Founded by Jerry Baldwin in 1971, the Starbucks Company in one of leading companies in coffee business in the world today. It serves a wide variety of freshly brewed coffee as its main product as well as other drinks such as cakes, tea, and pastries. It also boasts of its extensive brands including the Tazo tea, Italian Coffee, and Starbucks Entertainment. Just like any successful globally conscious company, Starbucks has a fair share of challenges that it faces. This case study will describe and analyzes one of the major strategic issues faced by Starbucks, a description of what the company has done to address the issues as well as the leadership roles involved, giving my opinion regarding the companys actions.
One of the main strategic issues that Starbucks faces is its competitors. There are numerous coffee houses all over the world that offer a similar range of products served at Starbucks. Some of their main competitors include the McDonalds and Dunkin Donuts. Over the past decade, Starbucks has gone into constant battles with these companies to take the top position in the coffee business. Each of its competitors strives to draw customers away from competition so as to gain a greater customers business and become more profitable. Due to this competition, Starbucks had to devise new strategies that would aid them conquer the market and remain the coffee King in the industry.
What the Company Has Done to Address the Issue
Given the competition, the Starbucks Company has strived in penetrating the market by inflating their menu options and establishing itself as a destination coffeehouse. Their stores are evenly spread across the United States. The company has come to be known as the stop coffee shop to work and socialize. It has opened up stores in spectacular physical locations that offer its customers an unmatched total experience and a tranquil atmosphere. Their latest move saw them open a glamorous cafe and roaster in settle dubbed Starbucks Reserve. This strategy proved successful as they reported a revenue close to $19 billion in 2015 (Stynes, 2016).
Leadership Role in the Issues
The company managers are responsible for making these strategic decisions that are aimed at achieving higher market grounds in the market. Moore, (2011) states that these decisions shape the firms direction and they are responsible for the firms success or failure. This is because they are responsible for committing the important resources of the firm necessary for better organizational outcomes. Therefore, these decisions should be made using the appropriate information from research and development activities. They assist in knowing exactly what is happening in the marketplace. However, the decision-making process is influenced by the managers experience and prior knowledge regarding the issue.
Analysis of the Issues Facing the Company
Competition is a very common aspect that is experienced by numerous companies regardless of the industry. For a company to remain successful, it has to engage in activities that are aimed at giving the company a competitive edge over its competitors. To achieve this, it is important to the company first to understand the market. This includes collecting information about their competitors, their strategies and the new products they offer to the market. However, it is essential that companies concentrate on being proactive rather than reactive. This requires the company to be innovative in bringing new products to the market ahead of their competitor. Starbucks has fulfilled this by constantly coming up with new products and breeding new brands under their name.
The move by Starbucks was well fetched as the resources that were devoted yielded positive results, given the reported increase in revenue in 2015. The company decided to go further from just providing the best coffee and other products to improving how their customers consume their products. They opened stores in a location that offer their customers an unmatched experience in terms of comfort. They determined customer desires and preferences and exploited them. Slottje (2009) suggests that surpassing customer preferences and desires lead to an increase in the consumer base. It not only makes consumers want to buy a companys product but also be associated with the corporation.
In conclusion, the marketplace offers a dynamic environment that constantly breeds challenges to a corporation such as competition. It is, therefore, important for companies to regularly conduct market research and approach these problems strategically. This will aid them to retain their competitive advantages thus ensuring their continued profitability. However, the managers responsible for making these decisions should be well equipped with the relevant knowledge and information. This is because the success of these strategies relies on their judgment.
Moore, D. (2011). Managerial decision making. Cheltenham, UK: Edward Elgar.
Slottje, D. (2009). Quantifying consumer preferences. Bingley: Emerald.
Stynes, J. (2016). Starbucks Reports Jump in Profit. [online] WSJ. Available at: http://www.wsj.com/articles/starbucks-gives-downbeat-holiday-forecast-1446150676 [Accessed 22 Jan. 2016].
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