Question

Analysis the Facebook and Starbucks in 2 paragraph. Please

Answer 1

FACEBOOK

Facebook is a preferred social network by marketers, not only because of the sheer number of users represented but also because of its incredibly insightful analytics suite. It’s important to be able to analyze customers and their behavior on a micro level due to Facebook’s ever-changing algorithm, and the implications for your content and business. If you refuse to adapt your approach based on these insights, you’re doomed to obscurity on the news feed.

A deep Facebook analysis shouldn’t be a one and done situation. Ideally, you’ll be auditing your efforts every few months or so at most. But don’t feel guilty if this hasn’t been a part of your social media strategy so far—there’s no time like the present to start a new habit.

Sprout features mentioned in this post:

• Facebook Video Analytics Reports
• Facebook Competitor Analysis Report
• Facebook Pages Report

Here’s a step-by-step guide on how to conduct a deep Facebook analysis:

1. Analyze Your Competitors

The Facebook Insights data attached to your Facebook business page will provide you with a wealth of information, but it’s a good idea to start your Facebook analysis by looking at your competitors.

Find Your Competitors

For this part of your Facebook analysis, there are three kinds of posts that you’ll want to scrutinize for insights: posts related to your industry, your competitors’ posts and your own posts. If you’re not sure who’s your competition, here are a couple strategies to incorporate during your research:

• Find them on Google. Use Google to search for key phrases relating to what you do. If your business is not local, you can use search terms that best describe your industry.
• Look at who your audience follows. Check out the other brands your audience follows on social media and note the most similar to your company.

Analyze What They’re Doing

Once you’ve identified your top competitors:

• Choose the top 3-5 competitors to benchmark your efforts against.
• Gather information about them, including the social networks they use, the size of their following, how often they post and what their engagement numbers are like.

Manual competitor analysis is a tedious process. But with Sprout Social, users have access to our Facebook Competitor Analysis Report. This report shares audience growth numbers, so you can track fan count by day, as well as message volume to see how active the competition is on Facebook.

Perhaps the most useful aspect of the analysis is the message volume chart that includes overall posting volume, a breakdown of post types, total engagement and engagement per post. This data will help you to benchmark your efforts against competitors and may provide some motivation to renew your campaigns on the platform.

Few things are more motivating than the numbers of your competition staring you in the face.

Get deeper competitive insights with Sprout’s social media listening

Social listening can let you tap in on conversations around specific products and industry trends.

Find out how both you and competitors are being discussed, and what your target audience is buzzing about before anyone else.

Find out how Sprout can enhance your competitive intelligence with a free 30-day trial.

2. Gather Your Data

Now that you have some benchmarks and an idea of what your competition is doing, it’s time for some self reflection. In this step, you’re going to pull data on your brand through Facebook Insights or Sprout Social.

Accessing Facebook Insights is simple: just go to the Facebook Page Manager and click Insights. The default data range displayed on Facebook Insights is 28 days, but you can toggle this to fit your needs.

If you’d like to download the data to analyze or manipulate it off the Facebook platform, click on the Overview tab, then on Export Data. There will be a popup showing three kinds of data types you can export: Page data, Post data and Video data, as well as a data range for when you want your Insights. Our recommendation? Download everything.

What does each export include?

• Page Data shows you key page metrics for engagement, like sources and audience details.
• Post Data provides metrics for post reach and impressions.
• Video Data displays your key video metrics like number of views: unique, paid and organic.

If you don’t want to deal with the process of downloading and interpreting multiple sets of data, you can also conduct your Facebook Analysis with Sprout Social. New users can grab a 30-day free trial without entering credit card information.

In Sprout, after you sign up and connect your Facebook account, you’re going to run a Facebook Pages report.

Once you have all the data in front of you, it’s time to dive deep into your Facebook analysis.

3. Analyze Your Facebook Page Data

Once you’ve gathered all your data, it’s time to dive into the numbers. It’s best to divide this into two different parts. First, we’ll take a look at page level metrics, then we’ll go over analyzing individual post performance.

