Pertinent Issues that Starbuck Management needs to address
Many people worldwide walk into Starbucks daily to get a cup of coffee. It is not only the fact that the prices of coffee are overpriced, but they come because of the cheerful and friendly environment that Starbucks offers to the customers. Company employees offer excellent customer services, which are key success factors in winning their loyalty (Reay, & Hinings, 2009). Some of the pertinent issues that the company needs to address are coffee prices, identifying different customer’s niches, marketing issues, decisions making processes, dealing with imports barriers like tariffs, forming business relations with different companies in their target host countries, and networking of all the stores.
The coffee prices have been continuously increasing over the last few years. This has transferred the cost burden to the consumers discouraging a certain clientele from taking coffee. Although the management cannot control the tariff imposed on foreign countries, they could carry out thorough research to buy the coffee that matches their quality at a lower price. The management ought to separate its customers into different segments. This could be through identifying a niche and satisfying the needs of those customers separately. The management of Starbucks had not concentrated on carrying out marketing strategy and has instead relied on using the cup symbols and decors as their marketing plans. This poses a great threat since the competitors would succeed easily in winning their potential customers through vigorous advertising projects (Ghemawat, 2002). Management has also decided on partnering with its employees to make them benefit from the success of the company. This strategy is feasible though it would prolong the process of making decisions and dilute the company’s ownership. In addition, E.P.S will decrease requiring a lot of effort to balance earnings with shares. The management should use technology to network all its stores. By so doing, the management would be in a position to analyze the performance of each store. The management should form partnerships with rivals, this would help the company acquire expertise and establish itself in the target hosts countries easily.
Grading and Competitive Edges of Starbucks Company
When evaluating the Starbucks strategies, one would give it the best grade. It has great numbers of competitive edges over its competitors. It has applied appealing strategies, especially to its employees. The fringe benefits schemes applied by the management worked perfectly in lowering the rate of labor turnovers. One would admire how the company recruited the employees; training and development programs offered enhanced the efficiency of workers. The company also treated employees as partners, this worked well in making them own every duty allocated. By upholding the medical scheme for the employees, it would be difficult for them to shift to its competitors. This ensures that the company retains the skills of its employees. Satisfied employees would always work to satisfy the employer and hence achieve the company’s goals (Chen, Yang, Shiau, & Wang, 2006).
The company has an edge over the competitors due to its widespread stores worldwide and also being a market leader in the coffee industry. It has a strong brand that is well recognized by the consumers, high-quality products, and offers customers a pleasant environment. This makes them loyal to the brand and refers potential consumers to the business (Sirmon, Gove, & Hitt, 2008). One of the weaknesses experienced by Starbucks is high prices where the competitors like McDonald’s use it as a selling point during marketing campaigns. The fact that ¾ of its profit comes from coffee is a threat since it would be suffering the escalating coffee bean prices in the market. The opportunities are the emerging markets in India and China, which the company can utilize fully to win customers in Europe. The main threat for Starbucks is the upcoming competition from McDonald’s as a major competitor has been able to penetrate the European market at a low start-up cost than Starbucks. This poses threat to the geographical advantage enjoyed by Starbucks (Ghemawat, 2002).
Chen, S. H., Yang, C. C., Shiau, J. Y., & Wang, H. H. (2006). The development of an employee satisfaction model for higher education. The TQM Magazine, 18(5), 484-500.
Ghemawat, P. (2002). Competition and business strategy in historical perspective. Business history review, 76(01), 37-74.
Reay, T., & Hinings, C. R. (2009). Managing the rivalry of competing institutional logics. Organization Studies, 30(6), 629-652.
Sirmon, D. G., Gove, S., & Hitt, M. A. (2008). Resource management in dyadic competitive rivalry: The effects of resource bundling and deployment. Academy of Management Journal, 51(5), 919-935.