Sustainable Solution Paper on Starbucks Organization Order Instructions: Sustainable Solution Paper-Starbucks Organization
(Section 1) Identifying your Organization The Starbucks Organization.
Begin by thinking about the organization you have chosen that encompasses both the concept of sustainability and the need to apply strategic thinking. Please refer to the handout, “Sustainable Solutions Paper—Identifying a Potential Organization” for specific guidance on identifying an organization for your Sustainable Solutions Paper.
In your Proposal, identify the organization you have selected and place it in context; then specify its relevance for study, providing supporting evidence as needed. Your initial proposal should be approximately two substantive paragraphs.
Research and references for this section
Book: Harvard Business School Press. (2005). Strategy: Create and implement the best strategy for your business. Boston, MA: Author.
• Introduction
• Chapter 1, “SWOT Analysis I: Looking Outside for Threats and Opportunities” p. 1-15
• Chapter 2, “SWOT Analysis II: Looking Inside for Strengths and Weaknesses” p. 17-28
• Chapter 3, “Types of Strategy: Which Fits Your Business?” p. 29-46
• Chapter 4, “Strategic Moves: The Mechanisms of Success” p. 48-60
• Chapter 5, “From Strategy to Implementation: Seeking Alignment” p. 61-75
Book: Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2010).The necessary revolution: How individuals and organizations are working together to create a sustainable world. New York, NY: Doubleday.
• Chapter 1, “A Future Awaiting Our Choices”
• Chapter 9, “Positioning for the Future and the Present”
• Chapter 11, “Building Your Case for Change”
Articles
• Porter, M.E. & Millar, V.E. (1985). How information gives you competitive advantage. Harvard Business Review, 63(4), 149-161. Retrieved from ABI/Inform Global database.
• NetMBA.com. (2007). The value chain. Retrieved December 5, 2008, from http://www.netmba.com/strategy/value-chain
• Freemen, R. E, Gilbert, Jr. D. R., & Hartman, E. (1988). Values and the foundations of strategic management. Journal of Business Ethics, 7(11), 821-834. Retrieved from Business Source Premier database.
• Kaplan, R. S. & Norton, D. P. (2008). Mastering the management system. Harvard Business Review, 86(1), 62-77. Retrieved from Business Source Premier database.
• Mintzberg, H., & Hunsicker, J. Q. (1988). Crafting strategy. McKinsey Quarterly, 3, 71-90. Retrieved from Business Source Premier database.
• Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93. Retrieved from Business Source Premier database.
Handouts/Study Notes
• Integrated Essay Guidelines
• Sustainable Solutions Paper — Identifying a Potential Organization
• Freeman, R. E. & McVea, J. (2001). A stakeholder approach to strategic management. Retrieved December 4, 2008, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=263511
• How to Prepare an Annotated Bibliography Entry
• Handout: The Resource Transformation Process & Competitive Advantage: A Detailed, Process-Oriented Typology of Organizational Resources & Implications for SWOT Analysis
(Section 2) Applying Traditional Strategic Thinking Tools
Apply traditional strategic thinking tools in this section of the paper.
Please see the handout, Sustainable Solutions Paper—Applying Strategic Thinking Tools, Part I, for a fuller description of the following required traditional framing analyses:
• Stakeholder Identification and Value Analysis
• General Force Analysis
• Porter’s Five-Forces Industry Analysis
• Detailed Value Chain Analysis
• Detailed SWOT/SCOT Analysis
• Key Success Factors: Integrating the Analysis
Be sure to continue using the template: SSP Template. For more information about the final SSP deliverable, please review the Sustainable Solutions Paper Application Rubric, presented as a separate attachment.
Research and references for this section
Book: Harvard Business School Press. (2005). Strategy: Create and implement the best strategy for your business. Boston, MA: Author.
• Chapter 6, “Action Plans: The Architecture of Implementation” p. 77-94
• Chapter 7, “How to Stay on Course: Sensing and Responding to Deviations from Plan” p. 95-108
• Chapter 8, “The People Side of Implementation: Getting the Right People on Board” p. 109-120
• Chapter 9, “Strategy as Work-in-Progress: Keep Looking Ahead” p. 121-136
Book: Stacey, R. (2013). Strategic management and organisational dynamics: The challenge of complexity (Laureate Education, Inc., custom ed.). Essex, England: Pearson Education Limited.
• Chapter 4, “Thinking in Terms of Strategic Choice: Cybernetic Systems, Cognitivist and Humanistic Psychology” p. 64-97
• Chapter 5, “Thinking in Terms of Organisational Learning and Knowledge Creation: Systems Dynamics, Cognitivist, Humanistic and Constructivist Psychology” p. 98-125
• Chapter 7, “Thinking About Strategy Process from Systematic Perspective: Using a Process to Control a Process” p.148-171
Articles
• Hamel, G., & Prahalad, C. K. (2005). Strategic intent. Harvard Business Review, 83(7-8). Retrieved from Business Source Premier database.
Porter, M. E. (1996). What is strategy?. Harvard Business Review, 74(6), 61-78. Retrieved from Business Source Premier database.
