Starbucks: Foreign Market and Diversification
explanatory Essay
1275 words
Introduction This paper will provide an argument for diversification to be presented to board of directors for Starbucks. A strategy for diversification indicating the products and industries for diversification and how synergies may be gained will be provided. The identification and the discussion of the foreign market Starbucks should enter will be presented, along with the strategy it should use to enter the market. Challenges Starbucks may face in the foreign market will be discussed, as well how it might respond strategically to minimize the impact of these challenges. Also, this paper will encompass a scenario when it would not make sense for Starbucks to diversify or expand into a foreign market and how the company will create a business environment conducive to ethical behavior will be assessed. Argument for Diversification According to Investopedia website, “a technique that reduces risk by allocating investments among various financial instruments, industries and other categories is known as diversification. Diversification is the most important component of reaching long-term financial goals while minimizing risk” (“Investopedia”, 2011). “Fundamentally, this strategy is about creating new products with new product life cycles and making existing ones obsolete” (Olsen, n.d.). With diversification, Starbucks would be able to enter new markets with new products. By having a diversification strategy enforced, this will create a path for effective growth for the business. As with any company considering new products in new markets, there are risks associated with it and Starbucks would need to be prepared to respond accordingly. With diversification, Starbucks will have the opportunity to increase its growth. Also, this s... ... middle of paper ... ...t was delivered. A business environment conducive to ethical behavior for Starbucks was assessed. Works Cited “Investopedia”. (2011). The importance of diversification. Retrieved from http://www.investopedia.com/articles/02/111502.asp Olsen, E. (n.d.). Strategic planning: Diversification. Strategic planning kit for dummies, 2nd edition. Retrieved from http://www.dummies.com/how-to/content/strategic-planning-diversification.html “Starbucks”. (2013). Starbucks coffee international. Retrieved from http://www.starbucks.com/business/international-stores Thompson, A.A., Strickland, A.J., & Gamble, J. E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York: McGraw-Hill-Irwin
In this essay, the author
- Explains that starbucks considers managing a merger or an acquisition to execute its diversification strategy. the strategy should incorporate and introduce fresh, seasonal fruit and delicate chocolates to its product line.
- Explains the argument for diversification for starbucks, along with a developed strategy, and how synergies may be gained. a foreign market that starbucks should enter was identified and the strategy it should utilize.
- Explains olsen, e., strategic planning: diversification, 2nd edition.
- Explains thompson, a.a., strickland, and gamble, j.e. crafting and executing strategy: the quest for competitive advantage: concepts and cases.
- Explains that the paper will provide an argument for diversification to be presented to board of directors for starbucks. challenges starbucks may face in the foreign market will be discussed, as well as how it might respond strategically.
- Explains that diversification reduces risk by allocating investments among various financial instruments, industries, and other categories. starbucks can enter new markets with new products.
- Opines that starbucks should research iceland's culture customs and business protocols to enter the foreign market.
- Explains that starbucks may encounter some challenges while conducting business in a foreign market. starbucks should have an international team in place to interpret and bridging the gap in the language and communication barriers.
- Explains that starbucks should not expand into a foreign market if it will not produce financial growth for the company. overhead costs, raw materials, equipment, coffee farmers, and other expenses are associated with expansion.
- Explains that starbucks will create a business environment conducive to ethical behavior by ensuring its business code of ethics is enforced domestically and abroad.
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- Starbucks Going Global Fastexplanatory essayStarbucks Going Global Fast There are many topics that arise throughout the case with Starbucks Corporation. Starbucks Coffee is located worldwide and there are many different ways to look at this situation. The company offers a unique range of coffee, lattes, espressos, and café style drinks. The company intended to reach a specific target audience, but has ended up in many different markets and has been growing rapidly.
In this essay, the author
- Explains that starbucks is located worldwide and there are many ways to look at this situation. the company intended to reach a specific target audience, but has ended up in many different markets.
- Explains that starbucks' strategy is vital to its success, just as mcdonald's has in recent years. they have an excellent company vision, which helps their brand image.
- Explains that starbucks saw the opportunity to go global and jumped on it. starbucks started off using a benchmarking strategy trying to mimic what was done within other leading competitors.
- Explains that starbucks' expansion is coinciding with one of the worst economic surges in history. it is unaffordable for the average person to go to starbucks for a coffee.
