Question

On July 25, 2019 Starbucks announce that it would raise its full-year financial outlook due to strong performance. Starbucks is a global provider of exceptional products that include more than 30 blends and single origin premium coffee’s hand-crafted beverages merchandise such as coffee and tea brewers consumer products good sold in grocery stores and other retail outlets and fresh foods.

The company’s mission is to inspire and nurture the human spirit one person one cup and neighborhood at a time Starbucks 2018 Starbucks has more than 22,500 stores across the world in over 50 different countries. The company has successful brands such as Starbucks coffee Seattle’s best coffee, Teavana, Tazo, Evolution Fresh, LaBoulange, Ethos Water, and Torrefazione Italia Coffee.

In 2019 Starbucks had revenues of 26.5 billion and an operating income of 4.07 billion the revenue is broken down as follows beverages = 74%, food = 20%, packed & single serves coffee = 1%, and other serveware and ready to drink beverages equals 5% major competitors of Starbucks include but are not limited to Dunkin Brands group Inc. Jacobs Douwe Egberts jamba juice company krispy kreme doughnuts inc. Luigi lavazza S.p.A Mcdonalds corporation nestle SA panera bread company peet’s coffee & tea inc and the J.M. Smucker Co.

Given your understanding of the Company and industry described above address the following questions

a) Identify the most likely business level strategy the company is pursuing as its primary business level strategy take care to offer at least three supporting arguments/statements.

b) Given the company described above please describe the competitive rivalry and dynamics this from faces please offer at least two supporting statements or points for each (4 in total)

c) Describe the level of diversification pursued by the company and offer at least two supporting points to justify your classification. Label your answers

Answer 1

The market strategy of Starbucks is centered on the four principles which follow:

1. Offering experience on 'third-place.' Starbucks outlets are easily designed as a 'third location' away from the home and work, where people want to spend time with their friends or by themselves in a quiet and enjoyable atmosphere. In a Starbucks, shop customers are also welcome to have their job done. Most business retailers in the U.S., and several business retailers overseas, offer free wi-fi. Starbucks shops are carefully built to keep shoppers going longer, ordering more and returning for another visit.
2. Selling top price coffee. A business plan for Starbucks can be defined as differentiating between goods. The coffee chain company is now focussing on the consistency of its goods and consumers are paying higher premiums for good quality. Great customer support as one of Starbucks 'strong strategic edge outlets further strengthens the coffee retailer's appeal.
3. Foreign market growth with an emphasis on developing markets is one of the main aspects of Starbucks 'long-term corporate plan. The share of global business group China / Asia Pacific (CAP) client sales rose from 7 percent in the preceding year to 14 percent in 2016. In the last two years, 2719 new Starbucks outlets have opened.
4. Integrating the technologies into various systems of industry. The coffee chain giant's technology-related implements added value by incorporating technology into a broad variety of business processes and practices, such as new product creation, brand message delivery, inventory fulfillment, and customer loyalty level tracking. The most prominent examples of value development by Starbucks 'technology innovation include the introduction of the Phone Order & Pay function, which allows consumers to shop without waiting in line, the introduction of the voice ordering app and "send text message alerts to consumers in the Chicago area when their smartphone orders are ready"

Competitive rivalry: Many small niche coffee shop franchises and local coffee shops have also been sold around the world, like – Coffee Bean & Tea Leaf in the United States, Caribou Coffee in the Minneapolis Regions, Peet's Coffee and Tea Service in Canada and the United States where Starbuck's company was founded.

Diversification: The organization has been following a long-term plan to diversify its core product beyond beverages; this is meant to better distinguish the brand, and is very important given that coffee is almost a commodity. The new news is that Starbucks is now considering growing its emphasis on cooking. The U.S. Starbucks also sells La Boulange pastries – a bakery that the corporation purchased for $100 million – and Creation Harvest granola bars – again bought for a sumptuous $30 million. A new food collection has been introduced across the sea in U.K Starbucks, with the doughnut / muffin combination 'Duffin' serving as the main product.