Starbucks Corporation Analysis

What is Starbucks’ strategy

As per the article, the mission of the Starbucks is “to inspire and nurture the human spirit “.
Howard Schultz, CEO, explains the mission as “We're not in the coffee business serving
people, we are in the people business serving coffee”.
In essence, Starbucks' strategic approach revolves around delivering an exceptional and
inviting customer experience, prioritizing ethical sourcing, actively engaging its employees,
participating in community initiatives, pursuing diversification, expanding internationally,
and harnessing technology to enrich customer interactions and build loyalty.

Starbucks' core strategy revolves around crafting the "Starbucks Experience" which goes
beyond serving great coffee to connect with customers on an emotional level. Key elements
include premium coffee beans, engaged employees, strong community ties, and carefully
designed stores.

As a part of corporation strategy, Starbucks focus on “creating the best possible espresso
coffee” by sourcing the best beans, roasting them meticulously, and making a positive
impact on the lives of coffee growers. On the other hand, creating a social place for people
to experience other than “home and work”. On the other hand, the corporation created a
unique design and layout for Starbucks and diversified its business model by expanding its
menu in order to enhance the consumer experience and satisfaction. Other than that,
Starbucks creates new strategies and business models as per changed market environment
to increase its share such as drive-through, technology update, expanding nationally and
internationally either as company or licensed partners, mobile apps, K-cups, etc.

Assess Starbucks’ strategy in relation to:

“Starbucks Experience” strategy was a huge success and people bought the idea. However,
it was a huge challenge to maintain the “Starbucks Experience” while expanding nationally/
internationally and also diversifying the menu. It was a big challenge to overcome because
of internal and external factors.

Starbucks’ digital strategy was also successful and opened doors to further innovations in
consumer engagement, personalization, and improving operational efficiency.
Starbucks open-mindedly updates its strategies to meet with market expectations and
challenges. Starbucks was successful on this area as well. Even though some other
companies dominated the market regarding home-brewed coffee, Starbucks became “one
of the leading suppliers by 2017 on the US market” which is one of the biggest coffee
markets.

On the other hand, Starbucks has emphasized its commitment to social responsibility and
sustainability, which has helped build a positive image and engage socially conscious
consumers.
In summary, Starbucks analyzed its internal strength and weaknesses and external
opportunities and threats pretty well. Based on this swot analysis, Starbucks created
strategies such as global expansion, creating a unique customer experience, leveraging
technology, and diversifying its product offerings. While it has faced challenges and
competition, its brand strength and commitment to social responsibility continue to play a
crucial role in its success. Starbucks' future will depend on its ability to adapt to changing
market conditions and maintain its competitive edge.

Starbucks’ financial performance

According to the article, Starbucks is “one of the wonders of America”. Despite
encountering challenging periods like the 2007-2009 financial crisis, Starbucks is a gradually
growing corporation which partially dominates the coffee market. The fact that it generated
$22.4 billion in revenue in 2017-18, employed around 280,000 individuals, and established a
global network of more than 27,000 coffee shops is the reason why Starbucks is regarded as
"one of the wonders of America."
According to the article, Starbucks' financial success is underscored by the evolution of its
stock value over time. Even though the 2007-2009 crisis presented a significant challenge,
the company's share price, which was approximately $2 in 1998, soared to over $60 by
2018.

The overall coherence of Starbucks’ strategy in terms of its fit with the
company’s external and internal environments and the internal consistency
of the strategy
Starbucks Corporation's strategy has evolved significantly over its history, and analyzing its
coherence in terms of fit with the company's external and internal environments and
internal consistency is crucial. Starbucks' strategy reflects its commitment to the Starbucks
Experience, ethical business practices, diversification, and technological innovation. The
company has demonstrated adaptability and a strong focus on aligning its strategy with
changing consumer preferences and emerging markets.
Starbucks went through a significant leadership change when Howard Schultz handed over
the CEO position to Kevin Johnson. The transition from a “founder-led to a founder-inspired
company” can pose challenges, but it allows for continuity in the company's mission and
values. Starbucks has been the leader of using technology at the sector to enhance the
customer experience, with features like mobile payments and loyalty programs and this
strategy supported with the appointment of a CEO with a background.

On the other hand, Starbucks has diversified its product offerings, including food, music,
books, and videos, and introduced various store formats such as Starbucks Reserve to adapt
changing consumer preferences and expanding the reach to a broader range of consumers
was part of s successful strategy as well. At the same time, Starbucks has adapted its store
management models to include licensing agreements with local operators, reflecting
flexibility in its approach.

Does Starbucks operate in the interests of its shareholders or its

stakeholders?
According to the article, Starbucks operates in the interests of both its shareholders and its
stakeholders.
For its shareholders, Starbucks intend to maximize shareholder value by generating profits,
increasing share prices. The company's success in terms of revenue growth, profitability,
and stock price performance has been a priority, as evident in the financial results and stock
price records mentioned in the provided text. Starbucks create strategies such as
diversifying its menu and adapting market expectations can be seen as a proof of it.
On the other hand, creating “Starbucks Experience”, environmental sensitivity,
technological steps, employee involvement and many other strategies mentioned above can
be seen as a proof of Starbucks operate in the interest of its stakeholders.

How has Starbucks achieved a differentiation advantage in the coffee

business? Is this a sustainable competitive advantage?
Starbucks has achieved a differentiation advantage in the coffee business through a
combination of factors that have contributed to its unique brand and customer experience.
Creating a third place for people to socialize under the strategy of “Starbucks experience”,
developing and serving “premium quality coffee” to wide range of people from all kinds of
social levels for lower price, product diversity to enhance experience, quick adaptability for
technology and market, carefully designed store design, etc...
The biggest strength of Starbucks’ was its “core competencies”. Company strategically
created a brand “value” which can only be acquired through time and experience which
created a huge competitive advantage. Starbucks' brand, loyal customer base, and
continued growth shows that their differentiation strategy has been effective. However, to
sustain this advantage, they must remain “agile and responsive” to market trends and
competitive pressures.
What threats does Starbucks face?
The biggest threat Starbucks faced was “2007-2009 crisis” which halted the gradual growth
and forced the company to downsize. Starbucks was compelled to cancel new store
openings, close around 600 stores, and implement various financial measures such as
reducing the CEO's salary from $1.2 million to $10,000.
Maintaining or increasing its market share was another threat that Starbucks had to face.
New companies, either imitating or inspired by Starbucks, began to emerge. Furthermore,
technology advancements, shifting consumer expectations and behaviors were reshaping
the market over time. In order to survive in this challenging environment, Starbucks had to
develop new strategies and adapt accordingly.

Due to Starbucks' international expansion strategy, the company needed to adapt to the
regulations of various countries accordingly.
Brand reputation was another threat as well. Gradually expanding and growing, creating
diverse menu, education of new labors, service quality, or incident such as Philadelphia
which mentioned in the article could affect the “Starbucks Experience” reputation seriously.

What should Starbucks do to sustain its outstanding performance?

I believe, Starbucks should remain its fundamental principles, including delivering an
exceptional customer experience, social responsibility, and innovation while being
responsive to shifting market conditions and evolving consumer preferences. Developing
new strategies to meet local expectations of other cultures and customer behaviors while
maintaining the concept of “Starbucks experience”. By prioritizing these approaches,
Starbucks can continue to maintain its outstanding performance and adapt to the evolving
market of the coffee and beverage industry.