- Explains that starbucks was facing slumping morale and employee exhaustion among store managers at each individual location. employee discontent is far from the company's image.
- Opines that starbucks could improve its profitability in japan by renovating stores that need it and improving customer service and employee satisfaction.
- Opines that starbucks' overall strategy has worked because of the companies' size. it is large enough to absorb any losses at existing stores as new ones open up and prosper.
737 wordsRead More - Starbucks SWOT Analysisopinion essaySeaford, B., Culp, R., & Brooks, B. (2012). STARBUCKS: MAINTAINING A CLEAR POSITION. Journal of the International Academy for Case Studies, 18(3), 39-57. Retrieved March 29, 2014, from http://search.proquest.com.proxy.davenport.edu/pqcentral/docview/1037815154/F93C2836F2E04403PQ/2?accountid=40195
In this essay, the author
- Explains how starbucks was inspired by the book and movie about moby dick. howard schultz introduced the new italian coffee bean and italian style of coffee drinking.
- Opines that starbucks is taking a route that is causing the brand to lose its well-known image of friendly coffee house.
- Explains that starbucks refocused its attention on coffee in 2009, and introduced via instant coffee to steal back the market that was once theirs from the competitors such as panera bread.
- Explains that branding a new product is not as easy as placing it on the shelves and hope for the consumers to buy it. a strong marketing team is required for affective branding, as they understand the issues while doing so.
- Opines that starbucks has done a good job for packaging their instant coffee.
- Opines that starbucks must increase its advertising budget and increase the use of the media to counter the said problems.
- Explains that the key issue starbucks via faces is the negative image already engraved in consumer’s mind by other brands of instant coffee.
- Explains that there are many solutions to brand via now that the key issues have been identified. the company must try to lower the price by cutting unnecessary overheads such as excessive advertisements.
- Explains that starbucks has done a great job with the current packaging, but it's flawed. the most effective packaging is the one that advertises the product until the end of its consumption.
- Recommends a few starbucks via cups with each package sold to keep the overhead cost moderately low. they also recommend giving customers the option to purchase additional cups for $0.10.
- Explains that via brand will be starbucks minus the baristas-and the brewing.
- Explains starbucks' mission statement, which can be found at http://www.starbucks.com/about-us/company-information/mission-statement.
1431 wordsRead More - Target Market Analysis of Starbucksexplanatory essayIntroduction Starbucks Company was established in 1971 with their first store in Western Avenue from that same year to 1976. They started as retailers of ground coffee tea and spices with a single in Seattle’s historic Pike Place Market. Starbucks is named after the first mate in Herman Melville’s Moby Dick and their logo is inspired by the sea-featuring a twin-tailed siren from Greek mythology. Starbucks had always wanted to inspire the human spirit. They believe in serving the best coffee by growing the coffee under quality standards.
In this essay, the author
- Explains that starbucks was established in 1971 with their first store in western avenue from that same year to 1976. they believe in serving the best coffee by growing the coffee under quality standards.
- Explains that starbucks works with over 18000 stores worldwide to ensure supplies are always available to their customers. starbucks started "grounds for your garden" in 1999 to make their business more environmentally friendly.
- Explains that starbucks target market is mainly adults between the ages of 25-40, these customers account for almost half (49%) of starbucks total business.
- Explains that starbucks target market ranges from the ages of 18-40, both male and female. the income of these people depends on the life-stage individuals are at right now.
- Explains the starbucks distribution channel, which consists of getting the best coffee beans from the farm and then brewing it in factories. starbucks also works hand in hand with the company that produces their mugs and cups.
- Explains that market positioning is a way to put in perception which you want to the mind of the customers.
- Explains the products offered at star bucks include coffee, tea, cold drinks, buns, sand witches and plenty of other items.
- Describes the things that need to be considered before the prices of products are generated.
- Explains that each individual has his/her own wants, so they decided to price each cup of coffee according to the ingredients chosen by the customer and the total is then given out.
- Explains that promotion of products is a must for it to sell. proper advertising, proper marketing, and creating buying incentives are needed for proper promotion.
- Explains that a coffee shop needs to be located in an area that attracts large numbers of customers, such as shopping malls, schools, offices, and drive-through services.
