Three Questions on Strategic Management

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Table of Contents

Introduction
Question 1
Question 2
Question 3
Conclusions
References

Introduction

The practice of marketing concepts and practices in a corporate environment is fraught with challenges and barriers, especially when factors, external, internal, and intrinsic, are involved. Under such market conditions, marketing competence is put to a supreme test. This paper takes cognizance of Starbucks, the US-based coffee conglomerate, and how it approaches marketing issues.

Question 1

Differentiation between market development and market penetration

There are advantages and risks inherent in both product development and Market penetration. Thus it is necessary to assume company-centric views in order to address strategic issues connected with these options. In product development, the company seeks to increase its volume, or unit turnover, by resorting to certain customer attraction schemes that may draw new customers and also increase volume off takes by existing clients. However, only products that are well entrenched, have a solid brand image and are well received in markets, and are wholly endorsed by customers would benefit through these schemes. In market penetration, corporate take the risk of entering new territories. Besides the aspect of financing new projects, it is also necessary to take local factors in terms of competition, product acceptability, and customer orientation.

Starbucks case study

Taking the case of Starbucks, the coffee conglomerate, its strategy is the assumption of the product by the non-coffee drinkers. That is why Starbucks started to introduce a wide line of products. Starbucks has repositioned the Frappuccino line for providing market development. (Hunt, 2009, para. 5).

In the case of market penetration, it is seen that the first question that needs to be addressed is whether to indulge in vertical or horizontal penetration. Next, as is seen in the case of Starbucks, starting from the small locale in US Pacific North West, this coffee conglomerate has worked its way up to major US cities and is now also found in Europe, Asia, and American Latin Markets. (Thrall, 2002, p. 181).

Question 2

Strategic planning process

Strategic plans are not always short-term plans and need time to gestate. Thus, it would be inconceivable to judge strategic plans within the short term. For strategic plans that are of medium and long term duration, it is essential that market scenarios fall into place the way it has been assessed and forecasted by market forecasts and reports. It is in such environments that strategic marketing plans could be applied and their benefits realized. However, it is necessary to review performance and what exactly when wrong with the strategic planning systems. It is quite possible that crucial aspects have not been covered, or some unexpected occurrence threw the planning off course. However, there is no need to scrap the plans unless absolutely necessary.

Strategic planning at Starbucks

Taking the case study of Starbucks further, it is seen that this company provided a strategic planning process by enacting its mission statement, which placed its people above profits. (Nattrass, & Altomare, 2002, p.114).

In a materialistic business environment, this strategy seemed incongruous, but the success story of Starbucks using this fundamental strategy is now phenomenal.

Question 3

Consideration of all factors in terms of cost differentiation and speed:

It is necessary to consider all factors- cost differentiation and speed. The first aspect that needs to be understood is that companies operate in competitive and strategic environments, and thus it is necessary that they remain ahead of the competition through strategic planning and change management. Besides, Starbucks operates in a niche market, which makes it all the more important.

& Starbucks Coffee all aim at well-defined positions of differentiation within their

markets while aiming at market share leadership. (Differentiation advantage, n.d., p.5, Differentiation and segmentation, para. 2).

Customer allegiance in Starbucks

By concentrating on just one factor, market benefits in other areas may be lost. When the case of Starbucks is considered, it is seen that it has done exceedingly well in terms of customer allegiance, marketing, and horizontal integration and has also not ignored other major areas also.

Conclusions

By ignoring speed of delivery or price differentiation, it is possible that competitors may exploit such deficiencies while promoting their own business interests, thus jeopardizing Starbucks market position dramatically. This should not be allowed to happen, and the only way this could be possibly circumvented is to consider all relevant factors which directly and indirectly affect business prospects.

References

Differentiation advantage: Differentiation and segmentation. (n.d.).
Hunt, O. (2009). Starbucks coffee company. AA: Article Alley.
Nattrass, B F., & Altomare, M. (2002). Dancing with the tiger: Learning sustainability step by natural step. New Society Publishers. Web.
Thrall, G I. (2002). Business geography and new real estate market analysis. Oxford University Press U S. Web.

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