Starbucks has built its business on a number of key success factors. The first is that the company has built its brand on delivering a consistent customer experience that consumers value. The company developed a formula for what a successful coffee shop would be, and followed that formula every time it entered a new market. The company's franchise outlets also must follow this formula. The Starbucks Experience itself is something that the company seeks to utilize to bring in customers, by providing a relaxing "third place" for people to meet or relax (Michelli, 2006). The company's ability to deliver this experience consistently despite rapid growth around the world, and to have the same consistency in the quality of its coffee, is something that has allowed Starbucks to spread so rapidly, to charge premium prices, and to extend its brand into bottled drinks and other products (AMI, 2011).
While consistency has been a key success factor for Starbucks, so too has been its ability to adapt to local conditions within the framework of delivering the "Starbucks Experience." The company uses local partners to help it enter challenging markets, and this local experience helps the company to overcome operational challenges. Starbucks relies on its own expertise to overcome strategic challenges. For example, it needed to overcome a number of barriers when entering the Japanese market, such as the fact that Japanese people are not traditionally coffee drinkers and that they liked to smoke in social situations. Starbucks stuck with the no-smoking policy because it felt that would create a comfortable environment that new consumers would find attractive, and it added more tea drinks to the menu, and emphasized things like Frappuccinos instead of regular coffee as a means of convincing locals to buy there (McMillan, 2001). The company's success has been exceptional in that time, and it has since adapted these same ideas to the Chinese market.
Another key success factor for Starbucks has been with its management. In particular, CEO Howard Schultz provides leadership to the company, and it has almost always succeeded when he was in control. When he stepped down for a few years, the company began a downward slide that was only reversed when Schultz took back over the CEO job. The current leadership team has a finely-tuned understanding of the little things that make the stores successful, from the product mix to the customer service elements, to how to choose the best real estate. In this details-oriented business, having leaders and managers who understand the finer points of the business is essential to success.
The Starbucks brand is vulnerable in a few places. For the most part, its coffee shop business has been successful, though missteps in Israel, Germany and Australia hurt the company. However, the main areas of vulnerability lie with non-coffeeshop businesses. Starbucks does not have the same dominant share in many of its non-retail businesses. It has sought to grow its hotel business, its instant coffee, coffee pods, and bottled drinks. While the Starbucks brand has allowed many of these businesses to be successful, they appeal to different target markets that the company perhaps does not understand as well as it understands consumers. Additionally, Starbucks was not able to enter these markets with first-mover advantage. The company instead has had to build its business against entrenched players such as Nestle, Green Mountain and others. This has forced Starbucks to compete on an entirely different dynamic, rather than to simply build a new market.
Thus, Starbucks is vulnerable in its peripheral businesses. Some of these are billion-dollar businesses, so this threat is serious for Starbucks. The company also depends on some of these businesses for differentiation. Starbucks is also vulnerable with its other-brand businesses, such as Teavana and Evolution Fresh, both of which are nascent businesses for the company (Fox, 2012). New businesses are always more vulnerable that existing businesses, although the...
However, the company has in general enjoyed success overseas and as a result international sales now account for 27% of operating income (2010 Starbucks Annual Report). The international division remains a key source for growth at Starbucks, in particular the Chinese market, where Starbucks has enjoyed considerable success and now sits at over 500 stores. The company struggled in the mid-2000s due to two main factors. The first was the
There are other coffee chains in the country, but none of them are American, so Starbucks has an edge there. However, in more fashionable areas of Beijing there are Chinese coffee shops that offer their own take on a relaxing coffee shop experience. Starbucks must position not only against foreign competition and traditional Chinese tea culture, but against the inevitability of a Chinese-grown competitor. As CEO, I would recommend
However, the growth of the corporation introduced the concept of a fiduciary duty between stockholders and board members, in both open and closed corporations. (Stevenson, p.1144). Put succinctly, the board of directors has a duty to its shareholders to increase profits, and majority shareholders may have a duty to the corporation to vote in a way that increases profits. As a result, business ethics can actually conflict with both
There may be more closings in North America, as the company has reached saturation in many areas. In response to the glut of new, underperforming stores that emerged in 2006, Starbucks will return to its core philosophies regarding location scouting. New store openings will be slow in the next couple of years, but when the economy begins to pick up the company is expected to resume opening new outlets
The emphasis of Starbucks is to create an employee-centric model since they are ultimately the individuals who define the personality behind Starbucks. Therefore each store employee is given authority within their specific limitations of the workplace; they can make decisions on reimbursements, purchases, discounts and a variety of other small details. The strength of Starbuck's management system in this case is that they built it upon a platform of
Starbucks - Questions Why has Starbucks been so concerned with social responsibility in its overall corporate strategy? In the Corporate and Social Responsibility section of its website Starbucks promises to return back to society money for schools, roads, health centers and other needs. Why? "Because we've always believed that businesses can -- and should -- have a positive impact on the communities they serve" (Starbucks.com). It has been the Starbucks commitment
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now