Before trying to make sense of all this data, it’s helpful to set some key performance indicators (KPIs) that are important to your business. For example, if you’re using your Facebook Page to drive traffic to your website, one of your KPIs might relate to link clicks. However, if you’re focused on building a community, set a KPI for engagement stats.

If you’re using Sprout’s Facebook Pages Report, you’ll be able to surface your custom KPI’s at the top of your report in a summary – that way, your attention stays focused on the most relevant metrics to your business.

While there are a ton of metrics you can look at, we’ve trimmed the list down to some of the key metrics we feel indicate strong content and a successful social strategy.

Facebook Likes

This simply refers to the number of people who click the “Like” button on one of your posts. Facebook likes are a clear indicator that somebody is enjoying your social media content. This is a metric that you should always work on increasing, as it shows that people have some basic connection to the content that you’re posting.

The Lifetime Likes tab shows the overall likes for the page in the time period you’ve designated. You can use the data on this tab to identify specific days when likes spiked. Comparing this page data to post data, you’ll be able to identify specific posts that resulted in a good response from your audience, which may correlate to an increase in page likes.

Use the Daily New Likes vs. Daily New Unlikes tab to determine your net number of likes for the day, and to determine the days when you had the most unlikes. You can also cross-reference this with post data to identify which posts do not seem to be resonating with your audience.

Lastly, take a look at the Where Your Page Likes Happen tab to get information regarding from where people ‘liked’ your page. More than likely, no pun intended, a majority of people liked your page directly, but a number of fans could’ve come from other sources such as a Facebook button on your site. Knowing this is useful for connecting your digital marketing efforts across channels.

In Sprout, you can use your Audience Growth report to see how your number of likes trend over time, as well as unlikes. We help you compare organic vs. paid likes, evaluate likes by profile, as well as against total fans. You’ll be able to select the metrics you’d like to view and see the breakdowns or comparisons by day.

Engaged Users

Engaged users refer to the number of people who clicked anywhere in your post, without generating a story, plus the number of unique people who created a story about your Page post. This is a great metric to increase because it means people are creating their own unique stories about your posts.

Video Stats

The page data also includes statistics about your video content and how users interact with it.

To access this data, check out the tab for Total Video views (daily, weekly, 28 days), for paid and organic views. There is also a tab with data for Daily Total Number of Times a Video Has Been Seen Again, which is the number of times a video has been played after the initial play. More than one play per person indicates that people have been coming back to your page to see the video.

Another tab to consider in your Facebook analysis is the Daily 30-second Total Views, which shows the number of times a user has viewed a video for at least 30 seconds, with additional data regarding how many people have viewed the end of a video. Both of these metrics are useful in understanding whether or not your content was interesting enough to warrant more than a cursory glance.

Your Sprout report has a dedicated section for video metrics and will give you additional video performance data, including video view times, paid vs. organic video view times, partial video view times, average video time watched and more.

4. Analyze Your Facebook Posts

When looking at the performance of individual posts, we’re going to analyze both reach and engagement metrics. Here’s a breakdown of what each includes:

• Post Reach shares basic post statistics like impressions, engaged users, consumption and video views.
• Post Engagement shares basic engagement stats like engaged users, consumption and negative feedback.

Reach

According to Facebook, “Post reach is the number of (unique) people who have seen your post. Your post counts as reaching someone when it’s shown in their News Feed.”

The number of impressions is similar to reach but instead refers to the total views of the post. Of course, both metrics are important to focus on increasing, as the more people you reach, the more potential customers there are seeing your posts.

The algorithm that Facebook uses to decide what to show in each user’s News Feed is known as “Edgerank”, and it’s made up of a handful of different factors. To keep things simple for this topic of Facebook analysis, assume that your posts will gain more reach with an increase in clicks, shares, comments and likes.

