Strategic Management: How Starbucks Gains the Competitive Advantage

STRATEGIC
MANAGEMENT
“How Starbucks Gains the Competitive Advantage”
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TABLE OF CONTENTS
1. Introduction..................................................................................................................................3
2. Company Background.................................................................................................................3
3. Competitive Advantage in the Industry.......................................................................................4
Dynamic Capabilities ..................................................................................................................4
Core Competencies......................................................................................................................4
Competitive advantage of Starbucks...........................................................................................4
4. SWOT Analysis...........................................................................................................................5
5. Porters 5 Forces Model................................................................................................................5
6. Strategies used by Starbucks........................................................................................................7
7. Conclusion...................................................................................................................................7
REFERENCES................................................................................................................................8
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1. Introduction
Strategic management is defined as formulating and implementing the planning, tracking,
and assessing the necessary initiatives which are main for the company to meet it objectives.
Businesses have to continuously assess their approaches and strategies along with the operation
management which help them to take the competitive advantage. In the market many things
related to drinks are segmented, so the supply of drink products according to the demands of the
consumers in markets. It generated high profitability if the supply value chain is maintained. So
many competitors are entering into this sector. Starbucks is the leading brand in the coffee
industry which provided the qualitative coffee products to the consumers. This report discusses
the strategic management of the company including the detail analysis of its strategies for the
growth in the market.
2. Company Background
Starbucks is the leading brand in the coffee house chain and famous worldwide. This is
an American coffee organization which was founded in the 1971 in Seattle, Washington, U.S. It
becomes that much huge that it operates approximately 30,000 stores worldwide (Leskaj, 2017).
The founder of the company Jerry Baldwin, Zev Siegl and Gordfon Bowker as these people
found the coffee culture is increasing and it will gain the competitive advantage in upcoming
years. So they started a coffee store in Seattle and achieves profitability in 1980/ now the key
people of the company are Kevin Johnson (CEO and president) and Howard Schultz (chairman
emeritus). After appointing Johnson as the president of the company in 2018, company leads to
towards success with unexpected growth. The management of Starbucks believes in using
modern business strategies in their operations. The company currently focuses on expand their
business operations in the new market segments of United Kingdom. Business employed
approximately 300,000 employees till 2019 which are called as partners of the company, it
makes them feel nice and important part of the organization. So they serve the customers with
nice behaviour and polite ways which leads to customer satisfaction and maintain loyalty.
Company possess net income US$4.51 billion (2018) and its operating income US$3.88
billion(2018). The company gained £372 million last year from their business operations in the
United Kingdom. It is completely focuses on providing quality products to the customers in this
country. Starbucks main product is qualitative coffee products like hot coffee, cold coffee,
appetizers, coffee latte etc. As they use roasted coffee beans to prepare the coffee, it darkens the
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coffee taste so due to the second wave movement in which people deny accepting this dark
coffee because it is unhealthy and harmful (Doz, 2017). So the company installs espresso
machines to make instant coffee which is lighter and tastier than before. In recent years company
is lacking to take the competitive advantage so in further section its strategic management would
be studied.
3. Competitive Advantage in the Industry
Competitive advantage is about gaining superiority in the industry by a particular
organisation. They provide same products, quality and taste like the competitors but at low cost
or it can be higher charge with giving qualitative and valued products through differentiations.
Porter has defined the competitive advantage as the main concepts of the value chain framework
in which company can analyse its primary and supportive factors which help them to achieve
success and enhance their sales. To gain competitive advantage business can use different
strategies like differentiation, cost leadership, innovation, technology advancements and
operational strategies (Dagnino, King and Tienari, 2017). If the company has achieved
superiority in the marketplace then it should continue to improve in its products, service,
operational, marketing, management strategies.
Dynamic Capabilities
Dynamic capabilities which ensures that Starbucks protects its assets and valuable
resources for sustaining its future to take huge competitive advantage. The company is
continuousallt working on improving its capabilities for achieving high profit in the market.
These are defined as possible opportunities, managing resources and transforming to acquire
opportunity and lastly competencies renew continuously.
Core Competencies
Core competencies are stated as the process for strategic management in which the
development is progresses by the company to differentiate its product from the rivalries. To take
the competitive advantages the company focuses to continuous evolution of the technology,
knowledge, skills, and important strategies.
Competitive advantage of Starbucks
Starbucks has gained superiority in terms teams to take the competitive advantage but
due to some of inappropriate decisions in the previous years, company had to face failure
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