¶ … organization can pursue in pursuit of a market. The most important breakdown is between being a cost leader with a low cost strategy and pursuing a differentiated strategy. A low cost strategy needs to be supported by tactics that allow the company to be the cheapest in its market, because they are trying to win over the customers that are most attracted to low prices. The differentiated company is not seeking to offer the lowest prices but it is seeking instead to justify charging higher prices by offering the customer a unique value proposition.
There are other approaches to strategy as well . For example, there is the customer relationship strategy, where a company differentiates itself by focusing on building strong relationships -- this is basically a tactic within the differentiated strategy, but it works quite strongly in some industries. An investment advisor, for example, is by his or her nature differentiated so the relationship is the most important part of the strategy for building business.
The network effect is when "the value of a product increases as more products are sold," I guess meaning a business that has a strategy that depends on building a large market share. A company like Microsoft has thrived with this strategy -- it really does not matter if Windows is the best operating system or not, because after a certain point 90% of people are using it and it becomes the default option. Business is one simply because everybody else is using it too, which means the software and networking capabilities rely on it.
Once a basic strategy has been identified, there are a number of strategic moves that a company can undertake in order to get closer to its strategic objectives. To enter into new markets, a beachhead is often utilized, gaining entry where opportunity exists and then building out from there into more challenging segments of the same market. Product differentiation is similar in that it seeks to find new ground, but does so not be approaching a weak segment but by developing a new one with an innovative product. It is also possible to enter a market with process innovation -- when you do something better than anybody else you can make a splash -- like when the iPhone was released and completely wiped out the Palm and Blackberry because it was so innovative. When all else fails, you can use mergers and acquisitions to enter a market, or a joint venture, some way of basically buying existing market share.
The product life cycle is a theoretical construct that has introduction, growth, maturity, saturation and decline. There is a strategy for each -- so introduction is growth -- because that makes sense. Also, the product life cycle doesn't hold up in the real world where many products enter maturity/saturation and stay there. Coca-Cola has been there for almost 100 years. So it's a theory that applies where technology changes and the product faces obsolescence, but not all product should be viewed with this lens.
The business life cycle is a similar concept -- introduction, growth, industry leaders, industry runners-up and weak organizations. The strategies are different for each of these as well. Industry runners-up in particular have a difficult time trying to find success while being at competitive disadvantage, in particular as the industry leaders seek to leverage their market strength. Weak organizations have extensive amounts of work to turn themselves around, lest they fail completely.
As noted in Chapter 2, cost leadership and differentiation are two strategies that can be followed. These can be adapted to the mass market, or a niche market. The principle is that a company must choose, that trying to strike a middle ground means that some competitors will undercut you, and others will have better products.
Essay #2. The company I am going to write about is Starbucks. They have a differentiated strategy, and have sought growth in a number of different ways, which makes them a great case study for the subjects of product life cycle, business life cycle, and generic strategy.
First, the generic strategy. Starbucks is a classic example of a differentiated strategy. The company sells what is otherwise a basic commodity -- coffee -- but seeks to differentiate its coffee offering in a number of ways. The first is that Starbucks was always intended to offer a "European" coffee shop experience, in contrast with things like diners and donut shops, which were the places where many Americans would have bought their morning coffee prior...
Starbucks' Strategy Key elements of success in Starbucks' organizational culture Today Starbucks Corporation has become a leading retailer, coffee brand and roaster all over the world. It has more than 12,000 licensed and company-operated locations in Europe, North America, Middle East, Latin America as well as Asia Pacific. The products that are offered by Starbucks along with their coffee are today being sold in many airports, hotels, grocery stores, universities and many
The company also has an interest in hiring internally. Staffing is a challenge for Starbucks, however, because of the company's growth rate and the need to maintain high standards of customer service (Weber, 2005). This is why the company emphasizes training to the extent it does, because training and enculturation is needed to support the staffing policy. Employee Training and Development Starbucks has an extensive training program in order to ensure
In this, Krispy Kreme's strategy appears to be more focused upon monetary profit than risk-taking strategies for the sake of long-term customer relations. The company's franchising practices for example show that monetary strategy takes precedence over long-term quality assurance, whereas Starbucks' focus is upon using the company's inherent strengths to ensure the company's future growth. 3. Outcomes In general, both Krispy Kreme and Starbucks show favorable outcomes as a result of their
Starbucks Coffee has been faced with a number of challenges in recent years. The company has faced intense competition from McDonald's, Dunkin' Donuts and from a number of imitators in international markets. This has resulted in the company's margins being squeezed in the domestic market (Jargon, 2009) and threatens the company's strong growth trajectory in emerging markets. Starbucks' strategy should focus the company on stabilizing its competitive position as a
Starbucks 2010 MOST ETHICAL RESTAURANT Starbucks Coffee Company was chosen Most Ethical Restaurant for 2010, according to strict screening methods and criteria (Ethisphere, 2010). These criteria were corporate citizenship and responsibility, corporate governance, innovation in public well-being, industry leadership, executive leadership, regulatory and reputation track record and internal systems and ethics or compliance program. Starbucks is the lone recipient of the award in the restaurant and cafe category (Ethisphere). Company History Starbucks Coffee Company
STARBUCKS Strategic management Starbuck Corporation: Analysis of its past and future Today, the name of the Starbucks Corporation is synonymous with a rather corporate version of overpriced coffee. But the company originated with the intention of bringing a customized European coffeehouse experience to the United States. Starbucks began as a small chain of four coffeehouses in Seattle. The business partners asked Howard Shultz to assume the helm of the company as head of
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