Corporate Level Study of Starbucks Company - Strategic Management

This paper discusses the current corporate level strategies of Starbucks by the implementation of SWOT analysis and devising two recommended initiatives for the future growth of the company. The implementation of product differentiation strategy of the company with the proper fit of its capabilities in the global market helps to increase the revenue. In spite of facing price instability and easy entrance of the competitors, Starbucks is implementing the overseas expansion and emerging its business in the developed and developing markets.

Running head: STRATEGIC MANAGEMENT
Strategic Management
CASE STUDY OF CORPORATE LEVEL STUDY OF STARBUCKS COMPANY
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Executive Summary
Starbucks being a leading international company, it has to maintain a strong brand image along
with coffee loving customers’ satisfaction. This paper discusses the current corporate level
strategies by the implementation of SWOT analysis and devising two recommended initiatives
for the future growth of the company. The implementation of product differentiation strategy of
the company with the proper fit of its capabilities in the global market helps to increase the
revenue. In spite of facing price instability and easy entrance of the competitors, Starbucks is
implementing the overseas expansion and emerging its business in the developed and developing
markets. This is a positive sign of increase in the revenue. The product amalgamation and
product diversification are another significant steps taken by the company. Through the SWOT
analysis all the external factors are described with the explanation of the internal factors and the
evaluations are noted in the course of this paper.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
(a) Evaluation of Corporate level strategies...........................................................................3
(b) Evaluation of the Suitability of the Current Strategies of Starbucks.....................................5
Recommendation on Alternative Strategic Initiatives.................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
The paper discusses about the corporate level strategies adopted by the globally leading
coffee industry Starbucks. It has 182000 employees operating currently in 62 countries.
Corporate strategy includes the listing of all the strategic decisions taken by management of the
organization for business growth and overall revenue. Starbucks has never failed to lead the
beverage industry by adopting the product innovation strategy. It is holding the track record of
successful business and the corporate strategy includes a list of factors like high quality
maintenance, excellent customer support and service, unique steps to beat other competitors,
expansion of the Starbucks brand globally and many more (Fontaine, 2013). The competitive
strategy is the prime focus of the management of Starbucks along with the aggressive adaption
with the changes in the nature of the market to gain competitive benefit.
Discussion
(a) Evaluation of Corporate level strategies
Founded in 1987 in Seattle, Starbucks reached to every corner of America with its
innovative marketing strategy and product’s goodwill and in 2007, it gained a profit of $9.4
billion globally. In 2010, the company proceeded with the tagline of “to inspire and nurture the
human spirit - one person, one cup and one neighbourhood at a time” that showed the company’s
confidence on its product quality along with the flavour and variation of coffee they are offering.
The target market of Starbuck is worldwide large customer base that made Starbucks a global
brand (Grant, 2016).
The corporate level strategies implemented by the company needs to be identified in
terms of providing third place experience. These are seen with various types of the initiatives
such as providing comfortable environment for the friends and family. In addition to this, the

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added features of the pace incudes providing free Wi-Fi services and other services which
meticulously increase the duration of stay at the shop. Some of the other initiatives taken by the
company are discerned with maintaining highest standard of quality in their products. This has
been depicted with the main considered of the product differentiation. The coffee chain giant was
able to consider on improving the quality of the products by refining the customer services
through bringing about more innovative strategic opportunities as a retailer of coffee (Warren,
2015).
The international expansion is seen as another important strategy which is adopted by the
company. This initiative by Starbucks needs to be depicted with the long-term perspective. The
share of the company revenue needs to be also included in the revenue of the company from
China/Asia Pacific (CAP) and segmental increase of profit by 14% in 2016 from 7% in 2015. As
per the strategy of international expansion pertaining to the emerging economies the total
number store outlets of the company increase to 2719 new stores, with the expansions measures
adopted in 2015 and 2016 (Grant, 2016).
The consideration of the integrated technology in the different types of the processes of
the business. It needs to be also considered that Starbucks has declared that the implementation
of the new technology not only includes improvement of the website but also processing of the
payment with more swiftness. The company has been also seen to discern the achievement of the
technological aspects with the integration of wide range of tech driven business procedures and
policies (Pangarkar, 2015). These improvements are considered to be based on wide range of
areas pertaining to the fields of communication of the marketing message, new product
development, monitoring of the customer satisfaction and completing the sales procedure. The
most significant instance of the value creation is evident with the launching of the strategic

