Category: Starbucks

The human resource function and organizational goals currently affect Starbucks because of the increasing competition and the global crisis caused by the Covid-19 pandemic. The main area where the company seems to lack alignment is the cost advantage that Starbucks rivals have over the US mogul. According to Hartani et al. (2021), many business growth opportunities are hindered due to the inability to attract valuable customers and provide a rationale for increasing coffee prices. The company also does not align its strategy against supermarket distribution, making it relatively harder for customers to find competitive advantages that would protect the brand image while aiding the organization in terms of focusing on the quality of the final product. Saldanha et al. (2020) noted that the lack of strategic alignment affects the companys expansion, causing Starbucks to focus much more on the overall output. Franchising is one of the areas where strategic alignment is currently functioning properly. According to Razak and Pardhasaradhi (2021), the companys management started paying more attention to research and development, making it easier for Starbucks to penetrate markets.

To alter the current state of affairs at Starbucks, it could be suggested to reduce the price of the product and increase global sales by navigating through low-cost markets. The first step on the way to improved strategic alignment would be to build effective partnerships in new markets by means of technology and advertising. By building consumer awareness, Starbucks might be able to strengthen its market presence and appeal to consumers who have been skeptical in the past (Razak & Pardhasaradhi, 2021). The next step is going to be a thorough review of the are hindered due to the inability to attract valuable customers and provide a rationale for and innovation could be utilized to demonstrate market diversification and capitalize on research and development (Hartani et al., 2021). As a result, Starbucks might see improved strategic alignment while developing new products and establishing an international presence.

References

Hartani, N. H., Haron, N., & Tajuddin, N. I. I. (2021). The impact of strategic alignment on the sustainable competitive advantages: Mediating role of IT implementation success and IT managerial resource. International Journal of eBusiness and eGovernment Studies, 13(1), 78-96. Web.

Razak, A., & Pardhasaradhi, S. (2021). Strategic management tools: Text & cases. Readworthy Publications.

Saldanha, T. J., Lee, D., & Mithas, S. (2020). Aligning information technology and business: The differential effects of alignment during investment planning, delivery, and change. Information Systems Research, 31(4), 1260-1281. Web.

Introduction

There are different approaches to creating long-term strategies and objectives. These strategies are based on exploiting the strengths, utilizing opportunities, or addressing the weaknesses and threats. One of the major weaknesses of Starbucks is its dependence on the financial performance of [their] Americas operating segment (Starbucks, 2020, p. 13). Therefore, it is a viable option to address the acknowledged weakness by expanding the company to eastern countries, with China being a top priority. According to Statista (2018), the market size of the coffee shop industry in China was almost 21 billion yuan in 2017, and it is forecasted to grow to 47.9 billion yuan by 2023. Therefore, I recommend that the company invests in establishing a firm lead in the industry in China to take advantage of the growing market. The proposed objectives are as follows:

1. Increase brand awareness in China by 80% in three years.
2. Open 4,500 additional shops in Mainland China.

The associated costs will concentrate on two matters. First, the marketing budget of the China division is to be increased considerably. Second, more shops are to be open to improve its presence in China. The costs are estimated in Table 1 below:

Table 1. Estimated Cost of Expansion to China.

The promoted strategy is close to the actual strategy adopted by the company. Starbucks opened 629 new shops in China, acknowledging the market as potentially profitable (Starbucks, 2020). However, the current strategy does not seem to be aggressive enough to achieve relevant security from the instability of the US market.

Implementation Recommendations

There are two specific recommendations that can be made to implement the suggested changes. First, the company should utilize franchising to decrease the cost of establishing new coffee shops. Second, the company should create authentic product lines and invest in marketing those products. In particular, due to the snowballing consumption of milk in China, it is recommended to concentrate on marketing beverages with milk and sugar (Wenqian, 2018). Additionally, Starbucks should expand from East China to other regions of the country by establishing profitable partnerships.

Projected Financial Statements

Agenda

1. Assess the current possibilities for expansion in Mainland China;
2. Assess the current barriers for expansion in Mainland China;
3. Prepare a legal framework for expansion in Mainland China;
4. Create a comprehensive marketing strategy;
5. Open a total of 3,500 new coffee shops in Mainland China;
6. Assess the results and make the necessary corrections to the plan every three months.

Annual Objectives

1. Increase revenues by 10% every year;
2. Increase net income by 7%-9% every year;
3. Open 1000, 1500, and 2000 new shops in Mainland China in the years 2020, 2021, and 2022 respectively;
4. Explore other eastern markets, including Japan and South Korea.

Procedures for Strategy Review and Evaluation

1. Review vision and mission statement;
2. Conduct SWOT analyses every three months and estimate if the results and strategies are adherents to findings;
3. Investigate any strategic assumptions that might have changed and adjust the strategic plan.

References

Starbucks. (2020). Fiscal 2019: Annual report. Web.

Statista. (2018). Coffee shop industry market size in China 2013-2023.

Wenqian, Z. (2018). Dairy eyes big rise in consumption.China Daily. Web.

Introduction

The study concerned with preparing strategic management procedure of Starbucks. This analysis would focus on a number of key points regarding the external and internal environments, strategic missions, business, corporate and global strategies, corporate governance programs, organizational structures, innovative features and many other issues of related to the strategic competitiveness to earning more than average income.

Starbucks at a glance

The companies was established in 1985 aimed to buy and roast better quality coffee beans and sell them as fresh as Italian style. Several accessories and machines were included to prepare coffees as ready to drink beverages. Starbucks also sells the trademarks and licenses by using a number of channels and retail stores are regarded with specialty. However, the vital goal of the company is gain international recognition with operational specialty and selective distribution channels. Annual report-2008 shows that Starbuck earns total 85% of its revenue from the own operated retail, 11% from licensing and 15% from specialty.

Strategic management process

Starbucks overall strategic management process could be designed as following:

Environmental analysis

Starbucks environmental factors could be examined by PEST analysis as following:

• Political factors: Starbuck has gained ground regarding the ethics and supplier relation while it is also in a risk of imposition of greater control by China government regarding a minimum level of risks of interpretation, intellectual property enforcement and related laws while there is a chance of being penalized and restriction of launching new stores. David, F., (2008) argued that target markets of developing countries political conditions are causing the similar problems.
• Economic factors: Starbuck scored a high net income of $9.4 billon in 2007. In 2006 it gained $7.8 billion as net revenue. At the same time licensing revenue was $1.0 billion results from the high sales growth rate and the CPG business. The company has also proved its economic excellence by a global revenue of $1.3 billion, sales growth by 8% with others income of $29 million by the year 2006.
• Socio-cultural factors: Kotler, P. (2006) said CSR enables the company to providing social, economic and environmental satisfaction to public with 172000 competent employees.
• Technological factors: Modern technological supported Starbucks card for customer service, convenient central management of products and pricing for international distribution are very significant with technical expertise for production line.

Environmental concern

It includes a number of factors, like- resources, capabilities and core competencies. Those are as following:

• Resources: David, F., (2008) argued that under resource based theory, a company has 6 types of resources. Thus, Starbucks resources are:

• Financial resources: The comparative financial possession of the company could be presented as:

Starbucks is capable to gain high revenue and sales growth and a better EPS all that augmented to meet up the sales target in restaurant and retail sector of USA.

• Organizational resources: Regarding the organizational structure, Starbucks expanded in the field of retailing and situated with high traffic and visibility areas involving suburban centers, university campuses and situated outside of retails houses with various channels.
• Physical resources: It includes land, buildings, store equipments, leasehold improvements, equipments for roasting, and furniture, fixtures and others resulting total value of $28904330 by the year 2007.
• Technological resources: Starbucks is in top to performing its task by adopting modern technologies. For this purpose, it has implemented card system for customer service with entire process of maintaining restaurant service, retailing and global operations with innovative supports.
• Intellectual and human resources: Starbucks R&D is enriched with scientists, chemists and culinarians who are active for technical installation of foods, beverages and other machineries. It incurs about $7.0 million, $6.5 million and $6.2 for the year 2007, 2006 and 2005 for the R&D costs relative to testing process improvements of products and corporation.
• Reputation resources: Starbucks affords a high brand value and keeps continuous effort develop in future in North America. This reputation is the outcome of consumer perceptions about the quality, trust and ethical factors in every market segment. The generated goodwill for the year 2007 was $127636 in United States, $78289 around the world, $9700 in CPG and a total of $215625 in total.

