Influencing Organisational Strategy

Running Head: INFLUENCING ORGANISATIONAL STRATEGY
Influencing organizational strategy
Name of the Student
Name of the University
Author Note

1INFLUENCING ORGANISATIONAL STRATEGY
Introduction
In the year 1971, college friends Gordon Bower, Jerry Baldwin and Zev Siegl found
Starbucks in Seattle. Successes of the first store lead to the friends open multiple stores,
gradually distributing and selling coffee in the wholesale businesses. Howard Schultz, in the
year 1987 purchased Starbucks Corporation and served in the company’s operations
department. He took the role of CEO and Chairman. He went on with the official brand name
of Starbucks and proposed not to change it as it had already earned itself recognition.
Starbucks Corporation acquired stellar success under Howard Schultz’s management. In the
year 1993, the company came up with the idea to sell coffee at bookstores so they entered
into a joint venture with Barnes. Starbuck Corporation reached $8.3 million net earnings.
After their huge success in the United States, the company decided to go global and opened
nearly two hundred outlets. Dubai hosted the first Starbuck store in the Middle East region.
Europe provided Starbucks a unique business market and Starbucks launched its primary
store in Zurich, Switzerland. The company suffered huge loss in the year 2002 in the
Japanese market. The loss did not stop the company from investing and expanding
internationally. The economic recession enforced Starbucks Corporation to take down nearly
600 stores in the US. Starbucks changed its business module in the year 2009. The company
came up with the Starbuck card to engage more customers and for the first time launched
stores in Poland, Aruba and East Africa. The company started investing and expanding its
digital network. Currently Starbucks has 28000 stores in nearly 77 countries with a market
cap of $84 billion (Forbes 2019).

2INFLUENCING ORGANISATIONAL STRATEGY
Response to question 1.
Starbucks Corporation, the premier coffee brand has an exceptionally well planned
strategy. A lot of factors have effected Starbucks’ growth and development. When Starbucks
was founded in 1970s, most Americans were not happy with the inferior quality of coffee
available in the market. The American people were interested in authentic natural ground
coffee, and the founders could feel and understand the dire need and opportunity in the
American market. It can be deduced from this particular example that Starbuck founders
could identify the gap in the market and played the opportunities at the right time. There was
no such competitor in the market and the business bloomed. Starbucks Corporation always
looked for opportunities to expand (Snell 2017). The primary and principal strategy of
Starbucks is to serve people. Starbucks describes themselves as the company who are in the
people business and serving coffee.
Porter five force analyses give a better understanding of Starbucks business strategy.
Competition (Strong): Starbucks has a large number of competitors in the market of various
sizes, be it from McDonald or Dunkin Donald to name a few. The competition is increased
because of low switching prices. The kinds of coffee served in Starbucks are also served at
other cafes.
Product Substitution (Strong): There is high availability and affordability of substitutes in the
market (a strong force). The consumers in the market have a variety of options instead of
going for Starbuck products. Substitutes include on the go beverages, instant coffee powders
and vending machines. There is also a low switching price which strengthens product
substitution.

3INFLUENCING ORGANISATIONAL STRATEGY
New Entrant (Moderate): Starbucks has already set the market and is a strong player. The
threat of new entry is moderate. Establishing and developing a market hold so large as
Starbucks requires strong investment and the process is time consuming. Starbucks has
already instilled in its customers a taste for its high quality product. Hence, it is difficult for
new entrants to attract customers (Mason, Cole and Goza 2017).
Bargaining power- Suppliers (Strong): Company to maintain its production of variety of
coffee flavors had to procure assortment from various specialized farmers. This increases the
bargaining power.
Consumer bargaining power (Moderate): The consumer bargaining power is moderate.
Starbucks has generated loyal customers through its loyalty card policy.
Howard Schultz on his visit to Milan, the idea of cafes struck. He noticed how the baristas of
the cafes interacted with the customers on a personal level and served them cheerfully. This
made customers enjoy their time at the café as personal attention brings about loyalty.
Developing personal relationships with the customer is another strategy Starbucks
Corporation worked on. Starbuck started working on building a community, where people
could connect and interact (Corporation 2019). Starbucks targeted customers of all ages. The
employees were trained to have joyfully conversation and to develop personal relationship
with the customers. The employees interacted with them and greeted them with their names.
This improves the ambience and customers frequented the café. Starbucks designed each café
meticulously with the best interest in mind. The idea of the design was to enhance customer
comfort and satisfaction. Starbucks installed wifi services in its stores, the stores slowly grew
to a place where everyone could work and socialize. Loyalty card for customers and the app
increased Starbucks’ consumer base significantly. They launched “My Starbuck Idea” to