Starbucks Case Study: Innovation Labs, Competitive Advantage, Growth

This case study examines Starbucks' strategic management, focusing on its innovation strategies, particularly the Tryer Center innovation labs. Established in 1971, Starbucks has grown into a global coffee market leader through continuous innovation. The study highlights Starbucks' strengths, such as its brand goodwill and financial performance, and weaknesses, including reliance on worker performance and pricing challenges. Opportunities include targeting consumers with diverse beverage options, while threats involve potential financial losses from project failures and intense market competition. The innovation labs aim to launch new flavors every 100 days, enhancing competitiveness against rivals like McDonald's. The report concludes that Starbucks' innovation strategies hold significant potential for growth but also carry risks that must be carefully managed. Desklib offers similar case studies and solved assignments for students.

Strategic Management Insight

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Contents
INTRODUCTION.................................................................................................................................1
Background of the firm..........................................................................................................................1
Starbucks Case......................................................................................................................................2
Strengths............................................................................................................................................2
Weaknesses.......................................................................................................................................3
Opportunities.....................................................................................................................................3
Threats...............................................................................................................................................4
Conclusion.............................................................................................................................................4
References.............................................................................................................................................5

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INTRODUCTION
Business management plays an essential role in the business growth. There are large numbers
of companies and successful firms who have approved powerful strategies within their
business at the global levels to develop these kinds of markets. In today’s time, new
information technology has greater impact on the society. With the assistance of technology a
company will be able to achieve new discoveries (Hong, Kallarakal, Moina & Hopkins,
2019). This firm is known as firm that leads industry and has been successful in the global
market. Firm has implemented different strategies of innovation which has made them greater
competitive force within the global market. Today, firm has approved new business research
which will help them in becoming fruitful in the coming future.
In this part of the report, a thorough evaluation about strategies which freshly gained by the
firm and their impact stages of these strategies in the Starbucks has been described in an
efficient and effective way.
Background of the firm
Starbucks is a Seattle based firm and was established in the year 1971. Gorgon Browker, Zev
Sigel, and Jerry Baldwin are the three friends that opened at the coffee shops. They began to
deliver and offer fresh roasted, gourmet coffee beans and other type of snacks to their
customers. This made them successful. It has opened a branded coffee chain in higher than 35
nations all across the global market. The firm provides cold and hot coffee with some of the
food items like tea, coffee drinks as well as beans. This firm manages more than 7000 stores
in an around 10 nations and larger numbers of outlets are established within the United States
of America (MacDonald, 2009). In order to make successful business, the firm has
interrupted different kinds of new services like mobile based apps introduction, offering
brewing coffee etc. Due to these innovations are highly successful within the marketplace
(Hossain & Islam, 2015).
Starbucks Case
By seeing the difficulties in the market, this firm in the November 2018 has created a new
innovation lab. This firm understands the fact that consumers taste is altering at much faster
rate when compared to past hence the firm has set up the innovation labs to meet the demands
of the customers. They adopted fresh approach to alter the Starbucks (Taylor, 2019). These
labs is known by the name Tryer Centre of which the headquarter lies in the Seattle. This firm

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has currently constructed 20,000 square foot of space that houses its Tryer Innovation Centre.
The primary objective of these labs is to develop new kinds of innovation in their brand and
at the same time also help them in focusing on creating an innovative beverage platform
which can assist them in creating a better experience for their customers (Rogers, 2019).
From its launch in six months back, Starbucks experimented higher than 100 projects that are
unique at their innovation labs. In all these projects greater than 1500 employees are included
hence contributing towards making the project successful. Kevin Johnson, Starbuck’s CEO
states that approximately more than hub’s 40 projects are presently being utilized in some or
the other way. Starbucks through these innovation labs are capable to create a prototype of
single cup brewing which is able to brew the coffee within two minutes. At the same time it
also automatically takes out coffees making it easier for the Barista. Primary emphasis of
these labs was to search a new clue and gets converted it in an action in the period of hundred
days. Similar project also emphasizing on generating a healthier relationship with digital
mediums by utilizing fast copying by the help of 3D printer and at the same time improving
the delivery mechanism. This is because why Starbucks emphasizing on accumulating
innovative tastes to the beverages lists. On larger note workers can buying this kind of new
beverages at $5 to taste these new kinds of flavors. By paying this, their employees have
tested more than 200 beverages. It has developed a new type of system for customers to find
out their movable orders (Warnick, 2019).
Strengths
 Major strength of the cited firm is its goodwill and brand. This firm has produced new
flavors in the industry in a more efficient manner. The customers wait for the new
flavors with higher eagerness. Due to this, Starbucks does not need to focus on solid
marketing for finding a product that is new within the marketplace.
 It is found that similar projects might assist the firm in improving its growth in the
sales by 4% in the US. Due to this, the innovation labs is just one way Starbucks is
moving towards innovation style quicker than any time previously.
 This firm has a good performance related to finance within the market at international
level. Due to this, a firm might be capable of managing the resources related to
finance in a more efficient manner. This might help them in making the innovation
successful.