• Wheeler, D., Colbert, B., & Freeman, R. E. (2003). Focusing on value: Reconciling corporate social responsibility, sustainability and a stakeholder approach in a network world. Journal of General Management, 28(3), 1-28. Retrieved from Business Source Premier database.
• Mintzberg, H., & Lampel, J. (1999). Reflecting on the strategy process. Sloan Management Review, 40(3), 21-30. Retrieved from Business Source Premier database.
• Chang, D. S. & Sun, K. L. (2007). Exploring the correspondence between total quality management and Peter Senge’s disciplines of a learning organization: A Taiwan perspective. Total Quality Management & Business Excellence, 18(7), 807-822. Retrieved from Business Source Premier database.
• Kunsch, P. L., Theys, M., & Brans, J. P. (2007). The importance of systems thinking in ethical and sustainable decision-making. Central European Journal of Operations Research, 15(3), 253-269. Retrieved from Business Source Premier database.
• Mintzberg, H. (1990). The design school: Reconsidering the basic premises of strategic management. Strategic Management Journal, 11(3), 171-195. Retrieved from Business Source Premier database.
• Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard Business Review, 72(1), 107-114. Retrieved from Business Source Premier database.
• Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93. Retrieved from Business Source Premier database
Handouts/Study Notes
• Sustainable Solutions Paper—Applying Strategic-Thinking Tools, Part I
• Sustainable Solutions Paper—Applying Strategic-Thinking Tools, Part II
• How to Prepare an Annotated Bibliography Entry
(Section 3) Extending and Re-Framing the Sustainable Solutions Paper
Apply your understanding of organizations as complex adaptive systems, expanding the scale and scope of your analysis for your Sustainable Solutions Paper.
Please see the detailed handout titled, “Sustainable Solutions Paper—Complexity Analysis,” for a fuller description of the following required systems expansion analyses:
• Fitness Landscape Translation Analysis
• Boid Analysis: Rules for your topic?
• Ray’s Simulation Translation & Fishing Simulation Translation: Industry Evolution Modeling
Be sure to continue using the template SSP Template. For more information about the final SSP deliverable, please review the Sustainable Solutions Paper Application Rubric
Research and references for this section
Book: Stacey, R. (2013). Strategic management and organisational dynamics: The challenge of complexity (Laureate Education, Inc., custom ed.). Essex, England: Pearson Education Limited.
• Chapter 10, “The Complexity Sciences: The Sciences of Uncertainty” p. 234-261
• Chapter 11, “Systemic Applications of Complexity Sciences to Organisations: Restating the Dominant Discourse” p. 262-295
Book: Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2010).The necessary revolution: How individuals and organizations are working together to create a sustainable world. New York, NY: Doubleday.
• Chapter 2, “How We Got into This Predicament” p. 14-32
• Chapter 3, “Life Beyond the Bubble” p. 33-41
• Chapter 4, “New Thinking, New Choices” p. 42-56
• Chapter 8, “Risks and Opportunities: The Business Rationale for Sustainability” p. 101-118
• Chapter 9, “Positioning for the Future and the Present” p. 119-139
• Chapter 16, “Convening: Get the System in the Room” p. 234-249
Chapter 19, “Innovation Inspired by Living Systems” p. 285-291
• Chapter 20, “Unleashing Everyday Magic” p. 292-301
• Chapter 22, “From Low-Hanging Fruit to New Strategic Possibilities” p. 310-323
Articles
• Carlisle, Y., & McMillan, E. (2006). Innovation in organizations from a complex adaptive systems perspective. Emergence: Complexity & Organization, 8(1), 2-9. Retrieved from Business Source Premier database.
• Lichtenstein, B. B., Uhl-Bien, M., Marion, R., Seers, A., Orton, J. D., & Schreiber, C. (2006). Complexity leadership theory: An interactive perspective on leading in complex adaptive systems. Emergence: Complexity & Organization, 8(4), 2-12. Retrieved from Business Source Premier database.
• Morçöl, G. (2005). A new systems thinking: implications of the sciences of complexity for public policy and administration. Public Administration Quarterly, (3), 297-320. Retrieved from ABI/INFORM Global database.
• Plowman, D. A., Baker, L. T., Beck, T. E., Kulkarni, M., Solansky, S. T., & Travis, D. V. (2007). Radical change accidentally: The emergence and amplification of small change. Academy of Management Journal, 50(3), 515-543. Retrieved from Business Source Premier database.
• Senge, P. M., Lichtenstein, B. B., Kaeufer, K., Bradbury, H., & Carroll, J. S. (2007). Collaborating for systemic change. MIT Sloan Management Review, 4
Sustainable Solution Paper on Starbucks Organization Sample Answer
Sustainable Solutions Paper
Samuel Benn
Walden University
DBA Strategy 8161
Introduction
Sustainability has been part of Starbucks strategy since 2004. The sustainability approach at Starbucks is critical when it comes to enhancing sourcing practices for products other than coffee, its method of charity, transparency, reporting and declaration, and management at executive and board levels. While the paper evaluates sustainability solutions at Starbucks, it presents relevant information that can augment the understanding of sustainability in entirety.
