1

A Case Analysis of Starbucks

Manish Joshi

Westcliff University

BUS 525 Strategic Management in a Globalized Economy

Mr. Jayendra Rimal

November 9, 2020
 2

Starbucks

Founded in 1971, Starbucks Corporation is an multinational chain of coffee houses an

roastery

Competitive Advantages

Starbuck is a premium brand known for serving on of the finest coffee. They have a different

approach toward offering products. Starbucks keep experimenting with various flavors so that

it could offer different and unique experience to their customer. Differentiation is a must for

Starbucks as there are lots of similar business like local shops and coffee shops. The coffee

shop has been serving from various location around the world to millions of customer. Weekly

sales exceed 60 million from all across the globe.

The brand has been offering customization in its products and flavor according to the location

and the culture in the host countries. Providing good experience to their customer has always

been the priority. Starbucks is also a leader in technical and cultural innovation. The store has

been focusing on digital payment system. This is crucial as this can increase the speed of

customer transaction.

1. Brand Equity

Since, the inception Starbuck struggled and cope with various challenges to serve and acquire

loyal customers. The company is famous for its product and perceived as a premium coffee

brand.
 3

Capabilities of Starbucks

1. Large product range

Starbucks is also known for innovation as the company keeps experimenting with different

flavor to add new taste in its range of coffee products[ CITATION Pra181 \l 1033 ]. Similarly,

the coffee shop also offers tea and snacks. This wide range of products and flavors have high

possibility of satisfying costumer demand.

2. Customer Service

From the initial days commencement Starbucks focused on delivering high quality customer

service. The firm has managed to offer nice experience to its customer. Instead of huge

marketing the company focus on product quality and customer service.

3. Supply chain

Starbucks utilizes cocoa and coffee beans from one of the best suppliers that provides quality

products. These sources are also mandated to be working under ethical labor policy and

maintain the product quality.

4. Global Network

Starbucks is the largest chain of coffee store located worldwide. This has provided

geographical diversification thus firm can take advantage of product life cycle in developing

nation.

Above mentioned capabilities can also be considered as core competencies of Starbucks. These

factors cannot be imitated quickly by any new business houses. Secondly, creating such global

network and supply chain requires a noticeable time and effort.

Starbucks’ mission is “To inspire and nurture the human spirit—one person, one cup and one

neighborhood at a time.”
 4

This mission statement of Starbucks is really challenging task to accomplish. Since, every

person have different taste, economic background and cultural background, it might be

impossible to attain every human being on the planet. However, it is possible get most out of

from strategies. Starbucks is a premium brand hence, it cannot move down directly to a budget

brand with low pricing. But, I believe attaining the mission is still possible with following

steps:

1. Ethical employee practice and good Human resource policy

The human resource are the core hand of Starbucks that directly interacts with customer

and can make a difference in its brand equity. A satisfied employee will always work

good and maintain sound customer service. This will help in offering customer nice

experience when they visit Starbucks.

2. Innovation, Customization and adaptation

Think global and act local is very popular these days as simple as it is the concept

highlight fact that one must act as a local to be familiar and understanding for

sustainability. Since, Starbucks plan to expand in various areas at a time it will surely

face issues with various culture. Thus, the product line up should be customized

accordingly. The company should keep innovating and customizing their products and

offer a wide range so that the catalog could satisfy almost every customer.

3. A Sub brand to tap middle-class people

Although middle class people tend to be attract toward premium product the demand

for the product does not remain constant or rises in long term as they will always chose

value in budget friendly. Brands like Huawei and Xiaomi has been utilizing this

concept of introducing sub brands. Sub brands like honor and Redmi has been targeting

middle class people while Huawei P series, Mate series and Xiaomi’s MI series are set
 5

as a premium brand. This allows company to provide good brand image to all people

belonging to different economic class.

Following these above steps can support Starbucks to achieve its mission.

Mr. Kevin Johnson was appointed as CEO of Starbucks in 2017. He is an businessman and

software engineer who also served as the company’s president and Chief Operating Officer

from 2015 to 2017. In my view, he can be considered as a strategic leader due to following

attributes.

1. Embraces change and Technological advances

Since, Mr. Johnson came from a technical background he is well aware of technology

and its implication in business. He understand that change is inevitable and believes

that one must change strategy and working procedures accordingly. This has helped

Starbucks to adopt digitalization like online order and accepting online payments.

2. Focus on Innovation and growth

A leader is always pushing for innovation and growth. A company must be innovative

specially for a premium brand so that it always maintain its edge over other

competitors.

3. Emphasis team work and motivates employees

Starbucks has been prioritizing its employees, it is among the first companies to

provide health benefits to its employees. Similarly, colleagues of Mr. Kevin who

worked with him in Johnson also stated that he encourages employees participation and

have an open minded approach. This also proves that he emphasis on collaboration and

leading.

However, he has to deal with some challenges in Starbucks. These challenges are listed

below:
 6

a. Starbucks failed to include breakfast item in its menu

Conclusion

Financial crisis of 2008 raised concern for tightening the big firms that has massive

impact on the economy. Failure of these firms can have severe impact on the economy. Thus,

as a result Dodd Frank bill was passed. The act basically target sectors of financial system

that were believed to have cause 2008 financial crisis. The major five categories of the act

were; Consumer Protection, Resolution Authority, Systemic Risk Regulation, Volcker Rule

and Derivatives.

Typically, a bank cannot lend more than its deposit collection, it is capped with CCD

ratio which may varies from country to country (normally ranges from 80% and above).

However, Oldhat commercial bank disbursed higher credit than its capital and deposit

through borrowing. Hence, the bank is highly financially leveraged. Further, when the

mortgage rates jumped higher bank is bankrupt and now requires equity injection.

Similarly, an open-ended mutual fund are traded on the basis of their net asset value

unlike close ended fund which is traded at market price in exchange. Usually, the open end

mutual fund charges load fee for purchase of additional shares and exist fee when an investor

wants to sell his/her shares.

Lastly, Initial Public Offering is a way to raise funds from public for company

expansion. It is also utilized as an existing strategies as the initial promoter can sell their

shares in the market. Market capitalization is measure of the company value. The

compounded annual growth rate of Amazon over 23 years seems to be very favorable for the

investors.
 8

References

Pratap, A. (2018, December 15). Starbucks sources of competitive Advantage. Retrieved from

Notesmatic: https://notesmatic.com/2018/12/starbucks-sources-of-competitive-

advantage/