SWOT analysis Starbucks Corporation

Strengths:

• Starbucks has outstanding brand awareness and quality image which helps to.
• It has websites to cover spread its business all over the world.
• It has skill and efficient employees and administration.
• It has make huge profit from capital lease, in last three years it has made $12.8 million from lease capital.

Weaknesses:

• Pricing and availability for all sorts of customers.

Opportunities:

• Starbucks has strong capital and resources for further expansion.
• Increased consumer interest on new products.

Threats:

• Competitors are the main threats for Starbucks Corporation
• Last year it had failed to meet market expectation

Capabilities

Capabilities enable the company for creation and exploitation of opportunities for the development of sustainable advantages while a utilization of adroitness and insights. The flow of capabilities of the company can be shown as:

• Building of heart relationships with customers by the products.
• Maintenance of community services and strong supply chain with the distributors.
• Sourcing, roasting and improvement in making worldwide famous coffees.
• Committing to the acts of environmental leadership.
• Sharing possible and related information with stakeholders and partners.
• Innovative and diversified adaptive tendency.
• Controlling and evaluating the performance of every project.
• Initiating for co- branding as well as marketing performances.
• Operational swiftness at in store selling.
• Effectiveness in infrastructure of administration.

Core competencies: It indicates Starbucks resources and capabilities which are providing as a modem of competitive advantage, like quality, taste, flavor and diversification that distinguish it competitive and glorify its image and personality.

Formulation of strategies

Thompson, A., argued that strategic options are coordinated and interrelated set of actions that has been designed for exploiting the core capacities and competencies for achieving competitive advantage. So, according to the standard model, Starbucks generate several strategic options through some systematic phases from business- level to co- operative strategy:

Thus, a number of strategies at this level are as:

Business- level strategy

Starbucks can generate this type of strategy by using Porters generic strategy as below:

• By following the cost leadership strategy, Starbucks will be able to provide coffee beverages at the lowest costs in relation to other competitors like- McDonalds, KFC, and Pizza Hut.
• Dibb, S. et al (2001) argued that by following the differentiation strategy, the company can deliver unique attributes and features to the target customers. Here, Starbucks can offer the finest whole bean coffees, quality green coffees and other unique items. At the same time providing an effort to catch the customers according to their working, traveling, dinning places as a symbol of offering values at a distinctive way. The formulation of differentiation strategy can be shown as following:

But before running with these options, the company should consider a number of factors as bargaining power of suppliers and customers and suppliers, potential entrants, substitutes etc.

• Griffin, R. W. (2006) mentioned that the company can also adopt focused cost leadership strategy for the purpose of providing the customers with affordable solutions for better living by offering the products at a lower price for the particular segment of the market⁹.
• Focused differentiation strategy will enable the company of offering unique differences to match the significant needs of a small segment of the target market.

Competitive dynamics

At this phase Starbucks can attempt to create competitive dynamics that comes from a series of competitive actions and responses among the competitors within the ready- to- drink beverage industry which may be affected by a number of factors, like- resource similarity, relative size of the firm, innovation, quality etc.

Corporate-level strategy

This concept focuses on diversification that involves the companys retail segment offers the diversified sales mix of items for the year 2007 as:

Acquisition and restructuring strategies

Through the acquisition strategy, Starbucks will be able to buy a control or 100% interests in other company by using the core competency more effectively through the making of the bought firm a subsidiary in the sole portfolio. So, it can consider that strategy to gain:

• Increasing market power by horizontal, vertical or related acquisition.
• Overcoming entry barriers in newer or less- repudiated segment, like- North America.
• Increasing the speed to market.
• Increasing diversification.
• Reshaping own competitive scope etc.

For such purposes, Starbucks has bought a 90% stake in the licensed operations located in Beijing- China in the first quarter of last year. Because of the lion ownership from that acquisition, it has used the consolidation approach for the relevant data.

Another important aspect of acquisition is licensing of retail stores. Here, it leverages the zonal partners and stocks for the operational and store improvement expertise. Annual report-2008 demonstrated that by the year 2007, there were 3891 licensed stores existed in United States. Additionally, it also has this sort of relationship with Craft Foods, Inc., coffee partnership in North America with a joint partnership with Pepsi in while Starbucks has an equal investment of 50% for the bottled Frappuccino, Double Shot and espresso beverages.

Through restructuring, Starbucks will be able to sustain the fall in acquisition with others by changing the operating sets or financial structure. It can take many forms, like:

• Downsizing for reducing the number of employees and operating units with no changing in business portfolio.
• Downscoping for spinning off or offsetting business which are not related with its core business objectives.
• A leveraged buyout (LBO) for purchasing all the companys assets for the purpose of privatization.

International strategy

Since Starbucks is operating and distributing services over 15000 stores in 43 countries, to become a successful player in the international market it should consider the following factors:

• Factors of production.
• Demand conditions.
• Related and supporting industries.
• Firms strategy, structure and rivalry.

Hill, C., (2007) argued that its global store base is growing vastly while the company is obtaining contribution of renowned global segments by the investment and the emerging that segment. For example- China, Russia, Brazil. The current segments demand a vast support company regarding the present revenues and operating profits. In 2006, the company earned total net revenues of $1302914 from its international market because of high sales volume of goods as well as lower costs of sales involving vast distribution of fixed costs and low dairy costs which are contributing greatly for the compensation based on stocks.

Co-operative strategies

In the light of the existing plans and situations, Starbuck can develop various types of co- operative strategies as following:

• By composition of strategic alliances, it can combine the resources, capabilities and core competencies with other firms for gaining the mutual interest in designing, distributing and producing goods.
• By joint- ventures it can enjoy benefits by the combination of assets as it is doing now.

Implementation of strategies

The company can implement the above projected and proposed strategies by the following dimensions:

Corporate governance

It dictates the co- relation of all the stakeholders in terms of control and directive performance of Starbucks. These ruling bodies are committed for maintaining the straight and powerful principles of growth. For that issue, Starbucks board of directors has taken rules of governance and committee for charters for directing the activities. This board consists of 9 directors, minimum majorities that face all the flexible demands of NASDAQ as well as the SEC (Securities & Exchange Commission) of United States. Additionally, it has installed an ethical code in respect to the CO, CF, controller and leaders of finance for a code of ethics indicated by the SEC rules.

Thus, the corporate governance structure can be presented as following:

• Board of directors: This group is responsible for performing at the owners profits by the systematic monitoring and controlling the business. Starbucks board of directors include Howard Schultz, Barbara Bass, Howard Behar, Mellody Hobson, Javier G. Teruel and many others as chairman, president, director, retired vice chairman etc.
• Senior officers: It includes CEO, CFO, president, executive vice president, senior vice president for marketing, global manufacturing operations, partner resources, global logistics, Asia- pacific, global procurement and coffee, Latin America, global coffee of Starbucks, business solution etc.
• Compensation program: The Companys compensation schedule based on stock has been established according to the SFAS No. 123(R) or Share- Based Payment Schedule provision. The Black- School- Merton Model is used for pricing policy according to the subjective guesses that entitles time period for partners and stock price volatility.

Organizational structure and control

The organizational structure of Starbucks is as following:

Since Starbucks is highly differentiated in its own industry, it basically follows the following functional structure:

Additionally, the company operates the controlling function for assurance of material data according to the SECs references for the timely decision making.

Strategic leadership

Starbucks maintains such issue for anticipation, envision and flexibility of the entire planning as:

Corporate entrepreneurship and innovation: It includes about 170000 committed employees, efficient operating team, management capability and experienced R&D of which all are responsible for the companys handsome revenues, net income and global goodwill. The company proves its environmental concern by utilizing and selling environmentally healthy goods, taking the social concern as value of the company, and other affairs.