Purpose
The analysis of Starbucks is necessary, why because the firm’s future expansion and sustainability rely on its capacity to embrace a healthy business model. The firm should constantly advance its strategies important for value chain analysis, CRS and sustainability so as to remain competitive. Because value chain goes further than the business, it provides a platform for understanding an organization’s environmental, social effect and general stability. For that reason, recognizing and assessing Starbucks value chain presents insights that help in strategic planning and implementation. By and large, the analysis of Starbucks is essential in providing pertinent information for a wider knowledge base thus aid in comprehending sustainability.
Stakeholder Identification and Value Analysis
Stakeholder identification is the logical analysis and assessment of their impact when it comes to executing high-growth and sustainable solutions. Stakeholder identification is necessary during initial phases in formulating strategies, so as to prevent improvident allocation of resources on strategies primary stakeholders may not support. Moreover, stakeholder analysis is critical in enhancing and reformulating high-growth strategies to get the approval of primary stakeholders who may be against such techniques. Identification of stakeholders allows the firm to open other potential areas and methods to increase rapidly its ability and competence (Mintzberg, 1990). At Starbucks, stakeholders are people who occupy important positions in the company or those with the ability to significantly impact the firm’s revenues and expenses. These people can be within or outside the enterprise. In Starbucks, the relative effect of potential clients for skim or non-fat drinks can easily prevail over the views one person, the CEO. If the firm had attempted to reinvent its products to increase client base, instead of using traditional brand lines, it might have easily met client needs. Currently, the company sells various products besides coffee including, ice-cream and is evidently a firm that can listen to all the stakeholders.
Integrated Concepts From Readings, Evidence and Implications
Starbucks’ commitment to its stakeholders and focus on its mission statement and vision provides the firm with the need for change. The company looks for further opportunities while increasing stakeholders’ value. However, the company ought to integrate strategic intent thinking in their enterprise level strategy. This move will be significant when it comes to inspiring innovation (Morçöl, 2005). As a result, this will positively influence business strategy since change helps in the achievement of strategic objectives. Using stakeholders’ opinions in the company’s business strategy helps in exploiting the available opportunities. Moreover, strategic intent thinking allows the search for opportunities relevant for repositioning or restructuring their competencies so as to enhance sustainability (Stacey, 2013). All people across the organization are charged with the responsibility of work in teams to achieve the organizational goals as they have impartiality in the outcomes. Various perspectives on the organization provide room to address flexible environmental changes without the need for implementing strategic paradigms (Hitt, Ireland & Hoskisson, 2009).
Allowing stakeholder participation in the strategic planning allows the company to use available opportunities. Intent thinking is also necessary for exploring further opportunities, for which the firm can restructure its key competencies in a bid to increase sustainability.
General Force Analysis: External – Remote Environment
General Force Analysis involves collecting information about the organization’s external environment based on opportunities as well as threats. It is an exercise of ensuring that changes in external environment do not take the organization by surprise. They include;
Economics
The economic growth in developing nations as well as reducing joblessness presents opportunities for this organization to generate profit from different markets. Although, the increasing labor expenditures in developing adversely affects Starbucks since it leads to high expenditure for raw materials. Starbucks gets a significant percentage of raw materials from developing nations. Therefore, economic factors provide the firm with opportunities.
Technology
The firm has opportunities of increasing their mobile apps and related services to generate more profit via mobile payment platforms. Subsequently, Starbucks can enhance the efficiency of its SCM using modern technologies utilized by coffee growers (Stacey, 2013). Nevertheless, the increasing availability of home-made coffee appliances threatens the organization since enhances the availability of competitors’ products.
Demographics / social / culture
Social factors involve social environment and patterns that influence operations as well as clients. For that reason, the company has to put into account various factors including, increasing the number of middle class, increasing coffee culture and growing health conscious. The company has the opportunity of increasing its profit due to growing demand for specialty products, coffee culture and increasing number of middle class. Also, Starbucks can broaden its assortment of health brands to meet the needs of health-conscious clients.
Government / legal / military
On political factors, Starbucks faces regional incorporation, which is beneficial for the firm when it comes to its international growth strategy. In addition, many governments worldwide are upgrading their infrastructural facilities that allow the company to access easily various markets and suppliers. Nonetheless, bureaucratic procedures are persistent in many nations. This affects the firm as its makes expansion hard, particularly in developing nations.
Physical environment
Sustainability pattern at Starbucks concentrates on business procedures, which guarantees minimal ecological effects. With regards to accountable sourcing highlights on CRS in the SCM. At the moment, the organization has got accountable sourcing guidelines. Moreover, the firm has the opportunities of the offering, some its brands in eco-friendly packaging
Implications, Threats, and Opportunities of GFA
According to the GFA model, there is a need for putting into account and further assessment of the economic, technological and social factors hence the use of technology such as mobile apps and related services to generate more profit via mobile payment platforms. Subsequently, Starbucks can enhance the efficiency of its SCM using modern technologies utilized by coffee growers (Hoovers, 2010).
