Starbucks Organizational Analysis: Strategies for Market Growth

This case study provides an in-depth analysis of Starbucks, focusing on its core competencies, diversification strategies, and organizational boundaries. It examines Starbucks' commitment to quality, customer service, motivated employees, and cafe design as key factors in its success. The analysis explores Starbucks' diversification motives, including increasing shareholder value and building market power, such as through collaborations and premium pricing. The study also suggests drawing boundaries on bakery products to compete in the market, leveraging the company's existing baking presence in China and exploring cultural strategies. Finally, it evaluates the outcomes of Starbucks coffee outlets, noting their international success and strong market position, while cautioning against moving into grocery retailing to maintain customer loyalty and focus on coffee market innovation. Desklib offers this and many other solved assignments and past papers to aid students in their studies.

Business Management

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
1. Analysis of Starbucks's core competencies.............................................................................3
2. Starbucks Diversification.........................................................................................................4
3. Analysis of Starbucks boundaries............................................................................................4
4. Outcomes of Starbucks coffee outlets......................................................................................5
REFERENCES................................................................................................................................1

MAIN BODY
1. Analysis of Starbucks's core competencies
Starbucks is an American multinational chain of coffee houses and rostery reserves. The
brand is known for its supreme quality of Coffee and well satisfied service (Starbucks, 2021).
Core competencies refers to the ability and resources of the company that advantages to the
business. Core competencies of the Starbucks are its focus on supreme quality, outstanding
customer services, care for its employees and the extraordinary theme of the cafe. Following are
analysis of some core competencies of Starbucks.
 Quality Product : Starbucks never compromise on the quality of the coffee. It is the main
reason behind the success of the company. Company manage the quality by purchasing
ingredients from the local source as they are fresh (Lee, Jung and Moon, 2021). It helps
the company to maintain the standard. Every coffee beans are checked before roasting in
Starbucks. Maintaining same quality over the years by Starbucks made the company
more popular among the customers. Customer services : Starbucks has its own innovative ways to provide services to the
customer. This outstanding customer services has made too many loyal customers
(Liuand et.al., 2019). In order to improve customer satisfaction, Starbucks is always
ready to try various methods to satisfy the customers of the company. Motivated Employees : Starbucks treats its employees well so that they treat customers
well. Company offers all full time and part-time employees' health care benefits.
Starbucks call its employees as partners in order to respect their work and to motivate
them. In return Starbucks gets efficient work and happy customers.
 Interior Design : Starbucks know the value of design of the cafe. The reason behind
calling Starbucks third place is its interior design, comfortable sitting and beautiful
environment. Many customers are attracted towards the cafe of Starbucks just for its
attractive looks and conformable environment.
From the above analysis Starbucks can expand the business using these competencies as
it will help the company to satisfy the customer and the good quality can lead the company to the
successful expatiation.

2. Starbucks Diversification
Diversification motive of Starbucks is to increasing shareholder value by sharing
activities. In order to gain higher market share, Starbucks has provided diversified product mix.
Company also produced new products linked with beverages (Mi and et.al., 2021). Starbucks
also collaborate with other companies to increase its share value. One of the collaboration was
partnership between Apple and Starbucks that let the customer to browse, play and download
music on Wi-Fi Music Store at Starbucks (Apple and Starbucks Announce Music Partnership,
2021). Company did various Collaborations in order to increase the growth of the company. To
Increase the share value of the company they try more innovative ideas, sometimes they work,
sometimes not. Many people still do not know that Starbucks also sells other products than
coffee. Starbucks is popularly known in manufacturing moon cakes in China (How Starbucks
became one of the top Moon Cake seller in China?, 2020)
Starbucks also Uses building market power diversification in order to maintain the image
of the business. Market power diversification refers to the rise or maintain of the price above the
level of computation. Starbucks always maintain the high price of the product that helps the
company to have its premium image and it also does not let other companies to compete with the
Starbucks. Company needs to maintain the image to survive the market. If the company reduce
the price of the produce than customer will not buy the coffee from the Starbucks. Many people
prefer Starbucks to maintain their living-hood or to have expensive habits. This also main reason
for the Starbucks to build market power diversification.
Diversification Strategies by the Starbucks helps the company to make its upper position
in the market. Starbucks always prioritize the quality of the product because of the value if the
company. Innovations are also done by Starbucks to maintain the diversification of the company.
3. Analysis of Starbucks boundaries
Starbucks is currently adopting variety of services other than coffee. Company should
draw boundaries on bakery products to compete the market (Kubicová and Predanocyová, 2018).
The main reason behind that it is already has a good base of baking in China. Bakery products by
Starbucks may compete the market by using core competencies of the Starbucks coffee.
Innovating ideas like writing customers name on coffee cup differently can be used on cakes.