Recommendations

To become more effective and efficient, Starbucks should concentrate on the following issues:

• It should be alert about the expectation of market since there exist a chance of reducing the stock price at an extensive and sharp rate.
• Should be concerned about war, terrorism or political fluctuation.
• At present the company has to compete against the qualified restaurants in U.S.A and the established companies are offering a great threat for Starbucks.

Since the companys another lion revenues come for international sector, it should take in mind about some risk factors:

• Fluctuated rate of currencies.
• Uncertain economic, social and political factors.
• Interception of rigidity of laws etc.
• Richer prospect and flexible contract with China government as there the company is facing a major entry barrier for laws and regulations.
• Conducting campaigns and other efforts to remove public thoughts about the negative effects of coffee on health by illness and other fatal impacts.

Though the company typically faces all of those challenges, it is somewhat possible to handle it with an exact strategic and appropriate strategic planning and a proper management of it.

Conclusion

Starbucks, a core coffee company is managing the strategic process in a quite well structured way with adequate amount of resources, capabilities, core competencies, social responsibilities, innovative approach, worldwide distribution network, and many other factors for which in the previous year it has experienced targeted opening of new centers, in- store sales growth and consumers pressure in retail and restaurant business which converted into 21% of net revenues and 16% increase in earnings during that year although the company faced a number of major challenges.

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Introduction

Starbucks is one of the worlds leading coffee shop chains. It has a presence in over 44 countries through 15011 stores. Their growth was phenomenal during the period 1971  2008. The companys headquarters are in Seattle, USA. The products of the company are mainly coffee though they serve different varieties of tea, chocolates, and frappuccino. Almost 30% of the stores of Starbucks are located outside the US.

Starbucks factors successes in the united states

Starbucks being an international company, existence is influenced by various internal and external factors. A congruence model diagnosis will help the company to identify the misfits and rectify them.

The inputs should fit well to give the necessary output. The inputs are environment, resources, history, and strategy. Environment as the name signifies refers to the factors that are outside the organization such as market pressures, government restrictions, and limitations of scarce capital. Resources of the organization mainly refer to the assets which include employees, technology, information, capital, etc.

These resources when deployed properly give quality outputs for the organization. The history or past events of the organization have a greater influence on its current functioning. The market position of a company in the present is the result of strategies that were applied in the past. The strategy of the organization is one of the most crucial inputs. It determines what an organization should do and how it should be done. (The Congruence Model: Aligning The Drivers of High Performance).

Environment

The political stability of the government, the credit policy of the bankers, the investment climate, and the attitude of labor unions are the major environmental factors that affect the companys working. There has been no major change in the financial policy of the government in the US even when there was a change in government. This was a favorable factor for Starbucks in the United States market. The bankers were following a liberal credit policy so Starbucks had no difficulty in getting short-term and long-term loans from the banks for their revenue and capital requirement. Because of the good human resources policy of Starbucks, there were fewer disputes between the employees and management, and trade unions. (The Congruence Model: Aligning The Drivers of High Performance).

Marketing strategy in the United States

The management of the company should seriously take the advice of its present founder Howard Schulz and take a more practical approach to the companys expansion. The rate of growth should be brought down and an attempt to bring back the old club-like atmosphere and the smell of fresh fried coffee beans. They should also understand that clustering which had worked well in the past may no longer be a feasible option.

Overview of the United States market

The outcome of these changes will have a positive effect on the leadership and culture in the organization. The company and its management will become more customer-centric instead of becoming a cold sterile cookie cutter. The employees will also feel needed and happier in having a close association with the customers. A slower growth rate may not go well with other stakeholders like the stockholders and the management.

But the consequences of not changing have to be explained to them and their views changed accordingly. It should be noted that all these changes will be a slow process that can only be completed over a number of years. The most important stakeholders of the company, namely the customers will be the happiest to get back the opportunity of having coffee in the old atmosphere of Starbucks.

Diversification within Starbucks in the United States

The goal of the company is to expand worldwide so that more customers will have access to Starbucks stores. Strategy is one of the most important drivers of business growth. The strategy incorporates what markets to serve and what products to serve and at what price it should be served. Starbucks strategy for expanding its retail business is to increase its market share in existing markets and to open stores in new markets where the opportunity exists to become the leading specialty coffee retailer. (International guide of hospitality and restaurant managers).

Starbucks successes in Brazil

Starbucks in the United States is synonymous with coffee and coffee products. It was started in 1971 in Seattle and has outlets all over the world. The companys goals are to run over 40000 locations worldwide. The most famous fast food in the world is creating a style in the coffee-houses, whereby every store is an independent coffee-house. Starbuck growth has benefited coffee farmers in many countries and especially in Brazil to find a market for their produce. More complicated firm growth may slow down the growth. The future for Starbucks is to open with 600 make which transforms the concepts and design. (Starbucks Strategies and its new Stake: How to Consider Coffee Houses an Alternative to Fast Food Restaurants).

Starbucks Failures in Brazil

Falling coffee prices eliminated millions of dollars of the wealth and thousands of investors were washed out. Recently, falling prices of coffee have made the once-profitable coffee farms fail. Five years back, the coffee bean sold for 3 pounds and now it fetches only 50 to 60 cents per pound. The coffee plantations in Brazil are forced to cut down the workforce due to a drop in prices. The day-to-day fluctuations of world coffee prices have more predictable incomes for the employees. (Batsell).

Starbucks  knowledge of consumer preferences in the global society was reflected in the corporations white and green logos with no nipples on the cup shows the globalization of the Starbucks stores. It also shows the increasing culture of the consumption of the product. The low price for coffee is due to the oversupply of the product in the market. Farmers are struggling to survive is not investing in quality coffee threaten in supply chains. (The people vs Starbucks).

Local resentment occurs because the small company is forced to compete with the multinational companies. Management is very anxious about the decision with the new choice and the employees are remaining silent and think about the salary type they can earn in Starbucks. (Stone).

Starbucks Overview of the Brazil market

Starbucks naturally decided to open a market in the worlds top coffee-producing country, Brazil. The company has been researching the Brazilian market for 4 years. These new stores reveal that the Brazilian market is tough to crack. It is our hope to have a significant business in Brazil someday, said Buck Hendrix, president of Starbucks Latin America. (Clendenning ). A Starbucks outlet in Brazil will cost $1.27 to start with minimum wages for a month is $159. Starbucks can play a role in the Brazilian economy by providing a market for coffee as well as providing jobs for the local population.

Starbucks Marketing strategy in Brazil

The marketing strategy of Starbucks in Brazil is built around high-quality coffee, and in the year 2006, Starbucks paid a premium of $1.42 pound of 37% to the New York commodity price. To sell more quality coffee, the production cost is high and higher overheads. Starbucks encloses the price paid to the farmers for benefiting from the quality market boom. (The People vs Starbucks). Starbucks pays an average of 23% above the market price for the coffee beans. This social responsibility of the company is a commitment to its sincerity towards its suppliers. The employees in the business work for 20 hours or more than per week and are provided with health insurance for the benefit to employees. (Stone).

Diversification within Starbucks in Brazil

Starbucks has had 15 years of continuous 5% growth in business. In 2006 the target for the long-term store count was raised to 40,000 and opened its stores in Brazil and Egypt and launched a plan to expand the business to Russia and India. (The people vs Starbucks).

Starbucks has planned to start the business in Brazil as part of its efforts to boost its sales abroad. Starbucks formed a joint venture with Cafes Sereia do Brasil Participacoes SA, a Brazilian holding company led by local retailers, to form Starbucks Brasil Comercio de Cafes Ltd. Starbucks opened throughout Brazil within a year as per the company statement. An advantage is that foreign coffee buyers are encouraged in the country to start a business to boost consumption and increase the demand for the products. (Starbucks expanding to Brazil: Bloomberg News).

