Recognize the basic concepts and terminology used in Strategic Management (CLO1)
Describe the different issues related to environmental scanning, strategy formulation, and strategy implementation in diversified organizations- CLO2
Explain the contribution of functional, business, and corporate strategies to the competitive advantage of the organization-CLO3.
Case study
Read carefully case No. 5 from your textbook (entitled Starbucks Coffee Company) and answer briefly the following questions: (1 mark each question) (not less than 300 words).
Draw the SWOT matrix of the new Starbucks company.
Provide examples of the Corporate Social Responsibilities (CSR).
What is the competitive strategy used by this company? Justify.
Use the five forces of the M. Porter matrix to describe the Starbucks industry, particularly, in Japan.
Describe the relationship of Starbucks with its primary stakeholders.
Describe the core competency of Starbucks company.
What kinds of strategic alliances are used by Starbucks in China?
What are the main challenges that this company faces in the Indian market?
Assess the competitive advantage of Starbucks in the global market.
Recommend solutions for Starbucks to improve its competitive advantage in both Japan and China.
Full Answer Section
Weaknesses:
- High prices compared to competitors
- Limited menu customization options in some markets
- Dependence on premium coffee bean supplies
- Potential saturation in mature markets
- Negative publicity regarding labor practices and sustainability
Opportunities:
- Expansion into new markets, particularly emerging economies
- Development of innovative new products and services
- Digitalization and online ordering
- Partnerships and collaborations
- Increased focus on sustainability and social responsibility
Threats:
- Competition from local and international coffee chains
- Rising coffee bean prices
- Fluctuations in currency exchange rates
- Changing consumer preferences
- Economic downturns
Corporate Social Responsibilities (CSR):
- Ethical sourcing of coffee beans
- Environmental sustainability initiatives
- Community engagement programs
- Fair labor practices
- Commitment to diversity and inclusion
Competitive Strategy:
Starbucks utilizes a differentiation strategy focused on premium coffee, unique store ambiance, customer experience, and brand loyalty. Their high-quality products, comfortable atmosphere, and commitment to social responsibility differentiate them from mass-market competitors.
Porter's Five Forces in Japan:
- Threat of new entrants: Moderate. Existing high-profile cafes and local chains create some barriers, but entry remains possible.
- Bargaining power of buyers: Moderate. Consumers are somewhat price-sensitive, but brand loyalty and differentiation mitigate buyer power.
- Bargaining power of suppliers: Moderate. Dependence on coffee bean suppliers could exert pressure, but Starbucks' sourcing strategies limit it.
- Threat of substitutes: High. Tea, convenience store coffee, and instant coffee pose significant threats.
- Competitive rivalry: High. Local players like Doutor Coffee and international chains like Tully's Coffee create intense competition.
Stakeholder Relationships:
- Customers: Focus on building brand loyalty through high-quality products, unique experience, and personalized service.
- Employees: Invest in training and development, offer competitive compensation and benefits, and promote a positive work environment.
- Suppliers: Develop long-term partnerships with ethical and sustainable coffee bean suppliers.
- Communities: Engage in local initiatives, support social causes, and promote responsible sourcing practices.
- Investors: Maintain financial transparency, deliver consistent returns, and communicate growth strategies.
Core Competency:
Starbucks' core competency lies in its ability to create a unique and consistent customer experience, combining high-quality coffee, comfortable ambiance, and knowledgeable baristas. Their brand identity, global reach, and operational efficiency further strengthen this competency.
Strategic Alliances in China:
- Joint ventures with local companies (e.g., Beijing Uniqorn Food Services Ltd.) to navigate market regulations and gain local expertise.
- Partnerships with technology companies (e.g., Alibaba) for digital payment and delivery services.
Challenges in India:
- High import duties on coffee beans
- Competition from established local cafes and international chains
- Adapting menu and store ambiance to local preferences
- Navigating complex retail regulations
Competitive Advantage in Global Market:
Starbucks enjoys a competitive advantage in brand recognition, customer loyalty, global presence, operational efficiency, and commitment to ethical sourcing. However, competition and market pressures require continuous innovation and adaptation.
Recommendations for Improvement:
- Japan:
- Introduce more customizable options and localized menu items.
- Partner with local brands for cross-promotion opportunities.
- Offer more delivery and mobile ordering options.
- China:
- Enhance digital integration and mobile payment options.
- Partner with local delivery platforms.
- Increase focus on sustainability and ethical sourcing communication.