Additionally, there is evidence of high profit due to growing demand for specialty products, coffee culture and growing number of middle class. Much as these benefits are favorable, the threats are potentially overwhelming. For instance, the increasing availability of home-made coffee appliances threatens Starbucks since these enhances the availability of competitors’ products (Hoovers, 2010). In general, by 2018, however, the cost of coffee beans is expected to reduce, which will lead to reduced market rates and high-profit margins. Health attitude is another factor that is important in determining demand in this sector. The expected change in healthy lifestyle can be adverse the industry since clients are aware of the associated weight and obesity issues (Starbucks, 2013). Nonetheless, players in this sector have been proactive when it comes to shifting to organic and healthy brand mix.
Porter’s Five Forces Industry Analysis: External – Industry Environment
Porter’s Five Forces Industry Analysis is a model for analysis industry environment. These forces determine the competitiveness and attractiveness in the market they include; the bargaining power of the buyers, the bargaining power of the suppliers, the threat of new entrants, the threat of substitute products, and the intensity of the rivalry.
Five Forces Matrix Analysis
Barriers to entry
This threat is moderate since entry barriers are high; thus put off new rivals. However, the industry is moderately high due to monopolistic rivalry system. For new entrants, the initial venture is affordable because they can lease stores and equipment. At the domestic level, small-scale coffee stores can contend with Starbucks since there are no possibilities for changing prices for buyers. Although, this industry is associated with intense competition, chances of new entrants to be successful are moderate. Nonetheless, this average entry in the market is experienced by big incumbent stores like Starbucks that have realized economies of scale through price reductions, increased good organization, and a significant market share. Additionally, there is a somewhat significant barrier since new entrants that try to differentiate their brands from Starbuck’s brand quality, strategic regions, and store setting. Established companies such as Starbucks have a substantial size as well as degree, providing them easy access raw material and learning curve benefit. The anticipated revenue from established firms for product equity, resources, location, and cost, are moderately high creating a moderate barrier to entry.
Substitutes
There is some sensible substitute for coffee such as tea, soda, water, and energy drinks (Porter, 1996). Pubs that sell non-alcoholic drinks can replace Starbucks coffee. Further, clients can make their home-made coffee instead of buying premium coffee brands. However, there are no cases of changing prices for buyers for switching to substitutes that make them high. Nonetheless, it is to keep in mind that main players in the industry such as Starbucks are addressing the threat of substitutes by selling coffee makers and premium coffee packs, but it continues to exert pressure on the company’s profits.
Bargaining power of suppliers
The primary components of the Starbucks value chain are coffee beans and Arabica coffee cultivated in certain geographic regions, an aspect that makes changing prices among suppliers moderately lower. With regards to Starbucks scale and size, it is in a position to benefit from its suppliers, though it retains a fair trade licensed coffee based on the coffee and farmer equity plan, which presents the suppliers with a fair alliance position that in turn presents moderate low bargaining power. Further, vendors in this industry pose a lower threat to compete with Starbucks through vertical integration that reduces their power. Again, Starbucks has a vital component of suppliers that reduces their power. For that reason, suppliers cause moderate low bargaining power.
Bargaining power of buyers
There are many purchasers. However, none of them can demand price consideration. They offer vertically differentiated goods with a different client base that make moderately low purchases that reduce buyers’ power. Although, there is no changing price due to the significant availability of substitute products, Starbucks costs are determined by current market conditions. On the other hand, clients have a modest sensitivity to premium coffee since they pay highly for quality brands. However, they are careful of exorbitant rates with regards to quality (Porter, 2008).
Competitive rivalry
This industry is associated with monopolistic competition, where Starbucks has the biggest market share while its close rivals have a considerable share in the market, thus provide great pressure on Starbucks. On the other hand, clients incur the cost of changing to other stores hence create intense competition. However, Starbucks retains competitiveness because of differentiation causing moderate rivalry (Porter, 2008).. The retail coffee and snacks industry is not only mature but also growth rate is moderately low causing intense competition among firms to moderately significant as they all aim at increasing market share from well-established organizations. Nevertheless, the sector has no over capacity, making the level of rivalry to being moderately high.
Implications, Threats, and Opportunities of Porter’s Five Forces
According to the Porter’s Five Forces Starbucks have opportunities and threats. The firm’s main threat is intense competition from Dunkin. This is because Dunkin Brands has a market share of 24.6% compared to Starbucks’ 36.7% (IBIS, 2013). There is a somewhat significant barrier since new entrants that try to differentiate their brands from Starbuck’s brand quality, strategic regions, and store setting. Also, Starbucks has a substantial size as well as degree, providing them easy access raw material and learning curve benefit. With regards to Starbucks scale and size, it is in a position to benefit from its suppliers, though it retains a fair trade licensed coffee based on the coffee and farmer equity plan, which presents the suppliers a fair alliance position that in turn presents moderate low bargaining power (Hoovers, 2010).