Look at the post reach and identify spikes and peaks in the Reach column. You can also see the type of posts that generate these likes, as well as their permalinks (if you want to refer back to the full published post).

You can use Sprout’s Facebook Impressions to see patterns in organic, paid and viral impressions as well as the number of people your content has reached. Breakdown the data to compare organic vs. paid content impressions and reach and measure the average by profile.

Comments, Likes & Shares

There are three primary ways people engage with your posts:

• Comment
• Likes or Reactions
• Share

Analyzing these metrics will help you determine which posts resonated best with your audience. Once you know which posts worked, take what you can from them to duplicate this success.

Shares

More so than liking or commenting, someone sharing one of your Facebook posts is a strong indicator that your post really resonated with them. After all, they wouldn’t pass it on with their stamp of approval to their friends and followers unless it really struck a chord. When it comes to sharing, users have the ability to:

• Share on their own Timeline
• Share on a friend’s Timeline
• Share on a Page they manage
• Share in a private message
• Share in a group

No matter how fans share your content, this action fuels the Edgerank score for that piece of content and, in turn, increases that post’s reach.

Looking at the posts with the highest shares will help identify the posts people share the most. It also lets you continue crafting content that people will be compelled to share.

STARBUCKS

The internal analysis of Starbucks will consist of an organizational analysis strategy analysis and a business model analysis.

4.1. Organizational Analysis

The corporate mission of Starbucks, along with its vision statement and business model are crucial in determining where Starbucks wants to go as an organization. The Starbucks mission statement is: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time (Starbucks, 2011).

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To deliver on its mission, Starbucks executes some core principles. Firstly, Starbucks commits to the finest coffee. Starbucks is not only concerned with quality for the end consumer, but also ensures coffee beans are purchased in an ethical manner that will improve the lives of the farmers. Secondly, Starbucks deems their employees as a crucial resource and asset. Starbucks guarantees perfect coffee to their customers, which can only be delivered by high engagement of staff (Starbucks, 2011). Thirdly, the third place experience provided by Starbucks gives customers a gratifying atmosphere of human connection and a sense of belonging (Rice, 2009).

The products and services that Starbucks offer are critically important to Starbucks achieving differentiation in the market by way of constant product innovation (Kelly, 2006). Starbucks currently offers more than just quality gourmet coffee. Starbucks is proud of its customer service and is dedicated to ensuring that each customer enjoys each trip to Starbucks (Starbucks, 2011). Other services include the third place experience atmosphere and onsite coffee service. The third place experience is what Starbucks refers to as the third location that consumers will relax and enjoy drinking coffee beverages (Rice, 2009). Starbucks also offers free Wi-Fi to everyone at its store locations to entice customers to stay longer and work or surf the web while they enjoy their coffee (Starbucks, 2011).

The organizational analysis evaluates the key characteristics of the organization. Starbucks aims to nurture the human spirit around the globe by offering the finest coffee in a friendly and inviting atmosphere. It promotes product innovation and customer service through a decentralized leadership style that emphasizes distributed decision-making and information-sharing. The quality of a company is judged by the symbiotic fit between its strategy and organizational structure, yet consideration is also placed on whether the firm’s strategy and structure meet the demands of the external environment (Hannan, 2011). The next section will give a detailed analysis on Starbucks’ strategy.

4.2. Strategy Analysis

The strategy analysis consists of three parts: marketing strategy analysis, operations strategy analysis and international expansion strategy analysis.

Marketing strategy

The first part is about Starbucks’ positioning strategy. A positioning strategy aims at positioning rival companies into strategic groups. These strategic groups consist of industry members that have similar goals and positions in the competitive industry (Piercy, 2008). These groups are placed on a strategic group map to analyse how industry firms are positioned. Firms in the coffee industry will be mapped based on price and quality of their products versus product line breadth. The size of the circle representing each firm on the strategic group map is symbolic proportional to the size of the firm’s share of total group revenues.

