MGT510: Starbucks Corporate Strategy Analysis and Evaluation

This report provides an in-depth analysis of Starbucks Corporation's corporate-level strategy, focusing on its market development and transnational approach. The paper begins with an executive summary and an overview of Starbucks, followed by an examination of its corporate strategies, including market penetration, product development, market development, and diversification, as defined by the Ansoff matrix. The report then evaluates the suitability of Starbucks' current strategies, highlighting the company's use of a transnational strategy. Finally, it recommends strategic initiatives such as joint ventures and non-equity strategic alliances to enhance Starbucks' market share and business expansion, concluding with a summary of the company's successful growth strategies and recommendations for continued success.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive summary
This paper is going to focus on the corporate level strategy of the company, Starbucks
Corporation and discuss how the strategies have beenfitted the organization that has helped
the organziation grow to become a huge success in the market. This paper will evaluate the
corporate strategies of the company and will provide suitable recommendation to incorporate
different startegic alliance in the company that will help Starbucks gaining competitive
advantage and will also help in maximizing their profits which contribute to their growth of
the business.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Brief overview of the company..............................................................................................3
Corporate level strategy of Starbucks....................................................................................3
Evaluation of the current strategies of Starbucks...................................................................4
Recommendation....................................................................................................................5
Conclusion..................................................................................................................................6

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Introduction
Corporate level strategy is said to be the decision of a business that affects the entire
company. It usually affects the management, human resource, finances of the company and
also where the products of the company are sold (Adamides, 2015). The main purpose of
corporate-level strategy in the business is to generate more profts and maintain their financial
success in the near future. This also helps in increasing the competitive advantage of the
organization and be a unique service or a product to their customers (He and Balmer, 2013).
This paper is going to focus on the corporate level strategy of Starbucks corporation and
provide suitable recommendation to the organization to help them gain more profits in the
market.
Discussion
Brief overview of the company
Starbucks Corporation is an American coffehouse chain and a coffee company. The
comapny was founded in the year 1971 in Seattle, Washington (Starbucks.in, 2019). The
current CEO of the company is Kevin Johnson and the company operates worldwide with
over 30,000 locations worldwide.
Corporate level strategy of Starbucks
Starbucks is one of the largest fast food joints in terms of the number of locations they
operate in and is often considerd to be one of the most successful companies. One of the
biggest factor that has contributed to the success of Starbucks is the strategies that have been
incorporated by the company. The corporate strategy that the company has taken is market
development. Starbucks has put a lot of emphasis on developing their market and expand
their business further in other countries to generate more profits and has contributed to the
successful growth of the comapany. Accoridng to the Ansoff matrix there are four strategies
which are market penetration, product development, market development and diversification
which help in the growth of a company (Hussain et al, 2013). Starbucks has been seen to use
all the four strategies for the growth and expansion of their business.

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Market penetration is one of the stratgies that usually aims on icreasing the sales of
the products in the existing markets (McDONALD, 2016). Starbucks to increase their sales in
order to acquire great customer satisfaction started writing the names of the customers on the
coffee cups. This became very popular and thus many people visited the coffee shop for this.
The next strategy according to the Ansoff matrix is product development. The main of
product development is to maximize the sales of a company by introducing or launching new
services or products in the existing market (Yuen, 2013). Starbucks does not only provide
different coffee falvours and juices but has also introduced their range of premium coffee
beans that are made with exclusive and rare coffee beans which has helped the company in
giving a competitive advanatge in the market. Starbucks also has their range of products like
their customized coffee mugs and sippers which they sell in their coffee shops.
Market development is the strategy which helps in gowing the sales of the company
by introducing their exixting products in the new market (Titman, Wei & Xie, 2013). This is
one of the major corporate level strategy that has helped the organization grow. Starbucks
currently operates in more that 30,000 location all over the world and has been planning to
expand more to maximize theri sales.
Diversification is said to be launching new products in new market that helps in
increasing the sales of the company by significant amounts. According to reports, Starbucks
has been planning on coming up with a new range of food to maximize their sales. However,
it has been seen that Starbucks already introduced a range of food that compliments their
beverages but not as an importnat source of revenue. This form of diversification is very
similar to the current range of products that they already sell in the market thus known as
related diversification.
It can be seen that Starbucks has been using several strategies that has helepd them
grow and develop their market not only in the United States but also in countries across the
globe.
Evaluation of the current strategies of Starbucks
From the above analysis of the current growth stratgies that have been incorporated
by Starbucks it can be seen that Starbucks uses transnational strategy. According to scholars,
transnational strategy is considered to be a very personalized approach to market the goods

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and services of an organization and sell the products to the target audience (Schurr &
Fredrich, 2015). Transnational strategies is said to be the combination of the global as well as
the multi-domestic strategies. According to scholars, every country has a different climate in
terms of business and thus it is important for companies to have the ability to weave
resources together in order to stich the final outcome while taking cognizance and respectig
the differences that may come up as a result of some multi country operations (Kolk, 2015). It
has been seen that Starbucks may have changed the taste of the food available in the stores in
different countries as per the taste pallete of the people but they have not changed thier style
and the way they operate. The stores look the same and they write names in the coffee cups in
all the outlets be it in any country. This has helped them in gaining a competitive advantage
and has also helped in becoming a huge success. However, Starbucks has been facing some
issues in terms of their growth because of the competition faced by the home grown
companies in diffeernt countries.
Recommendation
By analyzing the corporate leevl strategy of Starbucks it can be seen that the company has
been successful in growig because of the use of growth strategies efficiently in the company.
However, to grow and develop more in the foreign market Starbucks can use more startegic
initiative for the growth of the organization. The strategic initiatives can be the following:
 Joint-venture- Starbucks can create a new joint venture with a beverage company to
create new products. According to scholars, joint venture is a business that is created
by two or more than two parties where they usualy share governance, ownership and
the shared risks and return (Killing, 2017). This will help Starbucks improving their
menu and introdcuing new products which will help the company in gaining a
competitve advanatge. Amici (2013) opines joint venture is cost efficient and will
help the organization experiment without a huge amount of cost put in the new
initiative.
 Non-equity strategic alliance- This involve two or more than two firms develop a
relationship based on a contract to share their unique capabilities and resources to
gain competitive advanatge (Lin & Darnall, 2015). Starbucks can create a contractual
relationship with a fast food joint and sell their products with their products to
maximize their products.

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Conclusion
Starbucks Corporation is one fo the most successful companies because of all the
growth startegies that ahs been used and incorporated by the company in their business. The
transnational startegy undertaken by Starbucks has been proven to be successful that has
resulted in the organzization expanding their business and developing the market for the
benefit of the organization. However, in order to retain the position and continuosly grow in
the market Starbucks can use joint-venture and non-equity strategic alliance to grow their
market share and expand their business successfully. These startegic alliances will help
Starbucks in gaining a competitve advanatge in the market and continue to grow in the
market.

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