Detailed Value Chain Analysis: Internal Environment
Value chain analysis
The value chain is a logical structure that is important when it comes to identifying the firm’s operations that can generate value as well as competitiveness (Garza, 2010). Value chain analysis includes inbound logistics, operations, outbound logistics, marketing and sales, and services. Starbucks value chain is illustrated below;
Primary Activities
Inbound logistics: in 2010, Starbucks supply chain management (SCM) was remarkably modified following the return of Howard Schultz as the chief executive officer due to the worldwide economic slump. The modification of the firm’s inbound logistics entailed simplifying SCM and development of a distinct, global logistics network (Hamel & Prahalad, 2005). Arabic coffee beans are imported from Africa, Latin America, and Asia to Europe and the United States through the sea. They are delivered to the firm’s regional distributions. After which this coffee is roasted then supplied to main distribution centers across the globe. In addition to coffee from regional distribution hubs, the main distributions get deliveries from suppliers for a variety of brands such napkins and coffee appliances. Main distribution hubs produce over 70,000 deliveries weekly to various Starbucks stores in more than 62 nations (Starbucks, 2013). Nevertheless, in the recent past, the firm has been searching for opportunities to cultivate its coffee beans. In particular, since 2013 has about 240 h coffee ranches in Costa Rica. This change in sourcing for the raw material may tremendously enhance the efficacy of brand development for the operation because Starbucks gets the opportunity of testing news coffee types.
Operations: the firm operates in about 62 nations in two systems namely firm operated and certified. In 2014, the firm had about 10,713, and 10,653 firm-operated, and certified stores respectively. The company increased the value of its operations through provision free internet access to the stores. Furthermore, Starbucks operation segments are categorized into five areas;
| Segment | Revenue share (%) |
| US, Latin America, and Canada | 73 |
| Asia Pacific | 7 |
| Africa, Europe, and the Middle East | 8 |
| Channel development | 9 |
| Others | 3 |
Outbound logistics: clients can buy the firm’s brands from certified as well as firm-operated stores. Also, they can use online services for particular brands, including drink-related devices, tea, and packaged coffee among others (Wheeler, Colbert & Freeman, 2003). Again, individual products can be purchased from leading supermarkets such as Tesco and Wal-Mart. Marketing and sales: previously, Starbucks did not invest in marketing its brands. Word-of-mouth was widely used marketing strategy this involved quality offerings as well as customer services. Nonetheless, the intense competition encouraged executives to reevaluate the marketing technique as such; the company budget has continuously been going up in the last five years to reach about $315.5b in 2014 (Garza, 2010). The money is invested in different parts of print and media promotions, events, direct marketing, and public relations.
Services: Starbucks primary source of competitive edge is good customer services, an aspect that increases value to its product image. The firm’s customer services are pleasantly polite and address regular clients by names. Seldom, regular clients can get their preferred brands for free based on customer service discretion, an indication of good gesture, which in turn adds the awareness of outstanding services to a great degree. Additionally, following the increasing hectic lifestyle, the company spends time assessing as well as enhancing ways on effectively matching their clients’ speed needs-providing tailor made beverages in a few minutes. Starbucks utilizes differential strategy. The firm aims at thwarting its rivals; as such MacDonald, Dunkin. Starbucks has been successful in standardization and enhancing the economies of scales.
Enterprise Level Strategy
Enterprise level strategy governs the whole company while aligning the firm with stakeholders. Starbucks monitors its workers so as to ensure quality products that meet clients demands. Some of its stakeholders include customers, employees, investors, suppliers, the environment and the government. In addition, the firm greatly values its employees since they are the people that help the company to survive. Mission statement: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” This demonstrates some of the things the firm implements or embraces to survive in the competitive sector. In any case, Starbucks mission statement not only nurtures and inspires but also reflects the aspect of one individual, one cup and one neighbor (Starbucks, 2011).
Vision: to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” This vision reflects various aspects including finest coffee globally, growth, inflexible principles, and premier purveyance (Starbucks, 2011). Starbucks mission statement and vision demonstrate the platform upon which the company uses to increase its value and offer a return on investment for its stakeholders. The company uses differentiation strategy to fulfill the demands of its mission statement and vision, hence supporting their stakeholders’ values.
Organizational Culture Type
The company has a strong organizational culture that revolves around ethical as well as responsiveness to clients’ demands. It is obvious that Starbucks has loyal customers who are satisfied with products they buy. On the hand, the company provides long-term benefits for its workers. Starbucks strives for cohesive teams and developing strong links in a bid to create unity.
Customized Value Chain of Activities in Table Form
Table 1: Value Chain Analysis
| Business Process | Starbucks | Dunkin | Macdonald |
| Management | operates both centralized and decentralized | Centralized management | Same management structure as Starbucks. |
| Inbound logistics | Modified SCM | Unique niche for acquiring organic ingredients from local farmers | Strengths:
• Economies of scale – Pass value to clients (such as $1 menu) |
| Operations | operates in about 62 nations | Has a global presence | operates in 32,000 restaurants globally in 118 nations |
| Outbound logistics | Certified as well as firm-operated stores. | Tracks the movement of finished goods | Strength: strengthened Information Systems
|
| Sales | High volume of sales | Strategic marketing to attract customers | Strengths:
•Product – Health and wellness promotion & product – customer and market research |
| Service | Good customer services | Quick-service restaurants boast particular characteristics that in turn enhance the number of clients | Strengths:
• Fast food service • Order accurateness |
Implications of Competitive Analysis
Strengths
Some of the organization’s strengths include; a modified supply chain management (SCM). The modification of the firm’s inbound logistics entailed simplifying SCM and development of a distinct, worldwide logistics network (Hamel & Prahalad, 2005). Arabic coffee beans are imported from Africa, Latin America, and Asia to Europe and the United States through the sea. Main distribution hubs produce over 70,000 deliveries weekly to various Starbucks stores in more than 62 nations (Starbucks, 2013). Because the firm operates in about 62 countries it had about 10,713 and 10,653 firm operated and certified stores respectively (Starbucks, 2013).
