Compare and Contrast Starbucks Frameworks to Analyze Global Business Operations
Enhancing customer experience through Innovation
Starbucks has been on the forefront to innovate as the only way for the company to
acclimatize with its local environment. This has been very successful for the company to
penetrate China. The company is taking advantage of the decentralized ecommerce in China to
craft an experience that blends its store and digital space. Through mergers and acquisitions,
Starbucks has been exploring the likelihood for exceptional digital innovations. With a B2C e-
flagship store in Alibaba, the company has the capability to offer social prizes to clients in China
(Das, Eisner & Korn, 2015).
Capturing the Indian Market
The exponential growth of the Indian economy presents Starbucks with enormous
prospects with respect to the budding middle class with the highest disposable income. Despite
intense competition in India, the company has partnered with Tata Global Beverages to jostle for
café market valued at $1.1 billion (Elder, Lister & Dauvergne, 2014). Apart from packaged
products, the company intends to introduce “Teavana,” one of its tea brands to India. The fact
that India is largely a tea-drinking nation, the introduction of Teavana in India could help
Starbucks amass a considerable market share. While company’s mobile order and pay will help
enhance retail services by cutting down long queues, it will offer the company a competitive
edge.
STARBUCKS BUSINESS STRATEGY
Evaluate an organization’s internal and external environment and competitive position.
External Environment
1) Political：
Starbucks has been able to penetrate countries like China that were previously closed to the
world. While globalization shattered trade barriers, this has attracted international trade and
investment.
2) Economy:
The economic boom in China has brought about new markets for Starbucks an aspect that gives
the company the prospects for exponential growth.
3) Social:
The lifestyle change in China has many prospects as far as coffee drinking is concerned. A report
by Mintel Inc shows that the annual sales of coffee in China are 30 percent. Nonetheless, the
current inflation and CPI being witnessed in China may lead to high costs, an issue that may
have a negative impact on sales.
4) Technology:
Because the coffee technology is not engineered in China, this gives Starbucks a competitive in
terms of technology.
STARBUCKS BUSINESS STRATEGY
Internal Environment
SWOT:
Strength
1) The company’s name and brand value is its strength
2) Employees give clients a superior experience
3) The company is responsive to customers
4) Productivity is rather high
Weakness:
1) The failure by a merchant or supplier to meet standards, offers products in a way that is
prompt and proficient and in tandem with applicable statutes beyond control.
2) Differentiating the development platform and start the packed coffee business may
terminate the significance of the brand.
Opportunities
- The economic conditions in India and China provided a platform for the company to
enter the market and increased its profit margin. - Another opportunity is the coffee culture that prevails in developing nations.
Threat
- Increasing cost and decreased availability of quality Arabica coffee beans
- Economic recession that contributes to reduced demand for coffee products
- New entrants in the coffee sector that lead to increased competition
- Fluctuation in foreign currency
STARBUCKS BUSINESS STRATEGY
Competitive Position
Starbucks operates among the most companies. Coffee sector fragmented. Starbuck’s
rivals for coffee include specialty coffee and quick –service shops like Costa and Nestle. Nestle
has adopted low pricing started to attract clients, which poses great challenge on Starbucks
(Paharia, Keinan & Avery, 2014).
Bargaining Power of Consumers
Consumers have low bargaining power. Their choice for Starbucks is based on
comfortable environment, quality products and services rather than cost.
Bargaining Power of Suppliers: Low
Bargaining power of supplier is low since the firm is dominant in its operations. The
amount of beans required is huge; therefore Starbucks is strict with quality and can reduce the
cost.
Substitute Products
Alternative products to coffee are soft drinks including juice, soda, tea and so forth. A
few years ago, the company acquired Evolution Fresh to meet the needs of Asian clients. As
such, substitute products and no effect on Starbucks (Paharia, Keinan & Avery, 2014).
Vision and Mission; Company Overview
Company Overview
Starbucks began in 1971, as a roaster and retailer of ground coffee in Pike Place Market,
Seattle. In addition, the firm’s logo is inspired be the sea with a twin-tailed siren. Currently, the
company have over 24, 000 stores in 70 nations across the world.
STARBUCKS BUSINESS STRATEGY
Starbucks offer the finest coffee internationally, prepared and severed by the finest
individuals (Paharia, Keinan & Avery, 2014). The firm’s workers or partners are the main
competence of firm’s experience. Moreover, the company offers a variety of products including;
Coffee; over thirty blends as well as unique-origin coffees
Beverages such as teas, iced and hot espresso, Frappuccino coffee and non-coffee blends,
smoothies and Starbucks Refreshers.
Merchandise like tea and coffee making tools, cups, books and packaged goods
Fresh food such as sandwiches, salads, oatmeal, fruit cups and pastries
Consumer products like ready-to-drink (RTD) such as energy Coffee drinks, Evolution
Fresh and Starbucks Double shot (Paharia, Keinan & Avery, 2014).
The company’s mission is inspiring and nurturing human spirit- “one person, one cup and
one neighborhood at a time”. The firm’s vision statement is establishing Starbucks as the
premier purveyor of quality and finest coffee globally and ensuring uncompromising values.
STARBUCKS BUSINESS STRATEGY
References
Das, D., Eisner, A. B., & Korn, H. J. (2015). TATA Starbucks: how to brew a sustainable blend
for India instructor’s notes. Journal of the International Academy for Case Studies, 21(4),
43-50.
Elder, S. D., Lister, J., & Dauvergne, P. (2014). Big retail and sustainable coffee: A new
development studies research agenda. Progress in Development Studies, 14(1), 77-90.
Paharia, N., Keinan, A., & Avery, J. (2014). The upside to large competitors. MIT Sloan
Management Review, 56(1), 10-11.