Competition within Brazil

Starbucks increased competition with McDonalds Corp and expanded the specialty of coffee counters at the restaurants. They plan to add 14,000 US stores when sales increased to 39% within 2007. The higher cost of the commodity and declining economic growth affect the sales and the serious problem of the company is mainly focusing on expansion and not customer satisfaction which is the major drawback. To improve the performance and growth of the company, customer satisfaction is a must. (Goncalves).

Works Cited

The Congruence Model: Aligning The Drivers of High Performance. Mind Tools. 2008. Web.

International Guide of Hospitality and Restaurant Managers. Starbucks. 2008. Web.

Starbucks Strategies and its new Stake: How to Consider Coffee Houses an Alternative to Fast Food Resturants. Tesionline. 2007. Web.

Batsell, Jake. Growers from Fair-Trade co-op Appeal to Starbucks Taste Buds. The Seattle Times. 2001. Web.

The people vs Starbucks. New Internationalist. 2008. Web.

Stone, Matt. Responsible Coffee, Starbucks Style. The Wildcat Online. 2006. Web.

Clendenning, Alan. Starbucks enters Brazilian coffee market with 2 Sao Paulo stores. Business & Technology. 2006. Web.

Starbucks expanding to Brazil: Bloomber g News. Seattlepi. 2006. Web.

Goncalves, Isabel. Starbucks Schultz Back as McDonalds Increases Competition. International Business Times. 2007. Web.

Starbucks is a leading coffee retailer operating on the global scale. Starbucks is a market leader specialized in coffee, beverages and whole milk products. Its brand image and unique image is based on services and products providers to diverse customer groups. Yet successful marketing requires bridging the gap between expectations and demands of customers. It could even be said that successful marketing is the bridging of this gap (Drejer, 2002).

To market successfully, Starbucks must transcend its own internal point of view to understand what the product means, and could mean, to consumers who have their own points of view. Only a product that is meaningful from their point of view will seem relevant to consumers, will seem different from other products, will seem to be reasonably priced. Thus, the goal of understanding consumers is fundamental. Understanding consumers is not just using marketing research as an information source, nor is it just performing a staff activity. It is a vital, and may well be the vital, resource factor for marketing.

the case study suggests hat the term service could cover service industries, as well as in the colloquial use of the term, which reflects the quality of the interactions between customers and an organizations frontline service personnelthe so-called moments of truth. A wide net is also cast to include many industries: those that might be said to be the purer service sectors (e.g., hotels, lawyers, investments counselors), as well as those mixed industries in which the core transaction may be the purchase of a good in conjunction with a large service component (e.g., retail outlets, restaurants, automobile dealerships, realtors or mortgage brokers).

For Starbucks, service means customer satisfaction and intimacy. Our goal is to create an uplifting experience every time you walk through our door/ explained Jim Alling, Starbucks senior vice president of North American retail. Our most loyal customers visit us as often as 18 times a month, so it could be something as simple as recognizing you and knowing your drink or customizing your drink just the way you like it (Moon and Quelch 2006, p. 3).

The service encounter is often described as an interactive performance: A corporate service provider produces an experiential process in which the consumer and frontline service personnel engage in a communicative exchange through which each party obtains from the other some essence of value (Drejer, 2002). The Starbucks customer exits the exchange having been processed in some manner that may be tangibly detectable (e.g., having ones hair cut) or not (e.g., having ones taxes figured).

The performance element of services has been elaborated in a drama metaphor (e.g., the frontline service providers considered as cast members, the customers as audience, the physical environment as scenery and props). The term is used to pose questions such as, does the customer observe a smooth performance on stage and what elements in the service operations must be in place behind-the-scenes to provide a smooth on-stage performance (Paley 2006, p. 87).

In order to ensure customer satisfaction, Starbucks relies on market research. A special attention is given to competition and competitors moves related to customers and new products development. For Starbucks, competition is intensifying in many industries due to factors such as deregulation, or technology (e.g., the creation of consumer databases or the provision of interactivity or self-service automation).

Accordingly, in an attempt to create distinct advantage, managers often seek to provide added value to customers and enhance their corporate competitive advantage by offering better customer service (Fill, 2001). The enhancement of customer service is perpetual, because initial competitive advantages are often easily met, turning the previous distinction into a commodity-like attribute of the service encounter, thereby also raising the expectations of the ever-demanding customer. Thus, services comprise a substantial market presence and are likely to continue to do so (Drejer, 2002).

Starbucks pays a special attention to call centers and customer relationships management. In addition to implications for advertising, the subjectivity and intangibility of services also has an effect on customers evaluative judgments. Whereas many aspects of the quality of a produced good can be measured somewhat objectively, service quality and customer satisfaction in services are defined by consumers through their subjective, evaluative assessment of the service experience. These models posit the customer evaluations as a comparison of the encounter experience to ones prior expectations. Specifically, if ones experience exceeds ones expectations, the models predict satisfaction (Drejer, 2002).

In many geographical locations, Starbucks operates as partnership with a local company. The low service quality and customer dissatisfaction is caused by low standards and inadequate services provided by partners. To some extend, poor service quality is associated with changing customers demands and expectations (Smith and Vogt, 1995). Expectations are thought to be developed through the communications of the firm (e.g., advertisements, other customers via word-of-mouth, or the customers own past experience with the focal or competitor firms). Satisfaction and quality are judged in both a gestalt, overall sense, as well as in an attribute-by-attribute analytical sense.

While an overall satisfaction measure gives a crude index of customer perception, the attribute-level quality indicators are those that can provide useful diagnostics. The detail allows for a pragmatic utility in assessing the financial effectiveness of corporate initiatives intended to enhance customer service and satisfaction (McDonald and Christopher 2003). Certain actions or modifications of the service delivery system will please customers more than others, so the challenge becomes one of identifying those valued qualitiesthose that drive repeat purchase most directly and therefore of greatest priority.

Furthermore, it is important to tie indicators of satisfaction to firm-level financial performance measures, to demonstrate that the seemingly simple and mundane human interaction involved in service encounters (the frontlines competence and empathy) indeed impacts the corporate bottom line, albeit somewhat indirectly (Drejer, 2002).

Starbucks, as a company that provides service and products, either as its central provision or in a value-added capacity in a bundle of attributes included in a customers purchase of some good, may find it useful to distinguish those elements of the service purchase experience that are core from those that are supplemental. The core of a purchase is that which forms the business identity. The supplemental services are the components of the service delivery system that are intended to facilitate and enhance the customers experience. Initially the supplemental services are introduced as competitive advantages, distinct features that the competition does not offer.

Often, as with these examples, the supplemental services are easily met, so that soon all competitors have enriched their offerings to meet the requirements in the marketplace (Fill, 2001). The new array of services becomes commodity-like, and each firm must seek additional unique, supplemental services to begin the distinguishing process again. Continual improvement efforts like these also contribute to the customers ever-increasing expectations.

For Starbucks, the core-supplemental distinction also has implications for customer satisfaction. Retention programs and self-service are the core of its current strategy. The core service of an airline is transportation from one city to another, and supplemental services include features such as: frequent flyer accounts, conveniently located hubs, movies and meals on board, and so on. Rarely will customers state explicitly that they seek safety,  though presumably of course they do (Kotabe and Helsen, 2006).

Safe workplace is a critical attribute of the core, and one that is assumed to be true. There should not be variance among competitors on core attributes. Competitive distinctions can occur on the value-added services. Hence, achieving good quality on the core service does not enhance customer satisfactiongood quality on attributes like safety is a given (Drejer, 2002). Poor service on core attributes can certainly drive customer dissatisfaction however (as reactions to extended delays or near-miss accidents can attest). In contrast, variability on supplemental services can drive customer satisfaction or dissatisfaction (Fill, 2001).

For Starbucks, loyalty programs help to add value to services and products provided to the end consumer. For Starbucks, value means trade-off comparison between quality or satisfaction against price, including both economic and psychological prices, such as search and purchase efforts. Stronger customer service is expected when paying higher prices, and poorer customer service may be tolerated when paying lower rates. The simultaneity of production and consumption also drives the aspect of services that they are perishable: the flight that lifts off with empty seats can never retrieve those seats for future use; the professionals time spent on seasonal projects must also manage supply and demand imbalances.