The coffee beverage strategy group consists of quick-service restaurants and specialty coffee shops. The major players in the strategy group are listed in the following table. The firms are divided by breadth of products offered to the market, industry related sales, and percentage of sales relative to rivals. The data listed in table x are used in constructing the strategic group map.

Diagram 7: Strategic Group Map of Coffee Industry

Green

Mountain

Price/

Quality

Source: Williams (2007)

Competitors of Starbucks can be divided into two different categories: direct and indirect. The direct competition would include firms that manufacture and produce hot drinks (Datamonitor, 2010). These firms are the retailers of ready-to-drink coffee and tea products, quick-service restaurants, and supermarkets. Also, in this category are the large multinational companies that produce ground coffees and instant coffees (Datamonitor, 2010). The indirect competitors are comprised of firms producing energy drinks, caffeinated soft drinks, and energy shots. Starbucks’ close competitors include other specialty coffee shops, doughnut shops, and restaurants.

Starbucks holds a dominant position in the specialty coffeehouse market and has no single clear rival in the sector. Its closest specialty coffeehouse competitor is Caribou Coffee with 440 stores in the US. Its most intense specialty coffeehouse competition is dispersed among the thousands of independent or small-chain coffee shops around the nation and the world. Two of Starbuck’s stiffest quick-service restaurant rivals are McDonald’s and Dunkin Donuts. McDonald’s followed its 2009 strategy of competing against Starbucks through expansion of McCafe locations into more stores both domestically and internationally (Liu, 2009). Nevertheless, there are big differences between their core customers. Privately owned Dunkin Donuts is another major competitor, with nearly 5,000 stores in the US. Following Starbuck’s footsteps, Dunkin Donuts will look to expanding globally, especially in the Asian markets (Dicarlo, 2004). Although Dunkin Donuts’ retail footprint also overlaps largely with that of Starbucks, its customer experience is much more similar to the coffee-to-go model rather than the “third place to work and relax” model. Consequently, it is likely to compete more directly with McDonald’s than with Starbucks (Dicarlo, 2004).

Starbucks is an industry leader in both product innovation and product offering. Most other firms take a follower position and simply copy successful Starbucks’ products at lower prices. This is a favourable position for Starbucks. The strategic group map shows Starbucks as the leader in both price/quality of product offerings as well as the breadth of products offered. The white space on the map is possible openings for existing firms or new firms to move into. These would be high priced, low breadth offering positions, or low cost, high breadth offering positions.

The second part analyses Starbucks’ competitive strategy using Porter’s Generic strategies framework. As a whole, Starbucks implements a broad differentiation strategy. It provides high quality coffee and a unique experience in accessible locations, which makes it stand out among all the coffee providers. VIA, the new instant coffee line, straddles broad differentiation and cost leadership strategy. Though it will be a low cost and convenient alternative to Starbucks regular coffee, Starbucks coffee is still unique from other products in the market. Providing in-store gifts and brewing utensils is the focused differentiation strategy; it was designed for coffee lovers, especially Starbucks’ loyal fans.

Diagram 8: Starbucks’ competitive strategy

Competitive Advantage

Uniqueness Low cost

Broad Target Narrow Target

As a whole

VIADifferentiation

Cost Leadership

In-store brewing utensils/ gifts

Differentiation Focus

Cost Focus

To differentiate it from rivals, Starbucks convinces customers that it provides more than a cup of coffee and associates its brand image with a sense of community activism. Moreover, Starbucks acts as a social responsible company to strengthen its differentiation strategy. It promotes ethical sourcing, environmental stewardship, and community involvement. Starbucks also prides itself on the innovation of new products, which further differentiates it from its competitors. However, with the customer base becoming more sophisticated and differentiation indicators adopted by ordinary coffee firms, Starbucks’ advantage on the differentiation strategy may fade away (Piercy, 2008).

