Starbucks Strategic Report: Tools, Strategic Planning, and Innovation

Verified

Added on  2023/06/12

|16
|4622
|378
Report
AI Summary
This report provides a comprehensive analysis of Starbucks' strategies in the U.S., focusing on the application of strategic tools and the utilization of deliberate and emergent strategies. It delves into the PESTLE analysis, Porter's Five Forces, and Bowman's Clock strategy to evaluate Starbucks' competitive position. The report assesses the advantages and disadvantages of Starbucks' strategic planning and emergent strategies, while also exploring existing and future innovations. Recommendations are offered, emphasizing product development and franchisee involvement in decision-making to foster creativity and adaptability in the face of evolving market dynamics and digital changes. The analysis highlights the importance of both deliberate and emergent innovation processes for maintaining profitability and market leadership, especially in response to events like the pandemic.
Document Page
Individual Coursework
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
TABLE OF CONTENT
EXECUTIVE SUMMARY ............................................................................................................3
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................5
Analysing the strategic tools........................................................................................................5
Evaluating the strategic planning by stating its advantages and disadvantages........................10
Evaluating the Emergent strategy by stating its advantages and disadvantages........................12
Evaluating Innovation existing and future with use of examples..............................................13
CONCLUSION..............................................................................................................................14
RECOMMENDATIONS...............................................................................................................15
REFERENCES..............................................................................................................................16
Document Page
EXECUTIVE SUMMARY
This report analyses ad evaluates about the Starbucks's strategies in the U.S. By having
the critical exploration of the strategies and the extent to which they used to have the deliberate
or the emergent strategies. The report is based on the Starbucks's which is the world's largest
coffee house chain and it has 33,833 stores in the 80 countries. The company must have the
strategic planning in order to have the effective work in the area where they are operating.
The report will explain about the various strategic tools related to the Starbucks by using
the PESTLE analysis which shows the different factors which are political, economic, social,
technological, legal and environmental. Further the strategic tools applied in the report are
Porter's Five Forces and Bowman Clock strategy. This tools helps the company to analyse about
the position in the competitive market. Further this report will conclude and explain about the
Starbucks strategic planning and emergent strategies by describing its advantages and
disadvantages. The below report will also make know about the innovation that is existing and
future with the examples of the Starbucks.
The report will describe about the deliberate approaches strategy and the emergent
strategy by describing its advantages and disadvantages. This will help the company to know
about the digital changes in the market. The innovations of the Starbucks's used to rely on the
deliberate process of innovation that helps the company to have the good profitability in the
market. The emergent innovations done by the company with the happening of the pandemic
makes the company to lead in the market.
The recommendation given to the company that they must have the focus on the product
development and make their franchisees to take part in the decision-making. As this will helps
the company to have the new and creative ideas rather than just supporting the decisions made by
the company.
Document Page
INTRODUCTION
As nowadays every company is using and possessing with the various types of strategies
which helps them to grow in the market. The current assignment is based on the Starbucks which
is an American multinational coffee house. The current report will outline the various strategic
tools which incudes the PESTLE, Porter's Five Forces and Bowman Clock strategy. Further this
report will outline the Starbucks strategic and emergent strategies by outlining its advantages and
disadvantages. Further this report will outline the innovation that is existing and future with the
examples and at last the report has outlined the recommendations.
Starbucks is the American multinational coffee house and the roasters reserves having its
headquartered in Seattle, Washington (homas and et.al., 2021). This organization is the world's
largest coffee house chain and it has 33,833 stores in the 80 countries. In US there are more than
8,900 stores operating. The company used to serve hot and cold drinks, pastries, beverages, and
many more items.
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
MAIN BODY
Analysing the strategic tools
PESTLE analysis of Starbucks
Factors Description
Political factors This is one of the most important factors that
has affected the company and the survivability
in the different market. As the company is
operating in many other countries they have to
follow the laws and regulations of the countries
where they are operating.
Economic Factors The continuing global economic recession is
the main factor that has affected the economic
drive of the organization. This factor is directly
linked with the profitability of the organization
(Pandey and et.al., 2021). In order to earn with
the profitability the company has to deal with
the rising labour and the operational costs. The
local currency rates and the taxes may also
affect the revenue of the company.
Social Factors As the main concern of the people is that the
company used to sell its products at high rate.
But if the company will be selling the products
at cheaper rates than they have to sacrifice the
quality they used to give it to their customers.
The organization used to focus on the
consumers and provide them quality.