Weaknesses
The intense competition encouraged executives to reevaluate the marketing technique as such; the company budget has continuously been going up in the last five years to reach about $315.5b in 2014 (Garza, 2010). The money is invested in different parts of print and media promotions, events, direct marketing, and public relations.
Skills
The firm has been searching for opportunities to cultivate its coffee beans. In particular, since 2013 has about 240 h coffee ranches in Costa Rica (Starbucks, 2013). This change in sourcing for the raw material may tremendously enhance the efficacy of brand development for the operation because Starbucks gets the opportunity of testing news coffee types.
Capabilities
Starbucks main source of competitive edge is good customer services, an aspect that increases value to its product image. The firm’s customer services are pleasantly polite and address regular clients by names. Seldom, regular customers can get their preferred brands for free based on customer service discretion, an indication of good gesture, which in turn adds the awareness of outstanding services to a significant degree (Carlisle & McMillan, 2006).
Detailed SWOT Analysis
SWOT Factor Matrix
SO strategies
The robust market presence and worldwide product recognition: the firm has stores in different regions with a market share of 36.7% in the US and operates in more than 60 nations (Starbucks, 2013). In addition, Starbucks is a leading product when comes to coffee segment and in 2013 it was among the recognized brands worldwide (Mintzberg, 1994). The company leverages its brand through merchandise and certifying its product emblem out. The robust market presence and product recognition enable Starbucks to gain a considerable competitive edge in the expansion in global markets while recording high growth. For years, the company has realized economies of scale with advanced delivery networks and suppliers.
High-quality products: the company concentrates on quality product delivery and prevents standardization of its quality even with significant production.
Location and appeal of Starbucks stores: Starbucks has located its stores in primes as well as strategic locations worldwide. Starbucks target high-traffic areas, premium and visibility regions close to various neighborhoods such as retail centers, learning institutions, downtown and certain rural locations globally. A move that has earned Starbucks an excellent capability and ability to expand in prime regions and meet clients convince. The stores are also visually attractive with a cool element to reflect the distinct feature of settings they operate in. The firm offers free WiFi, good music, quality services and an excellent place for people to meet that forms a larger component f the” firms experience” the key goal for Starbucks is making their stores a “home” to its customers. The use of technology and mobile channels such as Starbucks apps helps the company to leverage successfully and support its growth on a yearly basis (Plowman et al., 2007)
Human resource management: The Company is recognized for highly knowledgeable workers. They form the principal assets of Starbucks as such they are offered great benefits including healthy practices, retirement plans, and stocks. This move transforms to exceptional client services. It was ranked 91 out 100 good firms for one to work with. Goodwill among customers as a result of CRS: Starbucks stores are friendly, focus on recycling and waste reduction. The company also develops support in communities they function. Client base loyalty: The firm has a massive customer base, and they have executed loyalty initiatives such as Starbucks Cards and Reward strategies. The Card is an initiative that presents convenience, gifting and enhance card-holders regularity to the stores.
ST strategies
Intense competition: this primary threat the firm experience from Costa Coffee, Dunkin Brands, McDonalds among others. Because the coffee market has a market, this puts pressure on the organization. Starbucks main competitor in the United States market is Dunkin Brands with a market share of roughly 24.6% (Hoovers, 2010). Cost instability in the international coffee market: substantial price changes in the market for high-quality coffee beans, has been challenging for Starbucks because it is in a position to control.
Market saturation in developed economies: the firm generates substantial revenue from developed markets that are currently facing congestion. On developed economies, a financial crisis like 2008 may influence the developed markets upon which Starbucks depends on. This would considerably affect the profit margins of Starbucks as clients shift from premium products as they spend less during the financial crisis. Growing client preferences and lifestyles: the customer shift to more health choices and the threats associated with coffee affect Starbucks revenue.
WO strategies
Expansion in the new emerging market: The high diffusion, as well as reliance on the American market, makes Starbucks global strategy further imperative. Also, the company developed high-quality inroad in various nations, and in the recent past, India has joined the list through the entry of an enterprise. The firm has a substantial growth potential in the expansion of emerging and new markets. This allows Starbucks to leverage its size, experience, financial health and effectiveness in making new market share.
Broadening brand mix and offerings: in the recent times, Starbucks has begun expanding its product mix by offering teas as well as fresh juices using a smart acquisition approach. They provide considerable opportunities for the firm (Hitt, Ireland & Hoskisson, 2009). Increasing retail operations: the company sells the packaged coffee, iced beverages through large retailers. This segment’s ability is not yet fully realized as such presents Starbucks the opportunities for future monetization of their offerings. Technological development: the firm has implemented mobile devices/apps and partnered with Square a mobile payment platform, which is incorporated with Starbucks app. Such developments allow clients to use the procedure efficiently, aligning client loyalty using reward plans. In reality, Starbucks is ahead of its rivals, and roughly 10 percent of the transactions in the United States have been done using mobile apps. In any case, this is a growing area and likely to drive clients to their shops at the same time as technology progresses.