The third part is about Starbucks’ brand building strategy. Its marketing strategy has focused on “word-of-mouth” advertising and building the brand cup by cup, letting the high quality of their products and services speak for themselves (Starbucks, 2010). For years, this unique marketing strategy has played an important role in making Starbucks Coffee Company a success. In 2010, two-thirds of all coffee was sold in supermarkets. Starbucks coffee sold in supermarkets featured distinctive, elegant packaging and the same premium quality as that sold in its own stores. This new change requires Starbucks to create a new way to build its brand. Therefore, the Starbucks marketing strategy has expanded to create a community around their brand. On its website, individuals are encouraged to express their experiences with Starbucks’ history, and the company strives to “personally” join in the discussions.

Operations management Strategy

Starbucks has positioned itself as a provider of ethical premium coffee products and pleasant, luxurious meeting places for people. So, its prices are relative high and it competes on a unique value proposition. Commitment to the best quality and high ethical standards are evident in every step of the supply chain, from bean procurement to service (Jennings, 2009).

Starbucks’ supply chain starts from bean sourcing. To ensure compliance with its rigorous coffee standards, it controls coffee purchasing, roasting and packaging, and the global distribution of coffee. Starbucks pays over the market price for its beans in order to procure premium beans. Besides acquiring the highest quality coffee, the ethics of paying a fair price for coffee producers provides an ethical aspect to the value proposition (Rubin, Dierdorff and Brown, 2010). Starbucks also has the expertise to secure top-notch coffee beans to supply the company’s growing needs. All this allows Starbucks to serve coffee that is of superior quality compared to competitors.

As part of its sourcing strategy, Starbucks entered into fixed-price purchase commitments in order to secure an adequate supply of quality green coffee beans and to limit exposure to fluctuating coffee prices (Starbucks, 2010). When satisfactory fixed-price commitments were not available, the company purchased coffee future contracts to provide price protection. Nonetheless, there have been occasions in years past when unexpected jumps in coffee prices put a squeeze on the company’s margins and necessitated an increase in the prices of its beverages and beans sold at retail price. However, by this approach, Starbucks can smooth costs and avoid price hikes in the stores that would have a devastating effect on the company’s image.

Starbucks deems store operations as an important part of strengthening the company’s reputation and image. The company formed a group to create a store development process to ensure that each store conveys the appropriate image and character. Then, the information and operating system of Starbucks allow it to communicate information throughout the organization to increase the quality of decisions and efficiency in value-chain activities (Gamble & Thompson, 2011).

Starbucks also tries to develop the company’s brand through its specialty operations with third parties outside the traditional coffeehouse. This includes Licensed Stores, Packaged Tea and Coffee, Branded Products and Foodservices Operations. In 1997, Starbucks began entering into a limited number of licensing agreements for store locations in areas where it did not have the ability to locate its own outlets. For example, Licensed Stores with Marriott Host International and Aramark Food and Services put Starbucks stores in airport locations and on university campuses. Starbucks received a license fee and a royalty on sales at these locations and supplied the coffee for resale in the licensed locations.

International Expansion Strategy

Starbucks’ international expansion started in 1995 and its international expansion strategy is to provide licenses or create joint ventures with reputable local companies, which are equipped with retailing know-how in the target country (Garza, 2010).. This strategy is built upon the growing reputation of the Starbucks brand and the ability to identify attractive store locations. The international expansion strategy is also supported by centralized buying, standard contract development and fixed fees for certain items, and consolidated work under contractors with good cost-control practices (Alberto, 2011c). Starbucks’ product supply is also a key in the successful expansion. As reported by the Wall Street Journal (2006), the Starbucks Corporation is expanding at a very high rate and focusing on China. This company has aggressively campaigned to become the leading coffee in the United States and after attaining this, it has made further steps to considering global leadership.