Technological Factors The organization is in very good position in
order to enjoy the benefits in the current
market. It uses the new and innovative
technology which helps them to have fast
Document Page
work. They also use the WI-FI in order to
attract the customers.
Legal Factors This is the another main factor that must be
followed by the company in order to survive in
the market. The company must follow the rules
(PESTLE Analysis of Starbucks, 2022), laws
and regulations in the domestic market and in
the international market as well where they are
operating. They must also have the licence and
follow the licensing regulations and trade
regulations in order to have good operations.
Environmental Factors As the company used to provide the drinks in
the disposable glass which will affect the
environment. The company must follow the
environmental rules and regulations to have the
good profitability in the market.
SWOT analysis of Starbucks
Strengths
These are the positive factors of the company
which will make the organization to grow in
the market. The main strengths of Starbucks is
to have the good financial performance which
makes the company to grow in the market
Basak and et.al., (2020). The value of the
company is more than 4 Billion as compared to
its competitors. It has the largest coffee house
in terms of size and high volumes.
Weaknesses
As the company is the largest coffee house
seller so it is highly dependent on the coffee
beans which may affect the profitability of the
organization. The company must used to
diversify its products range which helps them
to have the good competition in the market.
The weakness of the company is that they used
to sell the products at high rate which cannot
be affordable for all to have the products.
Opportunities Threats
Document Page
the great opportunity that the organization have
is tat they can expand its suppliers network in
order to diversify the source of inputs. They
also have opportunity to expand its products
offerings which includes the food and
beverages as well.
The company can also expand its market in the
various other market as it is very trending in
the present time.
The big threat that the company can faces the
rise in the prices of the coffee beans and affect
in the supply chain that are related to the
fluctuation in the prices. The organization is
the largest coffee house producer so it has to
face the lots of competition in the market.
In order to operate in the different market the
company has to face the lots of difficulty in
order to follow the laws and regulations.
Porter's Five forces of Starbucks
Forces Description
Threat of new entrants The threat of new brand in the market of the
company can be decided by focusing on the
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
brand equity of the new firm. As the company
is the well- known brand having the high
market sabre so for the new entrant it will be
difficult and the time- consuming process for
them to have the same market share.
Threat of substitutes The threats of the substitutes is high on the
organization as there are many competitors in
the market. The substitutes products of the
company are coffee, smoothies, tea and baked
goods (Abdel-Basset Mohamed and
Smarandache, 2018). As there are the
companies which used to sell the ready drinks
which may affect the profitability of the
company. The customers has many other
options to drink the best coffee available in the
coffee machines.
Bargaining power of suppliers The raw material that the company uses in the
production are related to the food materials.
The company not cultivate its raw material as
they used to take from the farmers or from the
suppliers. As the farmers and suppliers are fix
so the bargaining power of the supplier is less
against the organization.
Bargaining power of customers The organization has experience that the
bargaining power of the buyers and customers
is having the strong force. As the customers
used to purchase the coffee for themselves
rather than having the bulk so this may affect
the bargaining power. So by this it can be
concluded that the bargaining power of the
Document Page
consumers is very less, as they are not the
regular customers to purchase product in bulk.
Competitive rivalry The cited organization used to face the lots of
competition in the food services and coffee
house industries (Basset, Sangaiah, and Jain,
2018). This is the important force which used
to affect the profitability of the company. As
there are large number of firms dealing in the
same kind of products so this may affect the
market of the company.
Bowman's Clock Strategy:
The Bowman strategy is the strategic clock which used to provide the various options in
order to position within the market based including the price and its value. There are eight
positions in this model which are described as below;
1. Low price and Low value added: In this strategy, the rices is relatively low
which helps the company to have competition in the market. The prices of the
products and the services offers is very low.
Document Page
2. Low Price: In this strategy, the company used to produce the large quantity of
products. By producing the quantity at the large they it helps them to sell products
at low prices by having the low profit margin (Lombardi, Chidiac and Record,
2021).
3. Hybrid: This strategy is very effective as it helps the company to sell its products
at affordable price by having the differentiation in the products.
4. Differentiation: In this strategy the company used to provide their consumers the
maximum level of satisfaction. They used to sell the unique products which
attracts the customers to have that product.
5. Focused strategy: This strategy used to target the position of the product or
service at the goof prices. The buyers are ready to sell its products at the higher
rates.
6. Risk High Margins: In this the company used to sell its products at the high
prices and if the customers used to buy that product than the company will be
having good profit.
