MGT 505: Starbucks' Strategic Turnaround - Business Policy & Strategy

This case study examines Starbucks' strategic planning and policies, focusing on its financial challenges and subsequent reinvention. It covers the company's background, PESTLE analysis, Porter's Five Forces, and Ansoff model to assess Starbucks' market position and competitive strategies. The analysis highlights key success factors in people management and identifies potential risks, including economic downturns and increasing competition. The report concludes that effective market analysis and competitor assessment are crucial for a company's successful reinvention during economic crises. Desklib offers a range of resources, including past papers and solved assignments, to aid students in their studies.

Business policy and
strategy

Table of Contents
Table of Contents.............................................................................................................................1
Executive Summary.........................................................................................................................3
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Company background.............................................................................................................1
Pestle Analysis........................................................................................................................1
Porter’s five force model........................................................................................................2
Ansoff model..........................................................................................................................3
Key success factors analysis in management of people to achieve the company’s strategic
goals........................................................................................................................................3
Risk analysis...........................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................5
Books and Journals.................................................................................................................5

Executive Summary
Starbucks is one of the giant us beverage company that has been facing major financial
loss from here 2007 therefore the report aims to conduct research on the strategic planning and
policies of company during the rise and fall of its finances. The report concludes that Starbucks
values and traditional methods of conducting a business therefore company has reinvented in
25th August 2014. Also company has come up with its old CEO Howard Schultz to have
renewal and transformation of the business.

