Custom «Strategic Position and the Business Model of Starbuck Company» Essay Paper

Starbucks Company has initiated a differentiation strategy that provides goods, and various customer services whilst giving prospects that make them discrete among their competitors. The main objective of this strategy is to attain several merits by offering better products or services at same or a restricted cost (John 2008). Starbucks Company ensures it has an exclusive market for marketing the products. This is based on the notion that if a product resembles other products from other companies, the consumers would have no motivation to buy it. Starbucks is positioned in the market as a highly regarded brand such that the company has planned its positioning in such a way that it differentiates their products from competing brands. This gives them the maximum tactical profits in their anticipated sales.

Starbucks Company has reminiscent basic accounts, which prompt the consumer’s morale. The company also has positioning strategy that is regularly customer-oriented for it to give the paramount service in an improved manner than the customer’s expectations. Starbucks Company has extended a destructive profit over consumer gratification as well as employee fulfilment. This is due to the initiation of the positioning strategy that advocates for the consumer and provides the extreme facilities. These facilities differ in terms of layout, equipment along with music. Consequently, the workers’ consent of Starbucks Company makes them associates whilst offering the associates personal security. This includes the right to partake in the decision making in the Company for it to grow (Johnson, Scholes, & Whittington 2005). The strategy is as well imperative and suitable for the numerous coffee bars in the U.S that create a key challenge to the Starbucks Company. An additional strategic position of Starbucks Company entails the idea of market segmentation, which guarantees that consumers are separated into dissimilar groups as per their market capabilities. This also includes the store location of the Starbucks Company where people love their coffee.

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The business model of Starbucks Company is different according to different quarters it is calculated. For example, the company had a poor operating cost in the 2008. The highest income was estimated to range between 12% and $2,526 billion while the operating income decreased to 26,1% to $178,2 million. The net income also decreased to 21% to $108,7 million. Starbucks Company possessed at the time that were worth 84,8% of their total revenue, that was; ($2,143 billion/$2,526 billion), which had decreased from 85,2% in the second quarter of the year 2007. The Starbucks business model also shows that the company invests a lot of money into their stores. This is due to their large scale even in circumstances with meagre working conditions. The Company also had stores that had a significant income compared to the certified stores. For instance, on a $700,000 annual income, a certified store would have a net worth ranging from $35,000 to $40,000. This is determined by the locality of the approved store regardless of the contemporary financial conditions. Starbucks Company would collect approximate revenue of $50,000 to $100,000 income before it improved its strategies. Starbucks Company makes certain that their business model is able to expand. The Company is also hoping that the current working situation will endure for the subsequent three years. Therefore, the Company spends more money on company owned stores globally as well as the one in the United States.

Starbucks Company has also created its community as one of their strategic positioning ideas. This enables the Company market their brand to several people. For instance, their website persuades their customers to put across their analysis on the company and its operations. The clients are also expected to link to discussions about the company. Starbucks Company has also created a Webolutions site to address complains and proposals made by their customers. The business has moreover approved of the modernization strategy that enables them to add diverse flavours to their coffee as well as other snacks they offer. Starbucks Company was also the initial pioneering companies to fix internet means in their stores. This has made the company rank at the top position among other competitors. More so, the Company has enhanced the consumer care service. For instance, instead of using the phone function service as an industrial model, the company fancies superior and enhanced consumer knowledge. This comprises of creating the paramount regulatory services to augment consumer contentment.

Starbucks Company has, in addition, prepared an immense strategic positioning of handling people with self-esteem and respect. This also includes the application of the highest strategies in running the business in order to sustain good fitness verification. Starbucks evades all the media indignity, which could taint their reflection in the community leading to a decline in sales. This goes with a key concern in the positive improve the society and the surroundings. Their main concerns in addressing the environmental issues include the development of practices with the farmers to guarantee that they distribute classic beans, which suits the company’s standards. The Company also links the farmers with the right channels, which guarantees them the right payment and participation in economic development. Starbucks also participates in strategic trade fairs that include the participation of several individuals. The trade fairs are extensively carried out to raise funds, which help in several community development projects as well as creating consciousness to the community about the Starbuck Corporation. The tactical positioning of Starbucks Company has instituted numerous moderations to suit its general performance. Furthermore, the world benefits wholly from the Company’s welfare projects. For instance, the education and health sector obtain substantial funds that aid in the growth of the U.S along with other countries financial system. Starbucks Company has created occupations to youths by creating several industries all over the world. With such strategies, the Company continues to be among the top coffee dealers in the world. Generally, their differentiation strategy has led them to greater miles compared to their competitors. This is the reason as to why the executive staff at Starbucks hold on to this strategy if the prosperity of the company is to grow in the future.

Future Strategies of Starbucks Company

The strategy theory may possibly explain the potential policies of Starbucks Company. The future of the company is determined by the current analysis of the performance as well as market performance. The strategy hypothesis includes Starbucks Company key aims and policies into a complex plan that consists of short-term and long-term goals. The strategy theory will determine the current position the Starbuck Company sails in and so as to determine the prospect position. This is by taking action to the accessible business chances along with exploring their limitations plus strong points. The strategy theory will allow Starbucks Company to classify a unique management tasks at the commercial intensity in order to gather its tactical position in the competitive business world (Andrews 2001).

