Management Strategies for Starbucks and Tesco in Competitive Markets

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Article 1- https://www.forbes.com/sites/panosmourdoukoutas/2018/06/27/starbucks-
problems-at-home-and-abroad/#41f7333364b5
Problem
In the respective article, the main issue which was faced by Starbucks is in relation to losing
of the competitive advantage in the market. As discussed in the article, Starbucks is losing
their coolness in the market as there has huge slowdown in the market share which was
bucking the market trend. In the last few months, the stock of Starbucks has lowered to
11.38% and the company is facing problems at abroad and home country as well.
There is a market saturation which is being faced by Starbucks and store
cannibalization which is affecting the overall market of Starbucks in United States. There
has been different closing down of the stores in the United States market and it has forced
recent closings of stores in the recent weeks.
The situation of store cannibalization has been faced by Starbucks as there are other
producers in the market who have introduced similar coffee items in the market at a less price
than Starbucks. Due to the same, the company faced decrease in the competitive advantage as
there was decrease in sales revenue and volume. Additionally, it has been noticed that
Starbucks faced competition in home and abroad from both start up and established brands
which was a huge threat for the company in the recent years.
Recommendations to Address the Issue
From the article, it is clear that the main problem which is affecting the sales revenue
and the competitive advantage of the company is the growth of the other competitors who are
selling similar products in the market. However, the issue can be addressed by the company

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with the help of the application of the Porter’s Generic Forces strategy wherein Starbucks
can apply the Broad Differentiation Strategy through which it will be ensuring that the firm
can maintain competitive advantage through speciality products and ingredients. Along with
the same, there can be inclusion of the Low-Cost Leadership Strategy which will be helpful
for Starbucks in attaining the competitive advantage to make their brand better than the
competitors (Omsa, Abdullah & Jamali, 2017). With low cost leadership strategy, Starbucks
has been able to include the different range of products which will be helpful for Starbucks to
grow through this respective strategy.
Figure 1: Porter’s Generic Forces
(Source: Bertozzi, Ali & Gul, 2017)
Additionally, the positive aspect which was being maintained by Starbucks is that the
company could not copy the business model of Starbucks which was of huge advantage and
due to the same, it helped Starbucks in increasing the sales and revenues of the company. The
intensive strategy which can be adopted by Starbucks is Product Development which will be
helpful for Starbucks in developing different coffee products which are low in cost and it will