Strategic Management: Starbucks Competitive Advantage Case Study

This case study analyzes Starbucks' competitive advantage, examining its products, resources, and core competencies. The analysis begins by defining Starbucks' competitive advantage, highlighting its global network, premium quality, and brand image. It identifies and describes five products (Nitro Cold Brew, Spiced Sweet Cream Narino 70 Cold Brew, Roastery Cold Coffee, Mora Iced Creamery, and Affogato Coffee), five resources (Human Resource Management, Technology Development, Inbound Logistics, Research and Development, and Equipment), and five core competencies (Unwavering focus on quality, Outstanding customer service, Continuous product advancement, Care for its employees, and Drive to be everywhere). The study further explores the value Starbucks creates for its customers through social impact, life-changing value, and wellness/therapeutic value. Finally, using the VRINE model, the analysis assesses the sustainability of Starbucks' competitive advantage, concluding that its 'Drive to be everywhere' offers a sustained advantage. References are provided to support the analysis.

LA#4 Concept Application #2: Competitive Advantage
Read Case 7: “The Commoditization of Starbucks” (page 564, in textbook), pages 435 – 437.
Answer the following questions based on information provided in the case, using the
template below. 4-page maximum. You may remove the template instructions.
1. Competitive advantage - Do you think that Starbuck has a competitive advantage? Briefly
explain your answer (hint: apply the definition of competitive advantage discussed in
class). (1 mark)
Competitive advantages are the conditions which is known to allow a company to
produce a very good service at an equal value at a much lower price and in a more
distinguishable fashion. These will help the organization to gain more attraction towards
itself and increase the number of sales for the organization when compared with the
similar category of products in a large range. The mission statement of Starbucks says
that the company follows the guiding principles which helps it to stay in a competitive
position over its competitors. The guiding principles mainly includes :
 Providing great work environment in order to treat the employees and
consumers with respect and dignity
 Embracing the diversity as an essential component
 Applying higher standards of living in roasting and delivering the coffee to the
customers
 Developing enthusiastically satisfied customers all the time.
 Helping the community and the environment.
Yes I do think that the company has gained a competitive advantage over its
competitors in the market. According to the author Harrington, Ottenbacher & Fause
(2017)the organization has built a very strong sources of competitive advantage. Its
global network, premium quality of food and services, and its brand image are the strong
points for the company. The Starbucks experience is a combination of empowering the
corporate culture which shares the wealth with the employees. This inturn creates a very
unique and personal experience among the employees Enz (2009 page number 435 – 437)
The organization is also able to develop innovative products which also shares various
types of organizational software and application. This is known to minimize the risk,
timescale the costs of production development which therefore enables the company to
introduce a new steam of new and innovative products.
2. Resources, core competencies and products - Identify and describe 5 products, 5
resources, 5 core competencies for Starbucks. (15 marks)
Products
The description of products of Starbucks are :
 Nitro Cold Brew - The coffee is made by the company in order to make the coffee
a very smooth taste which is known to get even better. The organization is also
planning to introduce it with the nitrogen flavor for a better taste. It was
implemented by the company as because it is a natural sweet taste flavor and
more cascading, velvety cream and perfection served at its best.
 Starbucks Spiced Sweet Cream Narino 70 Cold Brew – The Starbucks Narino 70
Cold Brew coffee is a custom blend of 70 percent Columbia Narino and adds on
TOUR335: Strategic Management in Tourism 1

LA#4 Concept Application #2: Competitive Advantage
30 percent African coffee beans. The Slow Steeped is whopping for more than 20
hours gives a separate taste to it.
 Roastery Cold Coffee – It has been about immersing the customers with the craft
of cold coffee. The roasted coffee beans are one of the rarest things. It comes in a
new Affogato line up and has a separate fan base of its own.
 Mora Iced Creamery – This small coffee flavored with a variety of ice creams
which are made with fresh milk , eggs and different types of sugar cranes.
 Affogato Coffee – This trio of beverages are made from the classic Italian Desserts
that is poured over the ice cream scoop in the rich espresso. It also has a touch of
demerera syrup and dustings of cinnamon Harrington, Ottenbacher & Fause (2017).
Resources
The description of resources are :
 Human Resource Management – The human resource of Starbucks is concerned
with the activities such as the recruiting, managing, training, development and
rewarding the employees in the organization. For this reason they have made it
very clear to make all the employees equal in the store rooms.
 Technology Development – The organization is known to have a huge amount of
technological innovation. The organization is using technology from regulating
the stocks t registering the customers in the cash section. The stores are also wifi
enabled which helps the customer to access free internet.
 Inbound logistics – This means that the coffee beans and other products received
by the company, which they need to product and service in their stores and
package of the subsidiary products.
 Research and Development – the research and development part of the company
is known for making the most important decision regarding the use of
appropriate coffee beans and delicacies which will make the best in class coffee
to the customers. The research and development of the company is one of the
best resource accrued by the company as because with its helps the whole
organization to smooth.
 Equipment – Starbucks has made a huge amount of expense in its resources
which are the time saving and taste creating machines. The organization has
made huge expense in setting up the devices to benefit the customers
Core competencies
The core competencies of Starbucks are:
 Unwavering focus on quality – The organization is known to have a clear focus in
providing the best quality of products to the customers they will be serving. The
organization is spending huge amount of money in developing the products and
services.
 Outstanding customer service – The organization is known to have a best
customer service team in its work place. The organization has built a separate
team who are known to gather the feedback which is received from the
customer.
TOUR335: Strategic Management in Tourism 2