The expansion and growth of Starbucks has been well known, especially by its desires to venture in emerging economies. Currently, the Starbucks Corporation is downsizing in the US as a result of the economic downturn in this country and its increasing global expansion. In 2008, this company closed more than 600 coffee shops across the US. Since the need for international coffee has increased, Starbucks is opening up 1,000 coffee shops across the world especially in Asia. Starbucks’ expansion strategy was well thought out: the strategy target was in the Asian Pacific, far away from Europe and Latin America where coffee shops competition is very strong. As the diagram below shows, the revenue from the US market is shrinking and the operating income of the EMEA market became negative in 2010 and 2011, while the market of China and the Asian pacific shows good potential. Therefore, China is Starbucks’ largest target, as it is expected to be the biggest growing market over the next two years (Starbucks, 2011). After the global economy recovery, Starbucks is planning to open an average of more than one store each day. Starbucks continues to close domestic stores that have already saturated the market, and replace them with international stores abroad.

Total revenues ($ Million)

Starbucks is able to enter into Asian markets and China in particular by targeting China’s middle class and bringing new lifestyles while maintaining coffee and other beverages as affordable luxuries. Barraclough (2006) reports that the Chinese are known for their increasing preference for coffee and hence Starbucks is able to convince more customers to take coffee. American products and lifestyle are highly admired by the Chinese and Japanese, and hence consumers there adopt American trends and products easily and quickly. This indicates that Starbucks is making use of the Chinese culture to enter into China’s market (Haoting, 2009).

However, the rapid international expansion also has negative effects. First of all, too many new locations established would exert an adverse effect on customer service. Therefore, the customer experience may degrade. Secondly, some retail stores opened even before the local supply chain was fully built up, leading to bad customer perceptions towards Starbucks coffee and food. Thirdly, the strategy of closing down US locations to offset new growth abroad results in reducing the convenience factor in the US market. Many American customers have to drive a long way to buy a cup of beloved Starbucks coffee. As mentioned previously, the convenience is one of most important parts of its value proposition. Last but not the least, the large number of stores is a huge asset or liability, depending on how one assesses the situation. If there is a strong economy and people have disposable income, then it is an advantage to have abundant stores to generate revenues. On the other hand, the vast number of stores will become a huge financial liability during economic downturns. Therefore, now Starbucks, led by Schultz, advocate the disciplined expansion of store bases and focus on real, sustainable growth.

4.3. Value chain analysis

Michael Porter (1998) states that acquiring competitive advantages can be done through an analysis of the company’s value chain. Companies can attain competitive advantage when the value chain is optimised by coordinating these activities to create value for its products or services that exceeds the costs of performing the value activities (Porter, 1998). In other words, a company can create additional value without necessarily increasing costs.

A company’s value chain system can be classified into two categories; (1) the primary activities, which involve the physical creation of the products, marketing and delivery system, and after sale service and support activities; and (2) the secondary activities, wherein company infrastructure and inputs allow the primary activities to take place (Porter 1998). When these activities are already defined, the value chain system can be analysed in order to aid the development of a strategic goal and gain competitive advantage or, in our case, to understand the current downfall in the Starbucks business model.

Below is the current value chain of Starbucks with international and technological developments. The upstream value chain allows the development of new products that suit international markets better, e.g. green Tea Latte in Starbucks Japan. The downstream is the online storefront customization, which allows customers to order online and create new drinks etc. The newly-added mobile app could locate Starbucks locations and order drinks.

Product Distribution

Bean and Ingredient

Selection

Local

Adjustment

Product

Development

Take-home

products

Online

Storefront Customization

Mobile Apps

Storefront

Starbucks’ value chain creates additional value for its products, which the customers are willing to pay for. Hence, the customer is not reluctant to pay above-market prices for Starbucks coffee. In fact, its customers are not looking for the price of the coffee but they are seeking for the quality of the products and the brand image that the company offers.

For a company to achieve or maintain competitive advantages and add value to its products or brand, it is necessary to link these activities and optimise the company’s value adding activities (Porter, 1998). In the case of Starbucks, as stated earlier, its value activities were at first effective in the co-ordination between its primary and secondary activities. For example, the setting up of stores was well planned. Each location was carefully studied, taking consideration of irrelevant details such as traffic flow, density of people and demographic characteristics of an area, and careful selection of personnel to be deployed in each outlet (Clark, 2007). These aimed to deliver good quality coffee products and exude an ambiance of luxury and comfort for its consumers (Clark, 2007).

