Starbucks Company: Strategic Analysis and Solving Problems

In 1982 Howard Schultz recognized an opportunity to develop a chain of retail coffee bars based in Seattle. In 1985 the first Starbucks coffee bar was opened in America serving latte and specially introduces Christmas blend. Today, Starbucks is a world-renowned brand that has 20 000 stores in 63 countries (Case Study 396). For better access, Starbucks stores are placed in locations with a lot of mobility, which adds to the popularity of the stores. Besides, to expand brand awareness, Starbucks employs a new strategy of placing the stores outside of the traditional urban markets to cover rural areas.

Moreover, to become accessible for non-pedestrian customers, Starbucks creates a chain of drive-thru retail stores. To provide higher brand visibility, Starbucks partners with a number of grocery stores and supermarkets such as Walmart and Target so that they sell the most popular products of Starbucks to its customers. In the case study, Starbucks’ expansion strategy is criticized for its “clustering” character (Case Study 396). Basically, at the end of the 1990s and beginning of the 2000s, Starbuck started to crowd its retail stores all over the United States.

The stores often were placed literally on every corner, sometimes even in groups. Such a strategy put many smaller coffee bars and stores out of business. After receiving a lot of criticism in the United States, Starbucks rationalized its unit placement, reduced the number of open stores, and transferred the focus towards the international market where there still was a lot of unconquered territories. Besides, to remain competitive, Starbucks developed a number of new products to be able to please customers with various tastes.

The company has launched a variety of projects directed at the improvement of taste of coffee they sell, creation of the new blends, and the development of new techniques of roasting of coffee beans. The company is aware that customer satisfaction and service are the main competitive advantages they should be focused on. As a result, Starbucks maintains a sustainable customer-centered approach. For example, the company has its own mobile app, and a Starbucks Card that makes the interactions between the customers and the retailers easier creates customer loyalty helps to develop a system of bonuses for the active clients.

Besides, Starbucks constantly monitors the needs of the customers and provides convenience. For example, the company is planning to include the calorie information in their menus to allow the buyers to be aware of their wellness choices. When it comes to the corporate culture of Starbucks, this company is officially recognized as one of the best places to work (Case Study 398).

The company has strong ethical values that can be hard and expensive to maintain at times, yet, its leaders are convinced that it is better to deal with occasional losses than to give up the core principles corporate ethics is based on at Starbucks. Compensation packages of the Starbucks employees include dental, vision, and medical benefits as well as stock options opportunities.

SWOT analysis

Strengths

  1. Recognizable brand which has a strong position in the world’s market due to its reputation and popularity. Starbucks has been working on the creation of brand experience for decades. This has brought rather tangible results. In the majority of the world’s countries, the customers would prefer buying Starbucks coffee to any other brand just due to its world-renowned image and well-built reputation
  2. Pleasant in-store experience for the customer. Starbucks has made the customer experience its main focus. This way, the stores are made comfortable and nice to stay at. Customers enjoy visiting Starbucks, relaxing there with a cup of coffee and a muffin.
  3. Accessible location of the stores. Starbucks stores are easy to reach for the pedestrians and drivers, they are placed in the busiest urban areas with high mobility which provides a lot of clientele for the company.
  4. Strong corporate ethics and pleasant working conditions for the employees.

Weaknesses

  1. High prices for the products. Starbucks is known to sell some of the most expensive coffee products in the market, which drives away middle class and low-income customers that compile a very large portion of the population in the majority of the world’s countries.
  2. 2. Specialization on the American culture. Starbucks is the product of the American culture, it carries specific views that often do not match the perspectives of other cultures (Geereddy 4). For example, the countries of the Middle East have their own traditions considering drinking coffee, and countries in Asia prefer tea.
  3. Large corporation impression. Starbucks is a huge global company operating all around the world. The common social perception of such corporations as soulless and greedy moneymakers works against the brand.

Opportunities

  1. Addition of new core products. Starbucks is specialized as a coffee retailer, yet it may gain a lot of revenue starting to sell other products such as tea, milkshakes, or juice.
  2. Expansion to the international market. The process of globalization encourages the development of a large corporations. The company can penetrate new markets, as it did with India (Geereddy 5).

Threats

  1. A shift of consumer preferences. Coffee is extremely popular today, but this fashion may change at any time and create a serious threat to the popularity of Starbucks.
  2. Another recession. The last recession of 2008 affected Starbucks a lot because expensive coffee drinks rapidly lost their popularity at that period.
  3. The resistance to the new markets the company is trying to penetrate. Starbucks needs to adjust its economic, social, and cultural policies every time it penetrates a new market. Besides, the strong corporate presence of the West is not appreciated in some of the world’s countries.

Besides, Starbucks stores have experienced a loss of popularity and loss of customers. This might have been caused by the elimination of coffee aroma from the stores, lack of “coffee theatre,” and growing soullessness of the stores (Solving Starbucks Problems par. 6-8). These challenges can be dealt with by means of adjusting to stores and making them more likable for the visitors.

Starbucks has been focused on the development of a strong brand reputation in order to attract customers as well as employees. This is why corporate culture has been such a serious concern for the company. Expansion within the domestic market was based on the acquisition of multiple workers. Besides, corporate ethic is the base for trust in the brand and customer loyalty.

Starbucks is not unique, providing high-quality benefits for the employees. For example, UPS is also known as one of the best companies to work for. The rapid growth of the company was based on the customer-focused approach, responsive service, comfortable stores, and the creation of the best conditions for the visitors so that they wanted to come back again and again.

Works Cited

Case Study.

Geereddy, Nithin. Strategic Analysis of Starbucks Corporation. 2013. Web.

Solving Starbucks Problems. BrandAutopsy. 2014. Web.