able to continuously provide these benefits in the long-run which might affect the cost for the company (Kumar & Pansari, 2015).
• In this cut-throat competition many of the other companies are also providing premium coffee with a lower price than Starbucks. Therefore, it is a challenge for the company to make effort for continuously positioning their brands in the mind of customers.
• Market Saturation can be the challenge for the company to expand their business where there might be already high level of competition.
• Changing level of tastes and preferences of the customers. With the passage of time, the preferences of the customers go on changing. People want to try something new which causes them to switch to another brand. Even though if they like the product, they will be bored after many years and want to explore and try another brand.
• Another challenge for the company is that they might not understand the concept of coffee at different countries. For example, in Australia the company had to shut down their stores because they didn’t understand the Australian concept of coffee.
Therefore, these are the challenges that the company might face while maintaining the level of competitive advantage.
Please research about Starbucks Inc. and identify three or four capabilities you believe Starbucks possesses. Please explain your opinion if any of these capabilities are considered as core competence and justify your reasoning.
Starbucks has strong brand recognition in the global market for providing premium quality of coffee products and offering a good customer service. The company has been able to position it in the world market because the company has been constantly focusing on product’s quality, better customer service and a smooth supply chain management. To achieve the goals and objectives companies need to deploy some resources as per their necessity and requirements which is considered as firm’s capability (Momeni, Monavvarian, Shaabani, & Ghasemi, 2011). The service and product that are provided by the company (Starbucks) are normally well differentiated from its rivals which has helped the brand in building reputation as well as gaining high customer base around the world.
And among the various capabilities the firms possess, the things that the company can excel in are considered as the core competencies of the firm. The different capabilities that the company possesses include:
• High Quality of Products• Better Customer Service
• Product Diversification
• Significant Investment in Technology, etc.
I believe that among all the above listed capabilities, most of the capabilities acts as a core competencies for the firm. We all are aware that the company delivers the best quality of coffee in the world. Though the products of Starbucks are expensive but people are ready to invest in premium quality products because they don’t want to compromise quality for money. And we are aware about the fact that ‘Quality comes with a Cost’.
The company values their customers and put effort continuously to provide better customer experience compared to other companies. Being updated with the technology can be also considered as the core competency of the firm (Hossaina & Islam, 2015). Starbucks adopts technological innovations in their business processes so that it can perform better and stand with the changing world of business where technology seems to the mandatory aspect of business.
Starbucks’ mission is “To inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.” According to your research and (may be personal experience as well) what actions do you recommend the firm take to reach this mission?
As stated by the company, the mission of Starbucks is “To inspire and nurture the human spirit-one person, one cup and one neighborhood at a time” which reflects the philosophical purpose of the business. This mission statement of Starbucks acts as purpose for the long term vision statement of the company. The mission statement of company emphasizes more on an internal satisfaction to the customers after consuming the product of Starbucks. In order to achieve this mission the company needs to adopt certain strategies which are explained below:
• The company should incorporate CSR properly. It has been mentioned in the case that the company has been providing different facilities to their employees already in the workplace environment and along with this the company should be socially responsible as well (Kang & Namkung, 2018). Adopting proper CSR practices like using reusable products, contributing certain percentage of their profit for the betterment of the society can help them to reach their mission.
• As I have mentioned above in the challenges faced by the Starbucks regarding not understanding the concept of coffee at different countries. Therefore, the company should adopt domestic culture so that they can understand and position their brand in a better manner compared to their rivals.
For example, most of the Nepalese won’t be satisfied with the western nature of food and miss our local food because we have been grown up with that food in our taste buds. Likewise, not all of the people will be immediately like the taste of your products and the environment it is operated in. Therefore, understanding domestic culture is very important.
• The company must integrate technological innovations in the products and processes on a continuous basis when needed to meet the cut-throat competition in the world. As we can see in the case the use of mobile payment mode has really helped the company to provide a better customer experience and the online traffic has also helped to increase the sales of the company. Therefore, continuous upgrades are required for the product and processes in order to sustain the business for the long run.
Please read about Starbucks’s new chief executive officer Kevin Johnson. Do you believe he is a strategic leader? What would be your recommendations to the CEO in terms of challenges he is facing in strategic management?
Kevin Johnson, the current CEO of Starbucks has been graduated with a Bachelor’s degree in Business Administration from New Mexico State University. He joined Starbucks in the year 2009 as a BOD and has brought technological background to leadership because he has spent around 16 years at Microsoft and 5 years as a CEO of Jupiter Network. Johnson is a passionate servant leader who has been carrying the legacy of Starbucks after the Howard Schultz stepped down from the CEO position.
As I do believe he is a strategic leader because he is optimistic person having a good analytical and decision making skill which has facilitated in bringing so many innovative ideas in the Starbucks. Overall, his leadership has really helped the company to grow and cope up with the changing dynamics of the business environment. Through he has been able to bring so many positive changes and growth to the company, it has also faced some of the challenges related to strategic management. The challenges are related to the competition with its rivals, allocation of the resources, different forms of barriers (political, legal, social, etc.), saturation of market, etc.
Ahlstrom, D. (2010, September). Innovation growth: How business contributes to society. Academy of Management Perspectives, 24(3), 10-23.
Chua, A. Y., & Banerjee, S. (2013, March 23). Customer knowledge management via social media: the case of Starbucks. Journal of Knowledge Management, 17(2), 237-249.
Hossaina, M., & Islam, K. M. (2015, October). Generating Ideas on Online Platforms: A Case Study of “My Starbucks Idea”. Arab Economic and Business Journal, 10(2), 102-111.
Kang, J.-W., & Namkung, Y. (2018). The Effect of Corporate Social Responsibility on Brand Equity and the Moderating Role of Ethical Consumerism: The Case of Starbucks. Journal of Hospitality and Tourism Research, 42(2), 1130-1151.
Kumar, V., & Pansari, A. (2015, June). Measuring the Benefits of Employee Engagement. MIT Sloan Management Review, 56(4), 67-72.
Mathews, J. A. (2002, December). Competitive Advantages of the Latecomer Firm: A Resource-Based Account of Industrial Catch-Up Strategies. Asia Pacific Journal of Management, 19(1), 467–488.
Momeni, M., Monavvarian, A., Shaabani, E., & Ghasemi, R. (2011, July). A Conceptual Model for Knowledge Management Process Capabilities and Core Competencies by SEM the Case of Iranian Automotive Industry. European Journal of Social Sciences, 22(4), 473-489.