7. Monopoly pricing: The monopoly is the situation where there is only one
business in the market. This used to set their own value and prices of the product
as they are the single seller in the market.
8. Loss of Market Share: This is the position of the company where they used to
sell products at high profit margin and gain loss.
From the above different positions Starbucks uses the Differentiation strategy which
helps the organization tos ell the differentiated products in the market. By this the company used
to provide their consumers the maximum level of satisfaction by selling the different products at
the good prices Duke, (2018). The company used to sell the unique products which attracts the
customers to taste the products of the company. By this it will help the organization to earn the
good profitability in the market as it is operating in the different countries.
Evaluating the strategic planning by stating its advantages and disadvantages
The strategic planning refers to the process which helps the company's leader to
determine their vision for the future and helps them to identify the goals. It helps the company to
establish the proper goals that will helps them to reach the goals. The strategic planning usually
involves the series of action which helps the company to grow in the market. The deliberate
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
strategy is the type of strategy that is planned and formulated internationally. In order to meet the
goals it must follow the three conditions: organizational details should exist, strategy must be
proper and by that the environment must be predictable. The organization has the different roles
in order to analyse the market and for making the best decisions which helps them to achieve the
goals in the market.
By following the guidelines the phase of the Starbucks's digital transformation strategy
was done in order to get the fundamental rights. This was done by analysing the industry and the
advancements in the technology. The company used to have the technological growth objectives
which helps the company to have the great strategic planning in the market. The power of the
external shareholders and stakeholders used to have impact on the business strategy. The
imposed strategy on the business by the direction of the company can influence the strategic
planning process of the cited organization. Starbucks's as the organization must listen to their
customers in order to collect the data that is driven to have the good decision-making on the
company. The advantages and disadvantages of the strategic planning are as described below:
Advantages
1.By formulating the strategy it helps in analysing the environment that used to provide
the accurate view for the long term as the cited organization has the deliberate strategy which
helps them to grow in the market.
2. The planned strategy is guided by experimenting and having the emphasis on the
learning which is beneficial for the company (Dumon and et.al., 2019). By testing
the all technological innovation before implementing the digital transformation
strategy has brought the company to increase in the sales.
3. The vision made by the leader has brought the changes in the strategy which used
to play the important role in the guiding the planned strategy. This will helps the
company to increase its stores in the competitive market.
Disadvantages
1. The drawback of the strategic planning is that it is the time- consuming process,
as the experimentation may take long time in order to give the opportunities to the
competitors in order to act more quickly to compete in the market.
Document Page
2. There are various inherent risks and issues that could be emerged. In order to have
focus on that issues the made and planned strategy proves to be inappropriate and
detrimental to the organization.
3. By having the pre planning it will the organization will be having the lack of new
and innovative things coming in the market.
4. If the cited organization is doing the strategic planning than it creates the rigidity
in the working goals of the company.
Evaluating the Emergent strategy by stating its advantages and disadvantages
The emergent strategy is the pattern in order to have the action that is not pre panned and
this is made on the sudden situation in the market. This strategy used to describe those strategies
that are not internationally planned but which used to change from the business practices,
opportunities and changes in the market(Ahmadi and Abadi, 2020). Emergent strategy used to
result in the traditional methods that is based on doing the things or developing the past decisions
of the company. Starbucks's digital transformation strategy is evaluated as the emergent strategy
which helps the company to grow in the market. The emergent strategy is the strategy that it
arises in the unplanned actions and initiatives taken by the organization. By the happening of the
pandemic the company has made the emergent strategy which helps the company to cope up
with the worst situation in the market. Thus, the emergent strategy the company can do the
innovation according to the situation in the market.
The individuals by having the past experience may also affect the decision- making and
the priorities by bargaining and negotiating rather than just planning and analysing the situation.
The current global situation of the COVID- 19 has caused Starbucks's the long term guidance
and helps them to overcome from the uncertainty happens in the economy. The organization is
managing all the areas of the business in order to ensure that the things will be done best by
managing the goals and achieve the long- term success. Due to limited coffee house in the
market the company has increased in the sales after the happening of the pandemic. The
advantages and disadvantages of this strategy are as follows:
Advantages
1. By continuing testing the market and implementing the strategy, the cited
organization has the opportunity to learn about the new market. This will make
chevron_up_icon
1 out of 16
circle_padding
hide_on_mobile
zoom_out_icon
[object Object]