The closest approximation services managers have to inventories is queuing, but this solution is not often desirable to customers (Pittengrew et al 2006). The fact that services are co-created by two dynamic and fallible humans also leads to services being described as heterogeneous (Keegan and Green. 2004). Service provision varies across customers and across frontline employees at multisite or even the same-site location. Different employees have different skills and attitudes, and different customers have different needs. Like cholesterol, there is good and bad heterogeneity. Good heterogeneity is the opportunity in the interactive service encounter to tailor the service provided to suit a customers unique needs. Bad heterogeneity is error.

Starbucks underlines that this marketing instrument serves to reduce the perceptions of the riskiness of the purchase, and it serves as a cue to the quality of the service to be expected (Keegan and Green. 2004). After all, the customer reasons, how could a firm offer a guarantee unless they are good enough and confident that they will not require frequent redemption. It also serves as a very clear tool for the frontline employees regarding what errors are intolerable, and what redress is expected by disgruntled customersthe guarantee provides explicit empowerment. Thus, value is the worth in monetary terms of all that a market offering provides to a customer firm.

To gain an estimate of the value that a customer receives, the supplier gathers comprehensive and elemental data on how its offering adds value or reduces costs in the customers application (Drejer, 2002). At the same time, suppliers should investigate what potential changes in their market offerings would be worth to customers. Although suppliers are more conversant with the technical and economic benefits of their offerings, they should not neglect service and social benefits, which can be significant sources of value (Pittengrew et al 2006).

Gaining an accurate understanding of competitors prices often is difficult in business markets because of problems in determining comparability. A supplier should investigate what supplementary services are and are not included in a competitors quoted price for a market offering. In pursuit of their own interests, customers may dissemble about a competitors pricing and offering comparability.

Further adding to the difficulty of accurately understanding a competitors pricing is the increasing use of a variety of off-invoice discounts, such as year-end rebates. Suppliers must gather data from the field on the range of prices that customers are paying for market offerings. Suppliers also should seek out disconfirming as well as confirming evidence on competitor pricing moves (Keegan and Green. 2004).

For instance, a salesperson might report that a competitor has cut the price of its market offering. In addition to seeking out other instances of pricecutting to confirm this report, a supplier also should seek out disconfirming instances where the competitor did not cut the price of its offering. Gathering this data will give the supplier a finer-grained understanding of variations in competitor pricing in the marketplace (Pittengrew et al 2006).

A supplier must also gather data about its own prices. Use of off-invoice rebates or allowances, whose percentages may depend on the amount of business that the customer has done with the supplier during the quarter or year, make it difficult for a supplier to know at the time exactly what price it is realizing from a given transaction. Monitoring transaction prices enables a supplier to learn the extent to which exceptions are being made from set pricing strategy and tactics (Hollensen, 2007).

Starbucks should change its correct strategy and adopt its products to customers needs and new demands. As a market leader, Starbucks should learn that success depends on adroitly balancing three pervasive, but often conflicting, marketplace requirements.

First, markets are becoming highly fragmented and customers are requesting, and getting, more customized offerings (Hollensen, 2007). Second, customers are uncompromising in their demands that market offerings be sold for either the lowest price or the lowest total cost. Third, due to the success of the total quality management movement, many purchasers now take quality as a given and believe there are few meaningful differences between competing products (Drejer, 2002).

In sum, overcoming inertia and systems impediments are essential, because more fully and more accurately allocated costs can provide quite a different picture of how costly some services actually are. An understanding of the value of services to customers and the cost to perform them enables business market managers to identify value drains, which are services that cost the supplier more to provide than they are worth to customers receiving them and have no strategic significance.

A producer of chemicals for use in extracting oil from wells routinely performed a field analytic monitoring service for each of its customers to determine when, and in what amounts, they should apply its products. Gaining an estimate of the value of market offering elements is not always easy; having one, though, is essential. With an understanding of value, discussions with customers focus on performance and meeting customer requirements.

Reference List

Drejer, A. (2002). Strategic Management and Core Competencies: Theory and Application. Quorum Books.

Fill, C. (2001). Marketing Communication: Contexts, Contents, and Strategies. 2. edn. Upper Saddle River, NJ: Prentice Hall.

Pittengrew, A. M., Thomas, H. Whittington, R. (2006). Handbook of Strategy and Management. Sage Publications.

Hollensen, S. (2007). Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition.

Keegan, W. J., Green. M. C. (2004). Global Marketing. Prentice Hall; 4 edition.

Kotabe, M., Helsen, K. (2006). Global Marketing Management. Wiley.

McDonald M., Christopher M. (2003). Marketing: A complete Guide. Palgrave Macmillan.

Moon, Y., Quelch, J. (2006). Starbucks Delivering Customer Service. Harvard Business School.

Paley, N. (2006). The Managers Guide to Competitive Marketing Strategies. Thorogood.

Smith, R. E., Vogt, Ch. A. (1995). The Effects of Integrating Advertising and Negative Word-of-Mouth Communications on Message Processing and Response. Journal of Consumer Psychology 4 (1), 133-123.

Introduction

Stainless steel travel Mug of Starbucks is of cup of high quality which makes whichever liquid in it to remain dot for not less than 2 hours. The mug is made of steel is portable and at the same time environmental friendly. The cup is one thing one should not miss at home due to the many advantages and the qualities it possesses. By buying this cup one is not a loss of money as proven by its magnificent qualities.

Discussion

To start with is the fact that the cup is steel and therefore the durability is guaranteed, due to this the cup is also able to bear harsh conditions such as when it slips from the hand and it falls. Furthermore the material used to make the cup does is not susceptible to natural factors like rusting (A travel survival ki, 2008).

This ensured the longevity of the cup as it is used with time. In addition the cup has a user friendly price with other sellers like the Amazon reducing price once in a while to favor the customers.

Despite the low price of the cup the sales turn over of the cup is superb. This is a direct interpretation that product is in the market and actually people are purchasing it. Amazons shipping for example of the product is high at the same time free making its turn over unbelievable.

This is a convincing factor that the customers have actually proven the product and found the product as worth paying for while not forgetting the satisfactory usage it gives customers (Anderson, 2008).

In terms of flexibility of usage, the cup remains the most flexible ever with different sizes to suit various situations. The varied sizes of Starbucks increases their flexibility as often people have different uses that is for work, at home and in outdoors.

Despite of the flexibility in terms of movement with t the cup is also flexible in the sense that it does not the limit the type of content that should be placed in it. Regulations concerning the contents of the cup at any given time are very open limiting no exact liquid to be added into it like some other companies which dictates the usage of their products (Mark, 2010).

In addition to all the properties Starbucks is an environmental friendly product which abides by all the environmental laws, the material used to make it is user friendly and can be reused in many different ways. It can also be recycled due to its durability to suit many uses.

The stainless steel used to make the cup is a user friendly material which despite being proven by environmentalists as non environmental hazard remains an eco-friendly product (Michelli, 2007).

To further remove any traces of doubt that might be in any customers mind a description of the cup will help one be convinced that this is basically the cup to go for when need arises. This is to prove to any buyer that the cup is actually something not just to go by. Starbucks is 4tall with prudent sides and has a stainless steel of about 18/8.

The stainless steel makes it survive that harsh environment of ever hand getting access to it. A hard rubber makes the handle with an S symbol at the top to show the trade mark of the company.

Moreover the lead is easy to remove due to lack of hinges this makes the access to its content quite simple, fast and suitable for all users including both adults and children. To act as a means of prestige the product has brand name in dark silver font to show the type of product, this can lift the status of a person as being identified to be using Starbucks.

To further make the cup user friendly it has a slanted lid, which prevents the spilling and splashing of the contents to the users. In regards worry should not be an issue of concern when using it as your hygiene is well catered for by the specifications of the product.

To further keep the content of Starbucks in secure and confined it has a tight row of two rubbers correlating with each other which are 1 thick to ensure no matter the mode of holding the cup is sealed, this makes Starbucks a product to admire and buy (Michelli, 2007).