- Explains that before starbuck?s existed, a consumer would buy canned supermarket coffee as the standard means of getting coffee.
- Explains that starbucks is one of the most recognized brands in the market and their market share seems to grow every year.
- Explains that starbucks' products are pricy, which may be a weakness for the company because customers may choose cheaper alternatives. starbucks has to maintain their expected brand image.
- Opines that expanding into emerging markets would be a better advantage for starbucks. starbucks recently introduced an app called mobile pour, which would attract more customers.
- Opines that competition may be a threat to starbucks because other companies may come up with something that they lack and/or customers may prefer going to other coffee shops because of the price.
- Explains that the bcg matrix shows different products of starbucks, and according to the matrix one will be able to tell which product is highly demanded in the market and what isn't.
- Analyzes how starbucks has applied positioning to its market. target segmentation is the process used by organisations to target a précised category of customers with various needs, wants, and characteristics.
- Explains that starbucks gave themselves the position as a premium product in the coffee industry by producing and incorporating high standard, initiating innovative products and offering exceptional service. schultz was aware of the fact that coffee is extremely perishable item and practised high level of quality.
- Explains that starbucks catered really expensive products and it was in accordance with theory that the price which the customer gives to the seller for a particular quality, this price was evaluated as the quality of the product.
- Opines that starbucks should slow down the expansion process internationally and pay more attention to marketing new products and its brand name.
- Explains market segmentation, target market selection, and positioning. 2005. subudhi, r., 2014.
- Explains ken boyer's behind the scenes at starbucks supply chain operations itâ€tms plan, source, make & deliver. nithin geereddy.
2718 wordsRead More - Business Analysis: WellPointexplanatory essayPearce, J.A., II, Robinson, R.B. (2011). Chapter 6. pg. 140-145. Strategic management: Formulation, implementation, and control (12th ed.) Boston, MA: McGraw-Hill/Irwin.
In this essay, the author
- Explains that wellpoint is a health benefits company engaged in providing managed care and health insurance products. it is an independent licensee of the blue cross blue shield association.
- Explains that wellpoint is uniquely positioned in the current market because of how well rounded the company is nationwide. with current innovations, increased efficiencies, and service-distinction company wide, they will continue to lead the healthcare industry forward meeting the diverse needs of all consumers.
- Explains barney, j.b., "gaining and sustaining competitive advantage".
- Explains pearce, j.a., ii, robinson, r.b. strategic management: formulation, implementation, and control, boston, ma: mcgraw-hill/irwin.
- Explains that wellpoint holds the largest demographic opportunity available to the insured as well as uninsured population at a low cost.
- Explains that wellpoint's strengths are its leadership in the industry, low discount rates, stable businesses opportunities in a wide range of geographic locations, and the costs to consumers.
850 wordsRead More - Economic Forces in Starbucks Corporationexplanatory essayEconomic Forces in Starbucks Corporation The importance of economic indicators to the strategic planning process in any organization is the ability to benchmark economic conditions that contribute to improve profitability, business growth and market size. Leadership sets up the mission “to establish Starbucks as the most recognized and respected brand in the world.” In doing so, they have created a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Corporation, 2007).
In this essay, the author
- Explains the importance of economic indicators to the strategic planning process in any organization. starbucks has established a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility.
- Explains that starbucks' corporate social responsibility includes ethical sourcing practices for coffee and cocoa, education programs, and water projects in developing countries. the starbucks foundation has begun to serve impoverished communities.
- Explains that starbucks is committed to many environmental activities and community service programs within the areas they serve.
- Explains how starbucks transformed their business operations cycle from a pedestrian commodity into up-scale high consumer acceptability with quality product.
1412 wordsRead More - Starbucks: A business model for success now and in the futureexplanatory essay“Starbucks was named after Starbuck, first mate of the whaleship Pequod in Herman Melville’s Moby Dick…Starbuck was pluralized for ease of use” (Burks, 2009, p. 1). Now President, Chairman, and Chief Executive Officer, Howard Schultz formed Starbucks Corporation in 1987 after purchasing the name Starbucks, six stores and a roasting plant from previous owners, Jerry Baldwin and Gordon Bowker (Burks, 2009). Starbucks operates under a successful value chain management strategy. Their value chain encompasses a systematic approach to the way business is done. Robbins and Coulter (2012) point out, “A good value chain involves a sequence of participants working together as a team, each adding some component of value” (p. 520). Starbucks continually reviews every aspect of their business; from the organizational culture to values and ethics to strategy, planning and operations, management control and finally human resources and performance management, searching for those items that don’t contribute to the “Starbucks experience” which is what makes the Starbucks Corporation a successful business model.