However, gaps in the value chain activities occurred in recent years. An example is the rapid expansion in several locations across Asia. The company failed to maintain the company’s brand image of luxury and exclusivity. The company rapidly expanded by opening an average of a store per week, which resulted in the downgrading of the “Starbucks experience” that its customers have been looking for (Velta, 2008). In fact, the customers have not seen any noticeable improvements in their experience (Jennings, 2009). Analyst Andrew Barish also commented that Starbucks’ operations have “‘slipped’ and longer lines, more complexity and less-than-stellar looking assets could be causing a modest decrease in sales in this challenging consumer environment (Moore, 2007). As a result, Starbucks’ strategic competitiveness is slowly disintegrating and its rivals are eating up some of its customer base (Rushe, 2006).

4.4. Business model analysis

The business model concept is defined as the value a company offers to customers and the architecture of the firm and its network of partners for creating, marketing, and delivering this value in order to generate profitable and sustainable revenue streams (Osterwalder and pigneur, 2002). It also consists of a narrative of both how the business works and how it makes a profit. Schindehutte and Allen (2009) developed a framework in order to define the core competencies of a business model from an entrepreneurial perspective.

The most important component of the framework is concerned with value creation. Starbucks creates unique value through great customer experience and interactive service. The unique value proposition of Starbucks is best described by Howard Schultz: The idea was to create a chain of coffeehouses that would become America’s ‘third place’, a place where people could go to relax and enjoy time with others, or just be by themselves. Starbucks enhances the coffee experience for the customers by creating a relaxed environment within the store whilst offering consistently rapid and on time delivery.

Many companies pursue a resource-based strategy which attempts to exploit company resources in a manner that offers value to customers in ways rivals are unable to match (Piercy, 2008). Starbucks’ customer value proposition is also based on its unique resources and capabilities. Starbucks capitalizes on intangible resources like brand power and image as a high quality coffee provider to attain its objectives. Starbucks also utilizes its immense human capital and expertise in product innovation, location selection, and its marketing ability to stand out as the premier coffee brand. Particularly, Starbucks utilizes technology extremely well, e.g. the heavy use of internet capabilities, social network marketing, rechargeable payment cards, and even new mobile apps help to ease and speed up the payment and ordering. Moreover, Starbucks has other competitive advantages based on its skills and specialized expertise, and valuable alliances (Piercy, 2008). Starbucks has a skill set in creating and introducing innovative products into the market. These skills give Starbucks a competitive advantage to be an innovation leader, but not a copycat follower. It is essential to differentiate itself from rivals in the coffee industry. Last but not the least, Starbucks has abundant free cash flow and physical assets to fund and drive its strategic initiatives. Without these physical assets, Starbucks would not be able to aggressively expand in the market or fund further product research and development.

Another important component of the business model is the firm’s core competence. Core competencies are defined as a proficiently performed internal activity that is central to a firm’s strategy and competitiveness (Piercy, 2008). The core competency can also lead to sustainable advantages. To be a sustainable advantage, the core competency must be hard to imitate or copy by rivals (Piercy, 2008). For Starbucks, its core competency can be defined as high quality coffee and products at accessible locations and affordable prices, providing a community the coffee drinking experience. Its sustainable advantage resides in the intellectual capital of defining and leading the market. Starbucks stands out as a leader, mainly because of its good business model that can generate innovative products that consumers desire.

Starbucks is able to leverage its resources, both tangible and intangible, to create competitive capabilities and core competencies to form its business model. Starbucks achieves this by utilizing its human capital and expertise to constantly strive for excellence in product innovation. Furthermore, Starbucks is able to internally fund its growth strategy from sound financial performance.

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