To further suit the needs of the customers which often require little by little sip the cup has a hole at the lead. This enables access to the content of ones cup without having to open the whole cup like other products.

Once one buys this product his satisfaction is guaranteed based on the facts that the mugs appearance is quite attractive and stands out very well, furthermore it is easy to wash (Mark, 2010). The mug in addition does not obtain dust easily at the same time resisting any form of dirt.

A customer should also not have a second thought about this product due to the fact that holding it when having hot content is easy as it does not get hot but remains warm despite having a hot liquid. Its multipurpose also enables it to keep items like ice comfortable without melting for a given amount of time. A guaranteed ticket is also given to the customers on the unbreakable nature of the mug which remains very sturdy.

In case of any complains on the product the customer care at Starbucks is always ready for criticism and takes them positively. This is to ensure that as production of the mug continues the specifications of customers are met.

This is a guarantee that buying this cup can not only make you complain upon any short fall bus also includes on I n the production process of the product. This makes customers feel part of the production process at the same time being part of the company (Michelli, 2007).

A customers mind on the product can further be enhanced based on the fact that they do not dictate the environment of use, they can be used on cars when driving, near computers without worrying on the mess they would create, dink on sofa sets. Its weight is also favorable as it is not bulky and can be shifted from place to place.

Conclusion

In conclusion, Starbucks mug is a safe, modern, portable, environmental friendly, user friendly and at the same time pocket friendly. A second thought on this product is a mistake that should be made as this product offers and meets all the customers requirements. Despite the many criticisms of the mug it still remains the best product for all customers. Buying of this mug by any customer will therefore not be regretful by any means.

References

Anderson, C. (2008). Dispatches from the Edge: Memoir of War, Disasters, & Survival. :. Hanoi: Publisher Harper Paperbacks.

Mark, P. (2010). Uncommon Grounds: The History of Coffee and How It Transformed Our. Colombia: Basic Books.

Michelli, J. A. (2007). The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary. Colorado: Publisher McGraw-Hill Professional.

A travel survival ki. (2008). Pennsylvania: Lonely Planet Publications.

Starbucks holds an enviable position among innovative companies. The coffee chain has an insatiable appetite for innovation. The company is willing to suffer some losses in the near-term to develop superior products in the long-term via incremental innovation. However, the willingness to suffer losses is not what makes the company outstanding.

The companys wish to pay a high price in pursuit of innovation is what reflects its remarkable feature. This paper uses management tools and frameworks to explore the role that management practices play to support innovation.

Specifically, the paper evaluates how Starbucks creates and develops opportunities and how it manages innovation. In addition, the paper explores how this company behaves as an entrepreneurial organisation.

Creating and Developing Opportunities

A number of studies that explore the capacity of entrepreneurs to create and develop opportunities exist. Ardichvili, Cardozo and Ray (2003) contend that entrepreneurs do not create opportunities but rather recognize the presence and emergence of opportunities.

In this sense, the authors propose that the main issue to investigate when studying the dynamics of business opportunities is the entrepreneurial capacity to develop, recognize, and evaluate them. In recent times, sustainability has become a major issue in entrepreneurship because of the concerns associated with the deteriorating global environment.

Research shows that entrepreneurs who are aware of environmental issues tend to identify and pursue business opportunities in ways that promote sustainable operations. They do not just look at the financial rewards that the opportunity will bring, but also the sustainable features of the business opportunity.

The five main factors that drive the process of recognizing and developing business opportunities are entrepreneurial alertness, information asymmetry and prior knowledge, social networks, personality traits, and the nature of the business opportunity.

Entrepreneurial alertness refers to the ability of an entrepreneur to maintain a high level of awareness in regard to emerging opportunities. If an entrepreneur lacks entrepreneurial alertness, it is difficult for him/her to identify emergent opportunities. Information asymmetry and prior knowledge refer to the knowledgebase of an entrepreneur.

At organizational level, this quality is the basis for the emergence of concept of learning organizations. Knowledge makes it possible for entrepreneurs to recognize opportunities when they are still undefined. In addition, it spurs the capacity of the entrepreneur to make the decisions needed to transform a business opportunity into a business venture.

Social networks play a vital role in the process of recognizing and developing business opportunities because entrepreneurs often need information and resources not currently under their control to pursue business opportunities. It is normal for entrepreneurs to identify opportunities that they cannot develop unless they get assistance from their social network.

The personality traits of entrepreneurs also determine how they pursue business opportunities. While all entrepreneurs are risk takers, they have different degrees of risk tolerance. Companies like Starbucks have a greater appetite for risk compared to most of their competitors. This comes from the personalities of the leaders of the firm.

One personality issue that may influence the way an entrepreneur handles business opportunities is whether the given entrepreneur is an introvert or an extrovert. In this case, an extroverted entrepreneur has a larger social network to draw support from while an introverted entrepreneur has a smaller list of trusted allies.

It could be estimated that Starbucks loves risk as the company believes in the rapid deployment of ideas followed by careful analysis and improvement of the original idea over time. Companies such as Apple ensure that they have fully developed a product before they release it to the market. In fact, Apple takes a lot of care to keep its product development processes secret, until the release of specific products.

Starbucks sustains entrepreneurial alertness by maintaining a data collection system that gathers information from its employees and customers. Employees are asked to write to the companys executives each time they feel that a given decision goes against the mission of the company.

This also allows the company to attain information asymmetry because at any time, the company has more information regarding a specific issue affecting its business compared to its competitors. This enables the company to take advantage of the opportunities that arise in its favor.

Managing Innovation

In the context of organisational innovation, the word that represents the activities of entrepreneurs is intrapreneurship. Intrapreneurship refers to the activities undertaken by individuals within organisations that promote innovation. These activities focus on internal opportunities or circumstances that demand changes in the operations of a given organization.

In this sense, innovation is not limited to the activities of individuals, but rather innovation can be the result of the activities of teams in an organisation. In cases where teams promote innovation, intrapreneurship refers to their collective activities that improve the services and products offered by the organisation. Innovation can take place at the micro level, the meso level, and the macro level.

At the micro level it refers to activities undertaken by the organisation internally to ensure that it improves its products and services. Innovation at the meso level refers to the industry specific elements of innovation covering the organisations supply chain and its immediate operating environment.

Macro level innovation results from opportunities that arise because of things that take place at a higher level, such as changes in legislative frameworks and the legal environment of the business.

Starbucks is adept at the management of innovation. The company has a strong culture of innovation, which is the backbone of its entrepreneurial model. Starbucks is using all available means to expand its footprint beyond the coffee sector. In fact, some people question whether coffee is just a Trojan horse in the Starbucks business model.

This question is valid, especially considering the portfolio of products that Starbucks is already offering, and the products that it is planning to launch. Starbucks is aware that innovation in the current business climate must go beyond the traditional aspects of innovation, which were quality control, cost cutting, and operational efficiency.

The first area of focus in the current paradigm of innovation is the reinvention of business processes. The second one is collaboration and integration within the firm, and the third one is the creation of new markets by meeting the emerging needs of customers.

The drivers of innovation at the macro level include the growth of e-commerce, and globalisation. One of the consequences of innovation using these new approaches is that companies find themselves with new competitors. When Starbucks started selling music, it found itself in direct competition with Apple. Apple, on the other hand, is not primarily a music retailer but a technology firm.

The Apple iTunes store was an innovative offshoot to support Apples iPod business. Starbucks, which is a coffee firm, finds itself in direct competition with Apple, which is a technology company, for a share of the music market.

Another illustration of the new philosophies of innovation at play in the Starbucks business model is the collaboration between Starbucks and PepsiCo to sell hot-on-demand coffee through vending machines. Starbucks specialises in selling different types of coffee products to its clients. On the other hand, PepsiCo has a large network of vending machines and has a lot of experience with vending technology.

Therefore, the innovative collaboration between these two firms led to the introduction of hot-on-demand coffee. PepsiCo owns the technology while Starbucks supplies the network with coffee. This way, the two companies are able to expand their footprint in the beverages market.