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programs such as Mobile Order & Pay feature. This feature allowed the customers buy any
product without standing in the queue. Moreover, the launch of voice ordering app and sending
of the message service was able to notify the customers for the orders made with mobile (Aiello
& Dickinson, 2014).
(b) Evaluation of the Suitability of the Current Strategies of Starbucks
For every business organization, the management considers the adopted business
strategies as suitable when they lead to the development of overall business and there is not any
exception of this fact in case of Starbucks. From the time of its inception, the most important
strategy of Starbucks has been product differentiation along with offering differentiation like the
premium product mix, different coffee beverages, exclusive locations and others. This aspect
makes the products and offerings of Starbucks unique from its other competitors and it
contributes towards the high amount of revenue for the company (Rothaermel, 2015). Another
major strategy of Starbucks is the acquisition of some major coffee and beverage related product
companies like Teavana, Bay Breads, Evolution Fresh and others; and the adoption of this
strategy of Starbucks supports its product differentiation strategy. The success of this strategy
reflects from the large popularity of the coffee as well as beverage products of Starbucks all over
the world and this aspect helps the company in gaining the highest market share in the
operational areas (Rothaermel, 2015).
Another major strategy of Starbucks is their strategy to expand in the key development as
well as emerging markets in order to expand their business share. The suitability of this strategy
can be seen from the expansion of Starbucks more than 60 countries all over the world. At the
same time, it needs to be mentioned that the adoption and implementation of all these strategies
have provided Starbucks with major competitive advantage over its competitors (Lasserre,

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2017). Thus, the above discussion indicates towards the suitability of the adopted strategy of
Starbucks in their business.
Recommendation on Alternative Strategic Initiatives
The alternative strategic initiatives are provided below:
 It needs to be mentioned that one of the current strategies of Starbucks is to sell their
coffee on discounted price with the aim to increase the number of customers for their
business. However, this strategy can lead to degradation of the brand image of Starbucks
along with the inception of price war with the major competitors like McDonalds and
Dunkin Donuts. For this reason, the alternative strategic option for Starbucks is the
implementation of a more elaborative discounting technique in the form of reward
program (Bettis et al., 2014). The adoption of the strategy of reward program will
encourage the customers to visit the stores of Starbucks more often. At the same time, the
presence of lucrative award program will deter them from visiting the competitor’s
stores.
 In February 2008, the magazine called Consumer Reports considered the coffee of
McDonalds testier than Starbucks. For this reason, the alternative recommendation for
Starbucks is to ensure the continuous improvement of the quality of their coffee. For this
reason, it is required for Starbucks to continuously inspect as well as analyze the brewing
system so that scope of renovation can be identified (Harrison & John, 2013). Moreover,
Starbucks should analyze their brewing system based on their ability for creating
distinctive and complex flavors of exotic specialty coffees.

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Conclusion
From the above discussion, it can be concluded that Starbucks is trying to be represented
as the neighbourhood coffee shop to grab the most customer visits to all the high-traffic areas.
The building of Starbucks mobile application, delivery application proves excellence in the
marketing strategy. Moreover, it offers customers the state-of-the art place for enjoying the
coffee. The expert team of Starbucks is also focusing overseas expansion. The branding
empowerment, nurturing a sustainable growth creates unique position of Starbucks in the
marketplace.

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References
Aiello, G., & Dickinson, G. (2014). Beyond authenticity: A visual-material analysis of locality in
the global redesign of Starbucks stores. Visual Communication, 13(3), 303-321.
Bettis, R., Gambardella, A., Helfat, C., & Mitchell, W. (2014). Quantitative empirical analysis in
strategic management. Strategic Management Journal, 35(7), 949-953.
Fontaine, M. (2013). Corporate social responsibility and sustainability: the new bottom
line?. International Journal of Business and Social Science, 4(4).
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Harrison, J. S., & John, C. H. S. (2013). Foundations in strategic management. Cengage
Learning.
Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.
Pangarkar, N. (2015). Performance implications of strategic changes: An integrative
framework. Business horizons, 58(3), 295-304.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Warren, K. (2015). Strategy Dynamics Essentials. Strategy Dynamics Limited.