In this essay, the author
- Explains that howard schultz formed starbucks corporation in 1987 after purchasing the name starbucks, six stores, and a roasting plant from previous owners, jerry baldwin and gordon bowker.
- Explains that the starbucks experience is an all-encompassing culture that revolves not just around customers but also to employees, or "partners" and suppliers.
- Explains that baristas learn how to treat customers, which is the final, but most important phase of the starbucks experience. schultz aims for starbucks to become the third place.
- Explains that starbucks' values and ethics surpass just paying employees fair wages or paying fair prices for coffee beans. starbucks began buying fair trade certified coffee in 2000.
- Explains that starbucks is a third place between work and home. they have undergone several types of business strategies, such as expanding their geographic presence and re-evaluating the current business model.
- Explains that starbucks' annual meeting of shareholders starts over a cup of coffee; company's impact now extends well beyond stores' four walls.
- Cites koehn, besharov, miller, and overholt, a. (2008). starbucks coffee company in the 21st century.
1470 wordsRead More - Force Field Analysis: Force Field Analysis Of Starbucksanalytical essayStarbucks has identified high value opportunity in China, India, Brazil and Japan. The large expansion opportunity of twelve billion in China alone is enough to drive Starbucks to expand globally. The organization has planned to double its footprint to 3000 stores in China by 2019 ("Starbucks Details Five-Year Plan to Accelerate Profitable Growth", 2014). Starbucks realizes that eventually there will be a diminishing return on their existing market within the US due to market maturity and there are only two ways to expand through diversification in their offerings and entering new markets. Given the international opportunity for growth and expansive tea market in Asia, the company will enjoy the benefits of the growth opportunity. Management’s decision to continue to grow globally is a driving force that has yielded
In this essay, the author
- Explains the force field analysis model, developed by kurt lewin, which views organizational behavior as a dynamic balance of forces working in opposite directions.
- Analyzes how howard schultz outlined starbucks' five-year plan, which outlines 7 key strategies for their growth. the force field analysis model will focus on the key strategy number 5, cpg brand growth, and the strategy around teavana.
- Analyzes how the united states accounted for 73% of starbucks's total revenue in 2014, while the americas contributed 54% of its stores. the statics provided the current state of the organization and a basis for the force field analysis.
- Explains that starbucks wants to sustain revenue growth and see an increase in revenue from international expansion. the tea market within china is as large as the coffee market in the us, with a market cap estimated around 10-15 billion dollars.
- Explains that employee centric growth policies have the greatest impact in driving forces. starbucks has facilitated this cultural change by providing higher pay, better benefits, and internal growth opportunities.
- Explains that product diversification is the second most impactful driving force. starbucks dabbled in tea in 2000 when they absorbed a local oregon company tazo.
- Explains that starbucks has identified high value opportunities in china, india, brazil, and japan. the organization plans to double its footprint to 3000 stores by 2019.
- Explains that technology capabilities are another driving force for starbucks. the organization leads in mobile apps, wireless internet availability at locations, loyalty programs, and infrastructure to support its business operations.
1345 wordsRead More - Marketing Research Plan: Starbucks in Chinaopinion essayThe objective of this paper is to perform market research for Starbucks’ President, Charles Shultz to ascertain the possibility of establishing new coffee houses in China. The preliminary research and design for presentation to Mr. Schultz includes: 1) Two to three alternative target customer segments; 2) the types of secondary research used; 3) the problem statement; 4) research questions used to guide the study; 5) major competitors for this market; and 6) the cultural, economic, and political factors that need to be considered in China.
In this essay, the author
- Explains the purpose of the paper, which is to perform market research for starbucks' president, charles shultz to ascertain the possibility of establishing new coffee houses in china.
- Opines that starbucks should focus on expansion in beijing and shanghai, since both cities have a large urban population, rising economy, and increase in coffee consumption.
- Explains that secondary research involves the investigation of secondary sources of data.