Delivery channels: the company has initiated a beta edition of distribution network commonly called Mobile Pour. This presents substantial future opportunities by increasing the delivery of products and likely to drive profits if executed.
Product extension: the firm has a strong product image, which can be leveraged to extend horizontally of its operations and venture in brand diversification. This guarantees that dilution risk associated with the brand is monitored.
WT strategies
Costly products: Whereas Starbucks differentiate its brands especially during the economic slowdown; clients have a switch to rivals with cheaper products. The high costs can also lead to certain weaknesses especially in developing nations (Plowman et al., 2007). Self-cannibalization by congestion: Aggressively expanding and saturation as a result of congestion in the market contributes to cannibalization and reduces the company’s sustainable growth objectives. This occurs primarily in the US where the firm has over 8,087 stores (Starbucks, 2011).
Over-reliance on US market: With regards to self-cannibalization of the American market, the firm gets a significant percentage of its revenue from the United States making it’s susceptible prospect to the financial system as well as growth. Adverse great firm image: just like any big establishment, the firm is under augmented inquiry and has to invest in CSR while maintaining mechanical control of employment practices. Consequently, Starbucks product culture may fail to be accepted in certain nations as part of global development (Wheeler, Colbert, & Freeman, 2003).
Key Success Factor Analysis
Differentiation has been at the center of Starbucks main strategy. The company offers differentiators like quality product mix, places, coffee drink repute and superior clientele support that led to the creation of a quality product that is costly to emulate for competitors. The company has also followed an intelligent approach to the strategic alliance in making brilliant acquirements. Instead of embracing the franchise model, Starbucks chose to operate stores and joint ventures in the global sphere (Clark, 2007). Starbucks made considerable acquirements like Teavana (Tea products), Bay Breads (quality bread), and Evolution Fresh (fresh products) as diversification model. Moreover, the company’s acquisition methodology leans towards horizontal, product and market acquisitions. Global strategy has been the other critical methodology for Starbuck’s progression when expanding into some of the developed markets and also emerging one, to geographically differentiate. The approach has been a great accomplishment with operation spanning sixty nations. Collectively, these strategies have offered Starbucks competitive edge against its competitors (IBIS, 2013).
Starbucks (Financial) Performance Analysis:
A close look at a 6-year period ratio and growth review of Starbucks financial performance from 2008 to 2013 demonstrates that the income development of the organization plummeted -5.9% during the 2008/09 economic slump (Starbucks, 2011). However, the company made significant growth in earnings from 2010 to 2013 had a growth rate of 13.7% in 2012. Starbucks made revenues amounting to $14.9b in 2013 (Starbucks, 2013). The running income has escalated substantially from 4.9% in 2008 to fifteen percent in 2012. Conversely, in 2013, Starbucks generated a loss -2.2% that stemmed from the legal penalty of USD 2.8b to Kraft Foods after terminating the agreement. The penalty should be regarded as odd and therefore not be reduced from the strong general functioning of Starbucks. The company’s return on equity (ROE) and return on asset (ROA) were remarkable in 2012 with 29.2% and 17.8% in 2012 (Starbucks, 2013).
When considering Starbucks competence rates, the company has achieved significant operation with significant asset inventory revenue ratios with a low of 1.51 and 5.4 correspondingly for 2013. Regarding cash exchange, the company increased to 54.7 in 2013, and this is where Starbucks ought to focus on reducing to enhance higher proficiency. The company’s general financial health is remarkable with reduced debt/leverage at an equity ratio of 0.29 for 2013 (Starbucks Company Profile, 2011). The firm has decent current as well as quick ratios.
Analyzing the Company Strategy Type
Starbucks utilizes a multi-faceted strategy (Starbucks, 2013). This strategy entails different strategies that are incorporated into an interrelated one so as to ensure that the company is sustainable. In the multi-faced strategy, Starbucks has a differentiation strategy or diversification that is important in providing various brands that diverse regarding price or characteristics, aspects that present competitiveness for the organization (Starbucks, 2013). Other strategies Starbucks utilizes are functional approaches that customized for particular departments across the organization like logistics; operations; marketing and sales; human resources among others (Starbucks, 2013). The practical strategy aims at presenting the roles of a certain department to set objectives, action plan, and the overall mission of the company.
The multi-faceted approach enables Starbucks flexibility, sustainability and expand globally with a particular emphasis now on Asia and emerging economies. The multi-faceted strategy deploys allow the organization to embrace system thinking philosophy within Starbucks transformation expansion of global market that embedded system thinking process within its action plan for diversification; and this allows various stakeholders being part of the whole system that influences decision- marking (Stacey,2011). These interactions between different functions of Starbuck’s operation enables successful transformation into the global coffee market, from serving one cup one person in a neighbor heritage to a leader in this industry also unveil Starbucks’ adapt the system thinking actions. The embracing of the system thinking in Starbuck’s organization is apparent in a way that those reviewing the organization heritage, examine the system as a whole that includes themselves as part of the organization’s system and potentially contribute to the problem and determine solutions to foster change as a team.