Such ideas will engage the customer and the loyalty towards Starbucks will increase. Moon
cakes by the organisation needs to provide out of China too.
Starbucks can manage to have a good market by using core competencies on the bakery
products such as good quality products, variety of flavours, outstanding customer services and
care of employees (Goh and et.al., 2020). Although, it is not clear that if Starbucks has
competencies to manage the market of bakery products but after successful market of moon
cakes in the China. Company can use that competencies in order to compete the market in other
countries.
Cultural strategy can be applicable to the good start of the bakery product development
like making Christmas cake and distribute on the Christmas eve on discount. Such strategies may
give the product a good start to the business.
Beverages and food products by Starbucks can also be a good option for the company to
increase the sell. Beverages that have good match with the coffee can draw boundaries to
compete the market. Starbucks is not going to minimize the food products as company is seeing
it as a golden opportunity to further expand the business presence and create quality food attach
items that can bring good experience with great coffee (Nunes, 2021).
4. Outcomes of Starbucks coffee outlets
Starbucks has shown very good progress in terms of coffee house. Customer are satisfied
with the coffee of the company. Company is now leading a good market internationally and the
outlets seems to be in favour in the Starbuck's business. Company has almost achieved its target
by performances of its ventures throughout the world. Shares of the business also have greate
value and increasing day by day. Current scenario of the company is at good development stage
and market positing.
Statics shows that sales of Starbucks same-store has 83% in America and 41% outside
America with 55% growth in customer traffic (Mlyn, 2021). Currently company is having great
profit and the number of satisfied customers are also increasing. Many customers have made the
Starbucks coffee outlet their third place. Company has 125th position in the Fortune 500 with the
profits of $928.3 million (Fortune 500 Starbucks, 2021).
From the above examination of the Starbucks coffee outlets, company should not move
into the grocery retailing space. Moving into grocery can impact the business in many ways.
Company may lose the customers and the shareholders. Such transformation includes huge

amount risk that may lead to the great loss to the company. Starbucks should keep the coffee
outlet in order to keep the customer loyalty towards the company. Innovation in coffee market
can be a good idea but moving towards the grocery retailing space may affect the growth and the
market of the Starbucks.
Retailing space may not be the comfortable space for the customers, and they may move
to the other coffee store. People barely like changes, it can be seen as others products by
Starbucks do not have that level of sell or people are more likely to have coffee from the
Starbucks.

REFERENCES
Books and journals
Lee, W.S., Jung, J. and Moon, J., 2021. Exploring the antecedents and consequences of the
coffee quality of Starbucks: a case study. British Food Journal.
Liu, C., and et.al., 2019, July. Automatic dialogue summary generation for customer service.
In Proceedings of the 25th ACM SIGKDD International Conference on Knowledge
Discovery & Data Mining (pp. 1957-1965).
Mi, B., and et.al., 2021, June. Research of the Starbucks’ Ritual Sense and Strategy of Sales.
In 2021 International Conference on Enterprise Management and Economic
Development (ICEMED 2021) (pp. 86-92). Atlantis Press.
Kubicová, Ľ. and Predanocyová, K., 2018. Situation in the market of bakery
products. International Scientific Days, pp.391-406.
Goh, S.Y., and et.al., 2020. Organizational culture at Starbucks. Journal of the Community
Development in Asia (JCDA). 3(2) pp.28-34.
Online references
Starbucks. 2021.[Online]. Available through <https://www.starbucks.in/about-us/company-
information>
How Starbucks became one of the top Moon Cake seller in China?. 2020 [Online]. Available
through <https://marketingtoChina.com/mooncakes-more-gift-than-food/>
Nunes, K., 2021. Food seen as 'golden opportunity' for Starbucks .[Online]. Available through
<https://www.foodbusinessnews.net/articles/17793-food-seen-as-golden-opportunity-
for-starbucks>
Mlyn, S., 2021 Starbucks earning beats, fueled by strong U.S. cold beverage sales, but its shares
drop on weak China outlook. [Online]. Available through
<https://www.cnbc.com/2021/07/27/starbucks-sbux-q3-2021-earnings.html>
Fortune 500 Starbucks. 2021. [Online]. Available through
<https://fortune.com/company/starbucks/fortune500/>
Apple and Starbucks Announce Music Partnership. 2021. [Online]. Available through
<https://www.apple.com/newsroom/2007/09/05Apple-and-Starbucks-Announce-Music-
Partnership/#:~:text=SAN%20FRANCISCO%E2%80%94September%205%2C
%202007,while%20at%20a%20participating%20location.>
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