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 Starbuck’s man power is good and overall project comprises of more than 1500
employees. Due to this, employee’s soft skills lead its projects to be more successful.
This allows them to arise with the flavors that are new in every hundred days.
 This firm was also capable to make changes within workplace in an efficient manner
by creating 133 exclusive projects and at the same time, they have applied for forty
projects within different operational regions (Kline & Fool, 2019).
Weaknesses
 Project’s accomplishment is mainly dependent on its main and primary inputs such as
their workers. Any kind of discrepancies or laggings in the performance of the
workers can impact on the total accomplishment of the project at a major level.
 New tastes are priced at top levels or at middle levels within the segment in the
market. This makes the offerings out of the reach of the middle class working
customers who switches to the options like McDonalds or any other brand outlets.
 In the current time, Starbucks came within the line for their practices related to
procurement with different types of social and environment related events that point
to unethical practices for procurement. This makes it tougher for a firm to recover the
customer’s faith for their new products inappropriate way.
Opportunities
 With the help of such project Starbucks has availed many big opportunities. This firm
is able to target their consumers in a more appropriate manner by proving larger
numbers of different options in the beverage industry. It will assist in targeting
customers in highly effective way.
 Such innovative taste will provide Starbucks with new look. This will also enable the
firm to contest with their primary competitors like McDonalds and others and hence
satisfying the requirements of the people in a more efficient way than their
competitors and hence making them a more competitive company than ever.
 It will also give employees with an opportunity to improve their skills which will
assist them in holding the firm’s employee in a more efficient way.
 A firm might be capable to improve its growth in the sales by four percent with
assistance of similar projects in the coming future. It will give Starbucks an
opportunity to develop within the international market in more efficient manner.

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Threats
 Since the investment in the projects at the Tryer Centre is huge hence any kind of
failure in smooth running of the labs will not give firms with returns that they
expected. Due to this, firm might face heavy loses within the market and will have
impact on the overall performance of the firm at the higher levels.
 In the highly competitive market, it is difficult for the firm to target their consumers
efficiently. There is significant enhancement in the competition and due to this there
is a race of competitive pricing. This will have impact on the overall financial
performance of the firm and hence such projects might not get success.
 Starbucks is also facing challenges in the form of customer taste management. Since
the company is destined to produce in every 100 days hence they are now able to
manage the taste of the consumers. This firm has a 100 days project and if they fail to
do so, it might have impact on the image and the goodwill of the firm working at
higher levels (Warnick, 2019).
Conclusion
From the above based report, it can be concluded that Starbucks is one of the major firms in
the global coffee market. This firm has undertaken many strategies so as to ensure their
success in the international marketplace. Right now they have business in more than 35
nations and they have targeted new set of customers for their offerings. In the last decade, this
firm has launched Tryer Centre or innovation labs to innovate new flavors in 100 days. Their
already existing 40 flavors made it essential for the firm to aim to new set of customers in a
more desired way. It might provide an opportunity to the firm to fulfill the requirements of its
customers in highly efficient manner than their rivals. In the meanwhile, this firm has
invested a huge amount of money on different projects and any failure to these will affect the
overall operation of the firm.

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References
Dorn, M., Messner, C., & Wänke, M. (2016). Partitioning the choice task makes Starbucks
coffee taste better. Journal of Marketing Behavior, 1(3-4), 363-384.
Hong, P. C., Kallarakal, T. K., Moina, M., & Hopkins, M. (2019). Managing change, growth
and transformation: Case studies of organizations in an emerging economy. Journal of
Management Development, 38(4), 298-311.
Hossain, M., & Islam, K. Z. (2015). Generating ideas on online platforms: A case study of
“My Starbucks Idea”. Arab Economic and Business Journal, 10(2), 102-111.
Kline D.B. & Fool, M. (2019). Inside Starbucks' secret laboratory, they brew change at a
caffeinated pace. Retrieved from:
https://www.usatoday.com/story/money/2019/06/24/inside-starbucks-secret-
laboratory-they-brew-change-at-a-caffeinated-pace/39581675/
MacDonald, K. (2009). Globalising justice within coffee supply chains? Fair Trade,
Starbucks and the transformation of supply chain governance. Third World
Quarterly, 28(4), 793-812.
Rogers, K. (2019). Starbucks is speeding up innovation at its Seattle research hub. Retrieved
from: https://www.cnbc.com/2019/05/02/starbucks-is-speeding-up-innovation-at-its-
seattle-research-hub.html
Taylor, K. (2019). Starbucks has a new innovation lab that developed more than 130 projects
in under a year, including tech updates, Instagram-worthy drinks, and soup-making
equipment. Retrieved from: https://www.businessinsider.in/starbucks-has-a-new-
innovation-lab-that-developed-more-than-130-projects-in-under-a-year-including-
tech-updates-instagram-worthy-drinks-and-soup-making-equipment/articleshow/
69774303.cms
Warnick, J. (2019). Inside the Tryer Center, the Starbucks lab where anything is possible.
Retrieved from: https://stories.starbucks.com/stories/2019/inside-the-tryer-center-the-
starbucks-lab-where-anything-is-possible/

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