LA#4 Concept Application #2: Competitive Advantage
 Continuous product advancement – The organization is always changing and
bringing advancement in the products and services offered by the company. It
develops the products with utmost care and serves it to the customers.
 Care for its employees – The organization is doing everything to take care of its
customers. According to the author Taecharungroj (2017)organization is taking
care of each and every delicate thing to satisfy its employees with the best in
class coffee.
 Drive to be everywhere – The organization has a present mission that is setting a
Starbucks outlet everywhere. This will help the company to gain more customers
and have a competitive advantage over its competitors. With the motive of
setting up a new Starbuck center and coffee shop in a new place the organization
will be able have a greater customer base under the brand (Shirdastian,Laroche &
Richard 2017).
3. Value for customers - Using the “The Value Pyramid” discussed in class (available on
eLearn), identify and explain 3 types of value/s Starbucks is creating for the customer
and the resource/core competency used to create the value you have identified
(based only on information available in this case). (3 marks) Resource that can help
you: http://www2.bain.com/bainweb/media/interactive/elements-of-value/#
Value created: Social impact
Resource/core
competency used to
create the value
identified:
The organization is creating a social impact that is by providing
the customers with one of the best coffee and other eatable
products. The customers are also liking it just because it
provides a best in class materials. The best in class coffee
which is provided by the company is the consequence a
business action which it has over the community. The
company has presently started a wellbeing impact to the poor
people which is Habitat for the Humanity.
Value created: Life changing value
Resource/core
competency used to
create the value
identified:
The second value which is created by the company is the life
changing value that is the coffee which is provided to the
customers are very much motivated after enjoying the drink
from the centers. It helps in the development of one’s own
career.
Value created: Wellness and therapeutic value.
Resource/core
competency used to
create the value
identified:
The third value which is created to the customers are the
wellness and therapeutic value. The coffee which is provided
to the customers are of the best class and helps the customers
to regain their physical health and wellness.
The resources or the core competencies which are used in
order to provide the best in class services to the customers are
TOUR335: Strategic Management in Tourism 3

LA#4 Concept Application #2: Competitive Advantage
involvement of bets customer services, focus on the quality of
the products and services offered and the easy availability of
the centers in any parts of the world.
TOUR335: Strategic Management in Tourism 4

LA#4 Concept Application #2: Competitive Advantage
4. Sustainable Competitive Advantage – Using the VRINE model, do you think that Starbucks has a sustainable competitive advantage?
Explain your answer. (4 marks)
Resource/
Core
Competency
Valuable Rare Inimitable or non-
substitutable
Exploitable Result
Is the
resource/core
competency
creating value
for customers?
Do other
companies
have this
resource/cor
e
competency?
Is this resource/core
competency hard to
imitate?
Is the company
taking advantage
of this resource/
core competency?
What does this mean for
competitive advantage?
Unwavering
focus on
quality
No Yes No No Disadvantage
Outstanding
customer
service
Yes No No No Competitive Parity
Continuous
product
advancement
Yes Yes No No Potential Advantage
Care for its
employees
Yes Yes No Yes Temporary Advantage
Drive to be
everywhere
Yes Yes Yes Yes Sustained Advantage
TOUR335: Strategic Management in Tourism 5

LA#4 Concept Application #2: Competitive Advantage
Sustainable competitive advantage? Yes/no
Explain your thinking (should be based on parts 2, 3, 4 above)
TOUR335: Strategic Management in Tourism 6

LA#4 Concept Application #2: Competitive Advantage
References
Taecharungroj, V. (2017). Starbucks’ marketing communications strategy on Twitter. Journal of Marketing Communications, 23(6), 552-571.
Shirdastian, H., Laroche, M., & Richard, M. O. (2017). Using big data analytics to study brand authenticity sentiments: The case of Starbucks on
Twitter. International Journal of Information Management.
Harrington, R. J., Ottenbacher, M. C., & Fauser, S. (2017). QSR brand value: Marketing mix dimensions among McDonald’s, KFC, Burger King,
Subway and Starbucks. International Journal of Contemporary Hospitality Management, 29(1), 551-570.
Wu, H. C. (2017). What drives experiential loyalty? A case study of Starbucks coffee chain in Taiwan. British Food Journal, 119(3), 468-496.
Rossing, C. P., Johansen, T. R., & Pearson, T. C. (2016). Tax Anti-avoidance Through Transfer Pricing: The Case of Starbucks UK. In Twenty-
Eighth Asian-Pacific Conference on International Accounting Issues: Program & Proceedings (p. 98). Asian-Pacific Conference.
Campbell, K., & Helleloid, D. (2016). Starbucks: Social responsibility and tax avoidance. Journal of Accounting Education, 37, 38-60.
Campbell, K., & Helleloid, D. (2016). Starbucks: Social responsibility and tax avoidance. Journal of Accounting Education, 37, 38-60.
Enz, C. A. (2009). Hospitality strategic management: Concepts and cases. John Wiley and Sons.
TOUR335: Strategic Management in Tourism 7