Strategic Management Lessons Business Can Learn from Starbucks

Starbucks’ internal analysis comprises four elements gained from Howard Schultz’s view on the Starbucks experience. The company’s primary resource, the coffee bean, is the first component flaunting the company’s quality, delivery, and proper management strategies.

It utilizes Potter’s broad differentiation structure, which emphasizes the competitive benefit a business can have by ensuring its products and the organization itself are different from others in the market.

Starbucks’ proper management strategies focus on consistently improving its products and services to warrant the distinctiveness of its goods for the longest time possible.

Starbucks purchases high-quality coffee beans, which undergo careful roasting. The purchasing process involves a partnership with growers to promote suitable practices for coffee cultivation. This element provides an ethical business strategy.

Employee involvement is the second component of the organization’s internal analysis. Starbucks employees are charged with engaging customers within the distinctive setting of the Starbucks shop.

This extension of service beyond serving and preparing coffee incorporates personnel who are passionate advocators of the organization’s philosophies and standards. Therefore, in seeking such personnel, Starbucks aims to recruit individuals who fit well into the company’s culture.

Another aspect of the organization involves public relations and societal reasons. The philanthropic nature of Howard Schultz influenced the company’s move to ensure employee trust by extending the perks afforded to Starbucks personnel.

An example is the provision of healthcare, which is attributed to the demonstration of societal consciousness. The numerous stores adhere to the Starbucks layout and design to promote the general setting.

The furniture and decoration of the stores went through a close evaluation and targeted the neighborhood’s culture.

Also, Starbucks’ proper management strategies justify a dense regional presence. Starbucks sets up 20 or more stores within every urban hub to stir the Starbucks customer base. Despite the proximity of the stores, there is the absence of unhealthy competition between the stores.

Instead, the company has ensured to target their moving customers by introducing drive-through services at select stores with the proper location of other stores along highways.

 What Are Starbucks Corporation’s Strategic Capabilities?

Starbucks’ business strategy formulation is highlighted in its mission statement. The organization’s mission comprises one person, one cup, and one neighborhood at a time.

By focusing on a single individual purchasing their beverages across distinct outlets in America, the organization identifies their business, customer base, and customer needs.

With products ranging from coffee and tea beverages, the company attempts to profit through globalization while expanding its services into other countries.

And with the capability to provide for the beverage needs of customers outside of the United States, the Starbucks business strategy to venture into foreign markets reveals its identification of potential industrial success.

A summary of the proper management strategies that elevated Starbucks among other market players;

  •  An increasing number of Starbucks stores

By last year, Starbucks had 31 246 stores. The establishment of all these stores has enhanced the company’s operations. These stores have a unique design, a cozy environment and a well-equipped staff.

The Daily Mail report shows these stores have high-class furnishings with hospitable workers compared to most coffee houses.

  •  Its acquisition of top companies

Starbucks has swallowed six companies that have come in handy for its business success. The companies include; Tazo, Ethos water, Seattle’s best coffee, Torrefazione Italia Coffee, Teavana, and Evolution Fresh.

  •  Diversification of its services

Starbucks offers other exclusive services like introducing innovative products and foodstuff that make their coffee more exciting. For instance, some coffee shops offer ice cubes, which are known to strengthen the coffee flavor.

  •  Its brand image is outstanding

Starbucks is among the top firms in terms of popularity and ranking in the beverage industry. According to last year’s Interbrand grading, the value of its brand was approximately eleven billion. Its size but as well as the number of clients keeps increasing year over year.

  •  A solid financial position

Starbucks’s financial performance is evident from its annual revenue and profits. In 2019 alone, this company made a profit of almost four million dollars with a yearly income of approximately twenty-seven million dollars.

  •  Access to suppliers worldwide

Starbucks boasts proper management strategies even at the global level. It has a worldwide network of suppliers who cultivate and supply its coffee beans. It can acquire coffee beans from regions that produce coffee in large numbers: Pacific Asia, Latin America, and Africa.

With a stable coffee beans supply, Starbucks can consistently manufacture more coffee for its loyal customer and more prospects who love this fulfilling product.

  • Better handling of workers

Starbucks workers get better treatment; therefore, they have the morale of working hard.

When workers are mishandled, they are most likely to handle customers inappropriately and yield less productivity, which is not the case at Starbucks. It is continuously ranked among one of the top 100 organizations to work for in the world.

It also values all its workers’ gender through the introduction of washrooms for all types of sexual orientation, that is, gays, lesbians, bisexuals, and the rest of the LGBT community.

Starbucks strongly advocates for the indiscrimination of transgender employers, making it a comfortable and convenient workplace for everyone.

Can Starbucks Corporation achieve a Competitive advantage?

Starbucks has become a global success following its business placement in China, India, and Vietnam. The company, which seeks to supply the beverage needs of the market, expects a significant population to provide a customer base and raw materials for the industry.

Despite the success in Asia, the organization has been unable to breach the European market and adapt to the culture to fulfill customers’ needs. Starbucks gains a competitive advantage by providing a variety of commodities for customers, including household products, to capture the market and increase profitability.

The adherence to quality, with employees trained in the organization’s philosophies and standards, guarantees Starbucks a competitive edge.

Strategic Management Tactics Starbucks Corporation Can Use

Leveraging social media and information technology has demonstrated the company’s understanding of long-term planning.

The success of the Starbucks application could be replicated across new markets, with technological advancements affecting new markets. The management could also seek to purchase already established local brands in foreign markets to ensure success.

Since most Starbucks coffee shops are based in the United States and other areas in China, Africa, and India, opting to expand to other continents and upcoming markets is a great idea.

It can also use its popularity to its advantage by presenting new flavors and goods in the market with its label.

Another idea is partnering with other organizations to help reinforce their market share and brand at large.

Factors That Are Most Likely to Be a Threat to Starbucks

Although Starbucks has a firm grip on the beverage industry, some factors can threaten its business operations. The factors include;

  • Stiff competition from coffee suppliers that offer their goods and services at a low cost. Considering the high prices of Starbucks products, those customers who cannot afford them will go for the other cheap options in the market.

This case can be a big problem in the Starbucks industry’s future unless it looks for ways to cater to other individuals who can’t afford expensive products. Competition can also arise from big coffee firms like McDonald’s, which is why it is vital for Starbucks to guarantee the quality of its services and products.

  • Another threat can come from other industries imitating Starbucks goods. It is important to make their products as original and inimitable as possible.
  • Controversial rules may hinder the operations and reputation of the brand. For example, in California, in 2018, a magistrate asked Starbucks to include cautionary tags on its goods to avoid violations from biochemical usage that are likely to cause cancer.
  • Preventing customers from using a company’s amenities for not buying anything is rude and uncalled-for. There was a famous incident in 2018 where Starbucks workers denied two men the pleasure of using a washroom for not buying anything. Such a scenario can ruin the reputation of a company. It’s appropriate that the CEO finally apologized.
  • A bigger threat to most businesses now is Coronavirus. Most Starbucks warehouses have been dormant since the emergence of Covid-19. For instance, China has more than 4100 Starbucks stores, and almost half of them temporarily shut down. Implying that the annual income and profits of Starbucks this year will face a big negative drift.

However, Starbucks can avoid all jeopardies by employing proper management strategies. Reducing the costs of products and investing in robust technologies are other ways to attract customers and ensure productivity.

Winding up,

Starbucks is a unique brand in the provision of beverages and food products. Its proper management strategies ensure its success and customer satisfaction. For other companies that still struggle with sales, branding, and marketing, emulating Starbucks’ strategic management can help shed light in your dark hole.