Behaving as an Entrepreneurial Organization

Entrepreneurial organisations refer to firms that have an active philosophy, which encourages entrepreneurial behaviour in the firm. This dimension is very important in the current business climate because of the competitive nature of international trade. Organisational structures can be entrepreneurial or administrative. Entrepreneurial organisations are said to practice corporate entrepreneurship.

The difference between administrative and entrepreneurial organsations is the attitude of their top leadership to risk. Administrative organisations favour the pursuit of low risk opportunities for lower rewards. Entrepreneurial organisations, on the other hand, favour the pursuit of higher risk opportunities for higher rewards.

One of the key indicators of an entrepreneurial organisation is the ability to develop and deploy new products ahead of the competition. This calls for intense innovation and a solid risk philosophy. A company such as Apple thrives on the capacity to develop and release new products ahead of its competition.

It is very difficult to sustain this ability without having an entrepreneurial mindset across the organisation. In other words, a company that wants to use innovation as its source of competitive advantage must have an entrepreneurial culture.

An important aspect in the development of entrepreneurial organisations is that the top management of the firms must be entrepreneurial. It is impossible to develop an entrepreneurial organisation where the top managers are averse to risk, or have no entrepreneurial commitment.

At the same time, the organisation must be able to give middle level managers the ability to experiment with new systems, and to learn. Middle level managers represent the future of the organisation. If the entrepreneurial mindset exists only at the top, then the organisation cannot survive in the long-term.

Starbucks CEO, Howard Schultz is well known for his entrepreneurial traits. Schultz worked with Starbucks when it was a very small retail chain. He was on a visit to Italy where Italian coffee bars inspired him to develop a national coffee retail chain in America. When the management of Starbucks refused to buy into Schultz idea, he went on to open new coffee retail stores named Il Giornale, on his own.

Afterwards, Schultz entered into an agreement with Starbucks to buy the coffee company. He chose to retain the Starbucks as the name for his expanded company. This story illustrates that Starbucks has always been in the hands of a very entrepreneurial leader. As such, the company has retained its knack for creativity and innovation.

Starbucks behaves as an entrepreneurial organisation because it has a very innovative and risk tolerant CEO. The company is not always successful in all its endeavours. However, no effort goes to waste because the company usually builds on the lessons it learns from its entrepreneurial ventures.

The company is aggressive in seeking feedback. It seeks the opinion of its staff, and monitors the comments made online by its clients and competitors, which gives the company an advantage.

Risk Profile

The activities of the company illustrate that it has a highly established entrepreneurial culture as well as a high level of risk tolerance. The organisation prefers to launch new products quickly before competitors can respond in contrast to many multinationals that prefer to refine new products before releasing them to the market.

In conclusion, Starbucks is adept at creating and developing business opportunities. It does this by maintaining a high appetite for risk. The company has developed a culture that tolerates its aggressive risk behavior and is also active in the pursuit of innovation in its operations.

Its model for managing innovation takes into account the modern approaches to innovation, which include collaboration with other businesses to create new markets. Finally, the organisation demonstrates tendencies of corporate entrepreneurship in its activities. The most compelling evidence of this is the personal profile of its CEO, Howard Schultz who supports corporate entrepreneurship as a serial innovator and entrepreneur.

Reference List

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Dalal, S 2007, Creativity And Innovation Driving Business, Creativity Innovation Books, Mumbai.

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Starbucks is an American coffee company that operates in many countries around the world including America, China, Canada, Mexico, the United Kingdom, the Philippines, Germany, and Thailand. Coffee is a commodity that has high volume of global trading. However, its market is highly fragmented hence need for extensive exposure.

The United Arab Emirates (UAE) is one of the markets of Starbucks coffee and coffee products. UAEs fragmented coffee market has forced the company to consolidate distribution processes to cut distribution costs (Mangold, 2010).

The process involves participation of farmers, millers, exporters, brokers, roasters, and producers. Each of these groups has a role to play depending on its position in the distribution channel. Starbucks purchases, roasts, and sells coffee and coffee products. It sells products primarily through its retail stores. To boost distribution efforts, the company collaborates with other stakeholders that include suppliers, business partners, and specialty operators (Mangold, 2010).

In the UAE, Starbucks requires great market exposure because of stiff competition from other coffee shops (Mangold, 2010). In addition, the UAE is located in the desert, which makes it difficult for coffee companies to market and distribute coffee products. The climate of the UAE is mainly hot for most part of the year. Therefore, Starbucks needs to conduct extensive marketing and advertisement in order to endear its products to customers.

Another reason for extensive market exposure is the companys country of origin (Mangold, 2010). Many UAE countries are populated by Muslims. Muslims are conservative and firmly hold on to traditional values and beliefs. Starbucks needs a lot of market exposure in order to enhance its goodwill role in the UAE. Western countries are usually considered bad influence because of their culture that erodes ideals, beliefs, and cultural values of the Muslim countries.

Starbuckss distribution strategy involves a mixture of various distribution channels (Upadhyay, 2011). This implies that the company applies multiple channels that involve different participants at different market levels. First, the company uses a direct retail system to sell its products in stores under its management. Starbucks purchases, processes, and sells coffee in its stores without involvement of business partners. Second, Starbucks sells products in supermarkets and shopping malls across the UAE (Upadhyay, 2011).

It supplies products to supermarkets and shopping centers depending on demand. Proceeds from sale of products are divided between involved partners according to their business agreement. Third, Starbucks sells its products through airlines, hotels, restaurants, and suppliers of office coffee (Upadhyay, 2011). One of the benefits of adopting a multiple distribution channel is that Starbucks serves a wide market in the UAE.

However, the multiple channel distribution strategy is risky because of potential channel conflicts that might arise from using multiple channels concurrently. Starbucks also distributes its products via mail and on the internet (Upadhyay, 2011). The company produces a mail order catalog and sells products on its websites. Customers can place orders through the website. However, online purchase is not common in the UAE because of its conservative culture that does not fully embrace technology especially the internet.

The main objective of Starbucks distribution strategy is to grow Starbucks brand beyond the companys retail environment. The main distribution strategy is to provide products and services to customers professionally and on time. As such, the company adopts distribution channels that deliver products to customers in places of work, during travel, and in restaurants and shopping centres (Upadhyay, 2011).

It has thus developed business relationships with business partners who have similar business ideals, values, and goals. Business relationships include joint ventures and agreements with coffee companies and retail stores. Starbucks first entered the Middle East market in 1999 through MH Alshaya WLL, a company based in Kuwait (Mangold, 2010). The UAE market is difficult to penetrate necessitating collaborations with established companies and businesses located in the region.

Marketing involves several functions that facilitate purchase of goods and services. These functions include selling, buying, transportation, storage, advertising, standardization and grading, financing, and risk taking. Starbucks is concerned with standardization and branding, transportation, coffee purchase from producers, and storage.

After processing coffee, Starbucks standardizes and grades products before distributing them to retailers and wholesalers (Mangold, 2010). In addition, it stores them in storage facilities specially made to maintain quality of products. It is the responsibility of Starbucks to advertise products in order to attract customers. Wholesalers and retailers are not involved in advertisement of products.

Afterwards, the company transports finished products to retailers and wholesalers who sell them to consumers (Mangold, 2010). Starbucks conducts market research to evaluate and determine viability of providing services in certain regions. It obtains market information by conducting SWOT analysis of the location it intends to introduce its products.

In conclusion, Starbucks adopts a multiple channel strategy in the UAE. The strategy involves collaboration with distributors, wholesalers, and retailers. In addition, the company sells its products in its retail stores located in different regions of the UAE. A multiple distribution channel enables the company serve many customers distributed in various regions.

References

Mangold, C. (2010). Starbucks: Success Strategy and Expansion Problems. New York: GRIN Verlag.

