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De Wit and Meyer (1998) refer to market tendency towards homogeneous variety and tighter international linkages as globalization. The need for global strategy is outlined by the fact that companies are subject to global forces and consumer demands. As a consequence, firms are faced with a challenge of modifying their existent strategies to gain and sustain their competitive advantage in a rapidly changing environment. A well-designed global strategy can help a firm to gain a competitive advantage, that as identified by Sumatra Ghosh al of INSEAD can arise from Efficiency, Strategy, Risk, Learning and Reputation (Appendix 1). Therefore, to create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition. I would like to proceed with my analyses of the global market place, with examination the young but already well recognized brand world wide Starbucks.
In my research I will explore on changes in the product, operations, and strategies at Starbucks influenced by the changes in the global marketplace. Due to word limitation on the essay, please refer to Appendixes for more detailed information. Starbucks Corporation "There is untapped potential to grow our company internationally, " Schultz said. Headquarters: Seattle, Washington web Ownership: Starbucks is publicly traded -- shares are widely held 150 million shares have been authorized, of which 59. 6 % are on the market. History: Howard Schultz, 42, is the founder of the Company and has been chairman of the board and chief executive officer since its start in 1987. The Company originated with eleven Seattle stores and less than one hundred employees.
Since them the company has grown to a half billion-dollar company serving millions of cups of coffee per week in one thousand stores throughout the country, and in 17 countries internationally. Schultz believes his company will succeed well into the twenty-first century. He states, "One of the things that you can't measure on a balance sheet or on a financial statement is the soul of Starbucks. " The Company holds approximately 39 federal trademark registrations in the United States. They have approximately 44 additional applications pending in the U.
S. The Company currently owns one patent in the U. S. for its coffee on tap system and has several patent applications pending.
Starbucks prides itself on being a "good citizen" locally and in the various coffee producing countries. They make significant contributions to local charities that focus on children, the environment, the homeless, and AIDS research support. Operations structure: The Company is organized into a number of business units. The Company s North American retail business sells coffee beverages, whole bean coffees and related hardware and equipment through Company-operated retail stores in the United States and Canada. The Company s international retail business consists of entities that own and operate retail stores abroad.
These two retail segments are managed by different presidents within the Company and are measured and evaluated separately by senior management. The Company operates through several other business units, each of which is managed and evaluated independently. These other business units are organized around the strategic relationships that govern the distribution of products to the customer. These relationships include retail store licensing agreements, grocery channel licensing agreements, wholesale accounts, joint ventures and direct-to-consume marketing channels. Revenues from these segments include both sales to unaffiliated customers and inter-segment sales, which due to annual report are accounted for on a basis consistent with sales to unaffiliated customers.
Starbucks and its subsidiaries ("Starbucks" or the "Company") include Starbucks Corporation and its wholly owned subsidiaries: The Coffee Connection, Inc. ("The Coffee Connection"), Starbucks New Venture Company ("Starbucks New Venture"), Starbucks Coffee International, Inc. ("SBI"), Starbucks Holding Company. (Appendix H) Product: Starbucks Corporation and its subsidiaries buy and roast high quality whole coffee beans. To insure high quality of the product, Starbucks built three roasting plants of his own, where highly trained and experienced personnel monitors roasting of beans (Appendix C). Quality standards are so high that entire batch is thrown away after testing if qualifications differ from acceptable standard. Later beans are sold in primarily company-operated stores along with fresh, rich-brewed coffee, Italian-style espresso beverages, decaffeinated beverages, cold blended beverages, variety of pastries and confections, coffee-related accessories and equipment, and a line of premium teas. Retail sales brake down is roughly 61 % coffee beverages, 15 % whole-bean coffees, 16 % food items, and 8 % coffee-related products and equipment. Product mix varies with the size and location.
Starbucks sees its success sustainability in constant development of its products to bring new experiences and ideas to loyal customers of their cozy coffee-empire, (Appendix B). High quality of a product that will appeal to coffee lovers around the world is Starbucks main consideration. Marketing and Product Design: A branding strategy must work well with marketing strategy. Starbucks sells a lifestyle, to customers and employees alike (Appendix E). It has learned from the experience of Pepsi and others to link its brand to new trends. Therefore Starbucks's unless could be attributed to objective to meet their customers needs and innovate new product offerings.
Selecting a marketing strategy based on a product mix is a key to Starbucks success. Coffee is the second most traded commodity in the world. As a result, Starbucks is forced to adopt a high product differentiation strategy. Product differentiation defined by branding a product and marketing it effectively to target audience. This strategy differentiates company from the competition, making its product unique, targeting quality, service, and price conscious customer.
Starbucks' distinct branding strategy involves creating a coffeehouse as a place inspiring customers to socialize. As they managed to set up design teams to constantly innovate and create better product and store designs (Appendix D). However, expansion is also beginning to conflict with brand image. The danger with an extensive product mix is a weaker brand image. Strong competition is always a threat to the company's target market and thus even with a branding strategy, coffee is an easy substitute if other companies get serious with their own promotion. Starbucks cannot exclude from others their ability to walk into any store, study its layout, atmosphere, and product range, and copy the coffee bar concept.
Thus the highest value-added element of the Starbucks formula is not excusable. It is also hard to charge a premium for coffee if customers can pay less for the same amount of caffeine and comfort just down the street. Similarly, to compete on costs Starbucks needs a flexible workforce with low wages and every danger of staff being poorly motivated, it is hard for such firms to cultivate customer-friendliness. As a result, Starbucks' has long emphasized human-resource policies (Appendix E). So in order to distinguish themselves from other coffee makers, Starbucks must continue to transmit a strong corporate identity with their customers. After all, customers that come to their retail stores are the primary source of Starbucks revenue.
Starbucks is brand name sensitive, and is seeking to develop partnerships with companies who share their same commitment to quality. Kraft is a partner to Starbucks marketing strategy. Kraft handles distribution, marketing, advertising, and promotion for Starbucks. They distribute products to the grocery, warehouse, and other outlets.
Starbucks retail stores are usually located in high-traffic locations and high visibility areas. To reduce risk of failure and economic fluctuations properties for the stores are leased. Brand name recognition of Starbucks therefore comes from people being frequently exposed to it. As a result, Starbucks carefully selects their market and store locations.
Competition: Industry ranking as of April 1, 1999, particularly having coffee products: Company Name STARBUCKS CORP: FARMER BROS CO: CHOCK FULL O NUTS CORP: GREEN MTN COFFEE INC: COFFEE PEOPLE INC: BROTHERS GOURMET COFFEES INC Market Capital ($ 000) $ 5, 335, 000 $ 395, 000 $ 64, 000 $ 21, 000 $ 21, 000 $ 2, 000 The companies above mainly roast, pack and distribute coffee. Their core material: green coffee beans. Farmer Brothers sells to hotels, restaurants, and fast food outlets. Chock Full O Nuts is the fourth largest in this industry. It presents instant and specialty coffees such as La Touraine and Cain's. Green Mountain's profile mentioned the two distribution channels it is focused on - wholesale and direct mail.
Like Starbucks, Green Mountain considers growth with brand recognition and availability of its products. With 246 franchises so far, Coffee People is the second largest distributor of specialty coffee. Coffee People recently ventured with Gloria Jean...
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Research essay sample on Starbucks Corporation Coffee Beans