Action Plan Analysis
The action plan presents strategic objectives while identifying the phases needed to accomplish those (Hamel & Prahalad, 2005). The action plan also integrates a timeline to help in assessing its effectiveness. For action plans to be valuable, the assessment process should identify the measurement of success, which should regard as benchmarks,(Starbucks, 2013). Once that complete, the company should repeatedly monitor the progress and assess it against pre-set criteria. Despite proof of success, it is obvious that a franchise strategic plans in the Starbucks diversification strategy is needed. That plan has not been part of the diversification strategy and ignored in the past (Starbucks, 2013). It also suggests the need for launching a new menu embarked, which, will entice non-consumers taste for coffee products and offers varieties of taste to accomplish the target Asia market for establishing 1000 shops (Starbucks,2013). That franchise plan embedded in the diversification plan will enable Starbucks timely accomplish the target1000 coffee bars target before a new entrant’s disruptor activities emerges. The assessment of accomplishments presents proof of success (Starbucks, 2013).
| Action
|
Roles
|
Timeline
|
Resources & objectives
|
Potential obstacles
|
Communication Plan
1. People involved
|
| Phase 1:
Retail importance
|
Corporate
Executive management workers |
2015-2017 |
|
|
|
| Phase 2:
Modify Value Chain |
Corporate
& Regional branches |
2015-2017 |
|
|
|
| Phase3:
increase Market Share from 34%-40%
|
BOD
Executive Officer
|
2015-2017 |
|
|
|
Sustainable Solution Paper on Starbucks Organization Conclusions
Starbucks incorporates their vision and mission and investor values into their organizational level approaches, business methods and functional approaches in a bid to ensure sustainability. Starbucks embraces modern technology and innovative approaches across their value chain, in an attempt to clamp down weaknesses and enhance the company’s strength. Some of the strategies that have been used: value chain assessment, general forces analysis, porter’s five force model, key success factors, action plan analysis, (boid analysis and evolution industry strategy). Ultimately, Starbucks recognizes the need for social obligation, an innovation that enhances quality and the sustainability aspect of the organization and embrace system thing process throughout transformational agenda for global expansion.
Sustainable Solution Paper on Starbucks Organization References
Carlisle, Y., & McMillan, E. (2006). Innovation in organizations from a complex
Adaptive systems perspective. Emergence: Complexity and Organization, 8(1), 2-9.
Clark, T. (2007). Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture, Little, Brown and Company, New York.
Garza, George, (2010). “The history of Starbucks.” Catalogs.com. Catalogs.com, n.d. Web. Accessed November 8th, 2015.
Hitt, M., Ireland, R., Hoskisson, R., (2009). Strategic Management: Concepts & Cases, Cengage Learning.
Hamel, G., & Prahalad, C. K. (2005). Strategic intent. Harvard Business Review, 83(7-8).
Hoovers. (2010). Starbucks Corporation, Company Description.
IBIS World (2013). The Coffee & Snack Shop Industry in the US Report, October 2013.
Kaplan, R. S. & Norton, D. P. (2008). Mastering the management system. Harvard Business Review, 86(1), 62-77.
Lichtenstein, B. B., Uhl-Bien, M., Marion, R., Seers, A., Orton, J. D., & Schreiber, C. (2006). Complexity leadership theory: An interactive perspective on leading in complex adaptive systems. Emergence: Complexity & Organization, 8(4), 2- 12.
Mintzberg, H. (1990). The design school: Reconsidering the basic premises of strategic management. Strategic Management Journal, 11(3), 171-195.
Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard Business Review, 72(1), 107-114.
Morçöl, G. (2005). A new systems are thinking: implications of the sciences of complexity for public policy and administration. Public Administration Quarterly, (3), 297-320.
Plowman, D. A., Baker, L. T., Beck, T. E., Kulkarni, M., Solansky, S. T., & Travis, D. V. (2007). Radical change accidentally: The emergence and amplification of small change. Academy of Management Journal, 50(3), 515-543.
Porter, M. E. (1996). What is the strategy? Harvard Business Review, 74(6), 61-78.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93.
Senge, P. M., Lichtenstein, B. B., Kaeufer, K., Bradbury, H., & Carroll, J. S. (2007). Collaborating for systemic change. MIT Sloan Management Review, 4
Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2010).The Necessary Revolution: How individuals and organizations are working together to create a sustainable world. New York, NY: Doubleday.
Stacey, R. (2013). Strategic management and organizational dynamics: The challenge of complexity (Laureate Education, Inc., custom ed.). Essex, England: Pearson Education Limited.
Starbucks (2013). 10-K Form for FY ended on September 29th, 2013
StarbucksCompanyProfile (2011).Available at http://assets.starbucks.co.uk/assets/aboutus- companyprofile-q1-2011-final-3-8- 11.pdf Accessed November 8th 2015.
Wheeler, D., Colbert, B., & Freeman, R. E. (2003). Focusing on value: Reconciling corporate social responsibility, sustainability and a stakeholder approach in a networked world. Journal of General Management, 28(3), 1-28.