The origin of the financial and non-economic aids also matters as per the strategy theory that the Starbucks Company will need to analyze. This will give them a future dimension of how to operate with other stakeholders. For instance, Starbucks Company acquisition of Evolution Fresh juice Company. The amount of money Starbucks Company disburses to purchase the company is resolute by their lasting objectives predetermined by their implementation of the strategy theory. Since Starbucks Company considers this achievement as a vital planned decision that will assist them to reinvent their set rules. Starbucks will distribute the juice to its worldwide stores and include it in a health-and-wellness retail formation. The succession is expected to be worthy more than $1 billion shillings for Evolution Fresh Company.

The strategy theory, in addition, stresses on the appearance of the strategic intention of Starbucks Company. This is the principle the corporation wishes to achieve in the prospect. For example, the business assumes that there is a limited flooded market, which drives them to publicize their shareholders along with their eventual arrangement. This comprises of at least three thousand original sites in the United States in a span of five years. Starbucks Company as well hopes to expand its stores in order to increase the international path and make China their greater market. Additionally, the Company owns a target policy of joining the Verismo system, Starbucks VIA, Ready Brew and K-Cup so as to form the sturdiest line-up of quality single-serve options of international coffee (Craig 2005). Starbucks also expands its association with their consumers through the assimilation of collective along with digital media in order to serve their consumers across the world. Moreover, the Company aims at augmenting the level of commitment and mobile payments forms so as to expand the consumer familiarity. Starbucks Company besides has additional strategic intent of reiterating the leadership positions in the forty billion dollars universal market tea as well as the plans to acquire Tevana. This will also comprise of the reiterated commitment to their general commitment in Western Europe.

The strategy theory supports the actions that ought to be in use to guarantee the Company continued domination of the market. For instance, the business could focus on a complete strategy of marketing their coffee rather than major in other fields like starting a movie, music in addition to book promotion occupations. This raises their cost of manufacture thus, their coffee sell outs decline. In an endeavour to fix up the Company’s product name, Starbucks first should address an important matter of persuading about the best quality of Starbucks coffee compared to other coffee companies and beverages. This is essential since if the extensive insight is that McDonald’s coffee is analogous to Starbucks coffee, there would be lack of stimulus for consumers to pay a quality price for Starbucks coffee. In order to resolve this difficulty, Starbucks Company ought to be more adamant in their advertising campaigns so as to educate and recommend to the public the specialty plus uniqueness of Starbucks coffee. For instance, the past statistics indicate that in 2006, Starbucks allocated thirty eight million dollars on promotion, contrasted to seven hundred and eighty-two million dollars billed by their closest adversary, McDonalds. Subsequently, Dunkin Donuts, which is extensively, minor than Starbucks Company, set $116 million on publicity the same year. From these figures, it is apparent that as the incumbents, Starbucks Company needs to increase its advertising efforts in order to maintain leadership in the coffee industry in the future (Hax 2007).   

Porter’s five forces analysis would also help Starbucks Company to improve its strategic position. This is by analyzing its substitute products like those of MacDonald’s beverages; they could offer other different “Quick-grab” foodstuffs like burritos, burgers, sushi, tacos, along with snack food. Their tactical position may possibly be enhanced by giving deluxe spaces for their consumers to hang out. For instance, ice-cream parlours, side-walk cafes, bars, pubs, and fast food places that is distinct from other competitors. The Starbucks Company could also invent ways to create capital, which acts as a major difficulty to other businesses in the fast foods. This would enable them to dictate the price of coffee in the market. Additionally, the paper, plastic products suppliers like cups, napkins as well as lids would consider their prices due to the alternative dealers Starbuck Company would advance (Grant 2000). Starbucks Company does not give bargaining power to the dealers because of their strategic position in the market, an alternative and strategy that helps them flourish in the market. More so, the Starbucks Company has made sure to utilize the innovative expertise expansively to advance their customer services. For example, the use of computerized coffee machinery, latte and espresso machines, which are supplied by a few dealers. The negotiating power of consumers in Starbucks has been enhanced in comparison with the past. This is because of the subsistence of other coffee businesses, which would offer inferior prices. Starbucks Company makes sure it gives their customers the chance to acquire their products at a price they are contented with so as to maintain the clients.

The above discussed theories and models would change the strategic position of the Starbucks Company. For example, Starbucks Company has a trustworthy propensity to conserve the environment and be principled in their business. This gives the company a greater public image, which serves to counter some censure that its sheer size creates. The size of Starbucks Company also aids in its level of publicity among others. The publicity helps Starbucks Company to be dominant among their competitors in the industry in terms of size and volume, which allows them to set their distinct prices and avert the expansion of other companies. Starbucks Company would as well effectively disfigure the public opinion of their coffee products from manufactured goods to a comfort good in the prospect. Consequently, this will allow them to add to the prices for their coffee goods to a greater deal, which would have been impossible before. Supplementary strategies to increase Starbucks Company comprise of purchasing companies such as XM Café, Seattle’s Best, and Tazo Tea.  Starbucks Company possibly will use an assorted brand name so as to start businesses in diverse markets. Starbucks also offers a variety of products that it sells to supplementary companies such as its bottled Frappuccinos and other specialty goods, which enlarge its market at a lower cost than opening full branches. The Company would use their vast resources to expand international businesses. This will bring more income for Starbucks Company in addition to improving their brand representation. Since one of their major predictions is in growing their business with their vast prosperity. In conclusion, Starbucks Company is best suited to adopt the strategic business model that will change its future objectives. This will also enable the Company expand more and offer excellent services to their consumers. The strategy theory is perfect for the Company’s analysis along with the implementation of porter’s five forces analysis representation.