Upadhyay, R. (2011). Distribution Strategy of Starbucks. Retrieved from http://www.managementparadise.com/forums/principles-management-p-o-m/216453-distribution-strategy-starbucks.html

In 2012, American company Starbucks and Indian Tata Global Beverages began their joint venture in the Indian coffee market. The companies alliance was successful, and Tata Starbucks became a profitable business by 2019. However, the company is still far from being financially stable in the Indian market and is exploring further improvement opportunities. This paper analyzes aspects that led to the companys past success and its actions and external factors that caused challenges. It examines issues from the CEOs perspective and suggests how Tata Starbucks could improve in the future.

Factors that Enabled the Company to Deliver Strong Performance in the Past

Starbucks is a globally famous company with an exceptional reputation. It is a responsible employer providing its workers with healthcare coverage and other benefits. Apart from excellent working conditions, Starbucks is recognized for hiring refugees and buying ethically-produced coffee beans only. Therefore, the companys name and reputation are one of the primary reasons for its success in India as people recognize Starbucks achievements, bringing loyal customers worldwide. Another reason for the companys strong performance is its choice of the international expansion strategy. The company chose a multi-domestic strategy characterized by customizing products and marketing strategies to specific national conditions (Jones & George, 2022, p. 233). Tata Starbucks customized its menu to local demands and culture. Indian population prefers drinking tea over coffee, so the company introduced 18 diverse varieties of tea to serve the Indian market (Dess et al., 2021, p. 114). They also found that their prices are above the local average coffee prices, and citizens are not willing to pay more. Therefore, the company focused on serving clients with above-average income, selecting locations in premium places visited by tourists and wealthy, westernized part of the population.

Important Issues Confronting the Company

However, Tata Starbucks faces external challenges due to high competition and the consequences of its wrong internal actions. Indians are a tea-drinking nation as for every cup of coffee, an Indian drinks 30 cups of tea (Dess et al., 2021, p.120). Local tea is also cheaper than Starbucks coffee and citizens are much more willing to buy tea, preventing Starbucks coffee from bringing expected revenues. The company overlooked or did not consider local preferences before coming to the region and is currently facing a challenge due to this internal action. Meanwhile, the main external threats are such competitors as Chai point or MacDonalds. Both places offer beverages for a lesser price than Tata Starbucks and have the relatively same quality, which is more appealing to the customers.

Actions Addressing Tata Starbucks Issues

As a company CEO, I would suggest improving advertising and opening more branches in places popular among travelers and the wealthier part of the population. Currently, Tata Starbucks target middle-aged citizens, so they could invest in advertising their coffee to teenagers and young adults by using popular platforms like TikTok or Instagram. Advertising beverages to the younger population would attract more customers and allow the company to expand. However, there is a risk that younger people will not be able to afford Starbucks coffee, and money spent on advertising is wasted. Opening more outlets in premium places would allow the company to get more clients from its target audience. Tata Starbucks can open new branches in airports as many tourists and wealthy citizens visit it. The company has already announced its plan to open 40-50 more outlets (Roy & Kalra, 2021). The potential risk of this action is that the company overestimates the need for new branches, and some do not attract enough customers.

Conclusion

Tata Starbucks is a promising company that can continue its expansion in the future. The company was successful due to its brand name, premium locations, and Indian-specific strategy. The company is facing challenges associated with high competition and local preferences. However, these issues can be addressed by improved advertising and opening more outlets. Tata Starbucks has much potential and can succeed in the Indian market in the following years.

References

Dess, G. G., McNamara, G., Eisner, A. B., Lee, S.-H., & Sauerwald, S. (2021). Strategic management: Text & Cases(10th ed.). McGraw-Hill Education.

Jones, G. R., & George, J. M. (2022). Contemporary Management (12th ed.). McGraw-Hill Education.

Roy, A., & Kalra, A. (2021). Starbucks Eyes Faster India expansion with new store formats. Web.

Social Responsibility

One of the core reasons the company is so focused on social responsibility is because the enterprise is trying to uphold its reputation. It is so important because the company has been criticized for its competitive behavior, and a focus on activities that are related to social responsibility allows improving the image of the enterprise. Another reason that is worth noting is that it can be viewed as a way to avoid a negative perception of the company. It is paramount to mention that it is essential for Starbucks because it has to deal with numerous protests and meetings, and it is not an easy task for such an enterprise to reduce the negative impact.

Another reason the company is focused on social responsibility is that it is concerned about the environment, clients, communities, and suppliers. It is necessary to mention that some of the activities that Starbucks supports can be regarded as beneficial in the long-term. For example, support that is offered to coffee growing communities is essential because it helps to develop relationships that are useful for the business. Another reason that should be noted is that the company attempts to make sure that the rights of employees are considered, and living conditions are outstanding. It is necessary to mention that the CEO of the company views it as a top priority.

The fact that social responsibility allows to create an atmosphere for the customers that is comfortable is also critical because such aspects are highly valued by most clients. It is necessary to mention that it is a core part of the business strategy because most individuals are inclined to support the enterprise that is socially responsible. Another reason that needs to be discussed is that this approach is an essential part of the companys mission statement, and the enterprise values the needs of the people much more than profits.

The fact that annual reports are reviewed by shareholders is also essential because they have high expectations and care about social responsibility, and it is one of the core reasons the company is so concerned about such aspects. The fact that the company has launched such initiative as Shared Planet also needs to be considered. It is necessary to mention that it is a smart business move because it has drawn a significant amount of attention towards the company, and the company needs to maintain this commitment. Another reason that is worth noting is that the company attempts to increase the involvement of the community because it helps to increase the profit, and preserve the environment at the same time.

It is also imperative to say that the company has joined the Product Red project that is determined to increase the awareness of such issues as HIV and aids and attempts to generate the funds. It is so important because it helps to increase revenue while such activities are socially responsible at the same time. Another reason that needs to be discussed is that the company supports philanthropy and does not want to receive anything back in some cases. Agricultural practices that help to reduce deforestation also should be considered because it is evident that the company understands that such activities may affect the company because such resources are vital most of the time. Also, it is necessary to mention that the company recognizes that it has damaged the environment, and attempts to reverse some of the damage that has been done because Starbucks is environmentally conscious.

Benefits for Employees

The fact that the company provides its employees with a broad range of unique benefits should not be overlooked. First of all, it is imperative to mention that most other companies offer health coverage only for workers that perform more than thirty hours a week. On the other hand, Starbucks offers it to individuals that work more than twenty. Such an approach is unique because it can be viewed as unnecessary most of the time, but it is evident that the enterprise does not try to minimize the expenses on healthcare. It is necessary to mention that such an aspect should not be overlooked because other companies are worried only about their revenue.

Most other companies do not offer support to employees that are part-time, and it was one of the first enterprises in this sector that have developed a comprehensive package of benefits. Another unique aspect that needs to be discussed is that Starbucks offers dental coverage to its employees. Costs of some of the procedures are covered, and preventive visits are also taken into account. It is so important because the cost of such operations is incredibly high most of the time, and other companies offer only basic coverage.

The fact that the company supports vision insurance is also vital. One of the most significant aspects that should not be disregarded is that only a small percentage of enterprises offer such benefit is relatively small because it is viewed as not essential. On the other hand, Starbucks understands that the fact that vision problems may affect the performance of workers is critical. It needs to be said that this approach is unique because an enterprise has the vision of what is truly important. Overall, it is evident that the company values its employees, and is determined to provide them with a set of benefits to ensure that they are retained.

Starbucks Growth

It is necessary to say that the growth of the company has been mostly caused by the fact that Starbucks has paid enormous attention to activities that can be regarded as socially responsible. One of the core aspects that should not be disregarded is that clients are determined to support the enterprise that is socially responsible, and it has helped Starbucks to develop a loyal base of customers. The growth of the company may also be explained by the fact that the role of ethics has been increasing over time, and it is one of the first enterprises that has focused on such aspects. The trust of people is also essential most of the time, and the focus on social responsibility has helped the company to expand.

It can be said that social responsibility has become a core part of the image of the company at this point, and a significant percentage of the customers prefer Starbucks over its competitors because they know that the company takes ethical aspects into account. It is necessary to mention that the focus on such activities can be regarded as a significant competitive advantage most of the time, and it can be said that it is one of the core reasons the company is as successful as it is now.