INTRODUCTION
In competitive business environment there is a huge importance of strategic management as it
deals with the strategic decision-making which decides the long-term future of an enterprise.
Policies are the decisions or the rules that are articulated commonly to accept for the decision
making (Lyneis, 2020). The present report is on the case study of the "Starbucks Reinvented'25
Aug 2014". The report will conduct a detailed research on the strategic planning of the Starbucks
in the process of rise and fall of the company. The report will include the macro level analysis,
competitive analysis, strategic planning process, key factors for the success of Starbucks and the
risk analysis.
MAIN BODY
Company background
Starbucks is an American company that is considered as the largest coffee House change of
the world and is headquartered at Seattle Washington. The company was founded by Jerry
Baldwin in 1971. 1980 Starbucks hours open 4 stores in Seattle and stood out as a competitor of
the top quality fresh roasted coffee. In 2000 cults the CEO of Starbucks step down from his
position and remained as the chairman buy 2070 chain boasted more than 1500 locations
worldwide and in 2008 sculpts returned as the CEO because in 2008 the company faced the
closure of 900 stores. Reason for the company to hit from the economic crisis in 2008 was due to
the customers were opting the cheaper options for their everyday coffee. By March 2008 the
company has fallen of 28% of profit compared to the 2007 due to which company has to close
many stores and lay off many employees.
Pestle Analysis
The pestle analysis is useful in analysing the external market and their impact on
planning process of the Starbucks.
Political factors: the political issues that Starbucks face is regarding the sourcing of raw
materials from the west countries (Cao and Qiu, 2021). This has impacted the company's
planning process and company has decided to outsource the coffee from the native country and
also to roast the coffee on its own.
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Economic factors: the growing economy of the UK and some developing countries has been
opportunity for the Starbucks to gain their revenue from such places where the high prices coffee
is affordable.
Social factors: the customers where shifting more into cheaper price coffee as an alternative for
the daily coffee this made the Starbucks to rethink about their prices and the strategy to engage
the customers again with the firm. Therefore company has gain chosen the tradition Italian
Barista to enhance the taste.
Technological factors: the technology is growing speedily and so is the machines and
techniques of the coffee. Therefore in the planning process of the Starbucks to have sustainable
future the company has planned to provide training to its employees and also to have great shot
of espresso.
Legal factors: the legal causes always bring problem the organisations when operating in
multiple countries. The legal rules regarding the food safety is very important so that company
has included all the legal food and safety acts in its planning process of making the coffee and
reinvent of the Starbucks.
Environmental factors: the environment is huge concern for the company and its stakeholders
therefore the Starbucks has effectively implemented the CSR and environmental safety strategy
in its business operations (Kee and et. al., 2021).
Porter’s five force model
Bargaining power of customers: the customers are lifeblood for every company to survive in
the market. In case of Starbucks the customers holds a strong bargaining power as therefore to
handle the situation with the customers the Starbucks developed effective marketing strategy that
by which company informed customers regarding the different forms of coffee and their
ingredients.
Bargaining power of suppliers: the suppliers of the Starbucks do not carry high bargaining
power the coffee chain is leading brand and can switch to any other supplier very easily.
Therefore the company has its own machines, techniques to roast the coffee and to develop
different shots of espresso.
Threat of new entrants: the company has huge threat of new entrants in this industry as there
are many coffee makers with new innovation and competitive prices that can rule the market
very easily (Osterwalder and et. al., 2020). In order to avoid such situation the Starbucks in their
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planning has added a personalized touch to their coffee cups by writing the name of the
customers in order to stay competitive.
Threat of substitutes: there is huge threat of substitutes for the Starbucks as there are many
coffee makers that sell the products at low price and they are also considered by the customers
willingly. Therefore, the company has added special services in their menu and also reinvented
the business for better sales.
Competitive rivalry: the competition is part of every business in context of the Starbucks the
McDonalds, Dunkin Donuts are the key competitors of the company also they serve their own
speciality of coffee beverages. Therefore company added the holiday offers on the coffee
beverages to attract the customers towards the firm.
Ansoff model
Market penetration: the strategy where the company stays in same market with same product
just creates changes in the marketing strategy such adding new offers, discounts on the product
or lowering of prices. In case of Starbucks the company has penetrative the market of US
through same product just by offering holiday free drinks and refill on espresso and coke at the
Starbucks.
Market development: the Starbucks was in early stage opened with the one store in Seattle its
home country and after moving forward company is operating multiple countries and has
multiple stores in one specific market. The development is effective strategy for the company as
it has money, resources and most importantly a high luxury premium quality beverages and
coffee.
Product development: the company in early stage had only coffee but with growing time and
company potential the company has designed and innovated many products in every new market
such as shakes, cold coffee etc.
Diversification: the diversification is the most effective strategy of the Starbucks as the
company enters every new place with new product that creates the emotional connects with the
customers of that place (Strekalova, Korchagina and Bogdanova, 2020). This is the effective
strategy of the company to stay head of the competition.
Key success factors analysis in management of people to achieve the company’s strategic goals.
Starbucks is the multinational coffee and beverage producing brand and is known for
planning strategies that helps the company in meeting their goals and objectives. It is critically
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analysed that company is successful in applying some key success factor in its management of
people in order to attain organisational goals. Some key success factor applied by Starbucks in its
strategic planning strategies is discussed below:
Market niche: the Starbucks most successful factor is the niche market that company has
acquired over the years. To plan for the management of the people means customers the
company has effectively segmented its market of customers into niche market as per the product
features, demographics, prices etc. thus, this success factor has remain a strength to Starbucks in
achieving their strategic goals.
Adding value reconfiguration: the company keeps their customers at priority. After the
reinvention of the Starbucks the company has been using their value reconfiguration as their key
factor of success and also used in their strategic planning. The company offers all their customers
refilling of coffee and also mention their names on the cup of coffee to make its personalized.
Profitability: commercial viability and profitability is aim of the business and is always a focus
during the strategic planning and during the management of customers. As the end outcome is
how much profitability Starbucks has gained through its strategic planning and how well the
strategic objectives are met.
Portfolio analysis: the portfolio of the Starbucks is unique, diversified, personalized as per
different locations and also the portfolio is highly premium in range. All this portfolio analysis
act as key factors for the success of the company.
Thus, it is critically evaluated that Starbucks has been effectively applying of its key
successful factor in its strategic planning in order to attain the strategic goals on time.
Risk analysis
After the critically assessing the Starbucks‘s strategy during and after its reinvention
process it is analysed that there are some key risk factors and threats are associated with the
company as the risk factors and threats has serious effect and also the probability of the
occurrence of threat is more than average (Kim and Park, 2021).
Risk factors and threats and its Potential effect
Starbucks ahs huge risk of declining economic condition due to the Covid-19 as the company has
high prices products and with declining economy will face the huge economic crisis. The
company also has huge risk of competitions as the new comers and existing competitors are
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coming up with new innovative products and strategy that are effectively gaining the attention of
the customers this is high risk for the sales of the Starbucks.
CONCLUSION
It is concluded form the above report that for any company to reinvent due to the
economic crisis it must to effectively analyse the market, competitors for the better strategic
planning.
REFERENCES
Books and Journals
Lyneis, J.M., 2020. Business policy and strategy, System Dynamics Applications to. System
Dynamics: Theory and Applications, pp.179-207.
Cao, J. and Qiu, R., 2021. Retail coffee business analysis and industry development research
based on Starbucks business model. In E3S Web of Conferences (Vol. 292, p. 03030).
EDP Sciences.
Kee, D.M.H and et. al., 2021. How Starbucks Maintain Its Competitive Edge?–The Secret of Its
Success. Journal of the Community Development in Asia (JCDA), 4(2), pp.34-43.
Osterwalder, A and et. al., 2020. The Invincible Company: How to Constantly Reinvent Your
Organization with Inspiration From the World's Best Business Models (Vol. 4). John
Wiley & Sons.
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Strekalova, N., Korchagina, E. and Bogdanova, M., 2020, November. Business Model
Reinventing on the Basis of Innovations: The Russian Company Case. In Proceedings
of the International Scientific Conference-Digital Transformation on Manufacturing,
Infrastructure and Service (pp. 1-7).
Kim, J.E. and Park, E.S., 2021. The Spatial Design Marketing Strategy of Global Franchises
That Take into Consideration the Characteristics of Modern Consumers—A Study
Involving the Global Coffee Companies of Starbucks and Blue Bottle. Land, 10(7),
p.716.
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