- Explains that external sources of data published about china's coffee market will be used to evaluate starbucks' expansion.
- Explains that internal secondary data with the company will also be used to judge the effectiveness of business already operating in the chinese market.
- Explains census data will be used to get age, demographics, and population information for areas of expansion.
- Opines that starbucks must establish new coffee houses for young consumers who are seeking a different type of chatting environment.
- Proposes research questions to help starbucks determine if it is feasible to open new coffee houses in china.
- Explains that starbucks has differentiated itself by convincing consumers that it is selling more than just a cup of coffee.
- Opines that starbucks' success in china will be associated with how it continues to introduce it coffee and giving peoples in cities a "third space" for gathering beyond work and home.
- Explains that starbucks is one of the most recognizable and successful coffee brands in the world, and believes in serving the best coffee possible.
- Explains that starbucks has a responsibility to make profit and grow the business, and must customize its offering to match the tastes and preferences of local buyers.
- Cites aaker, kumar, day, and biederman, p. s. on exporting a north american concept to asia: starbucks in china.
1269 wordsRead More - Starbucks Coffee and Snack Industry Analysisexplanatory essayThe threats facing Starbucks include trademark infringements and increased competition from local cafes and specialization of other coffeehouse chains, and the saturation of the markets in developed economies, and supply disruptions. Furthermore, the increasing prices of its inputs such as dairy products and coffee beans pose a threat
In this essay, the author
- Opines that the company maintains its long-term strategic objective of being recognized and respected brands in the world.
- Explains that starbucks prospers in the coffee and snack industry because of its brand equity, employee commitment, and value-driven human resource management.
- Describes factors that offer competitive advantage but only until competitors emulate them, such as starbucks' size, its mobile technology, and its positive corporate social responsibility.
- Explains that starbucks and dunkin' brands are the major players in the us coffee and snacks retail market. the industry is at the mature stage of its life cycle, has low barriers to entry and intense competition and technological change.
- Explains that starbucks is sensitive to changes in the macro-environmental political, environmental, economic, legal, social, and technological factors that face the united states.
1147 wordsRead More - Major Problems Facing Starbucksexplanatory essayOne of the main problems that Starbucks is facing at the present time is the ability to maintain national competitive advantage (Monash South Africa, 2014). Due to their local demand conditions, Starbucks tries to satisfy all customers by trying “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks Corporation, 2014). Local demand conditons consist of a company trying satisfy needs of their closest customers and expanding their competitive advantage by upgrading their strategic management policies (Monash South Africa, 2014).
In this essay, the author
- Opines that starbucks needs to create sustainable brand loyalty by having ads that are not controversial and appear to be sensitive to the public.
- Explains that starbucks maintains its brand competence by regulating all the process of production by themselves. all employees have been trained by experts within the industry to ensure that both the mission and vision statement of the organization is understood.
- Explains that starbucks has lost economy of scale by doing all the production processes by themselves. low raw materials and slow productivity have an effect on the customers finished product form.
- Explains that the porter five forces analysis allows for competition to be further understood whilst granting a clear view of the external factors and forces affecting starbucks.
- Explains porters' five forces will focus on rivalry among existing competitors and the threat of new entrants to better understand the reason that competition is a major problem for starbucks.
- Explains that the restaurant/speciality-coffee industry today is clearly dominated by starbucks. this industry is open to all rivals allowing for large companies involved in consumer products and retail chain business to easily enter the market.
- Opines that the most effective way to deal with competition is to conduct extensive market research while having vast industry knowledge. starbucks should focus on brand recognition and product differentiation.
- Explains that starbucks has filled a psychological need for individuals that other retailers cannot imitate. they developed their target market and made them want to identify with the company.
- Explains the disadvantage of being such a diverse multinational organization results in increased costs for the organization, especially with trying to emphasize on superb customer relations.
- Opines that jvs in certain countries can control brand image while maintaining a global brand standard.
- Recommends doing more market research and avoid controversial advertising by focusing on the service rather than societal issues.
- Explains bruzelius, y., and johansson, h. entry into the coffee shop market–starbucks establishes in gothenburg. the demand and supply of the domestic coffee shop market.
- Explains porter, m. e., the five competitive forces that shape strategy.
- Explains that starbucks is facing a national competitive advantage due to their local demand conditions. starbucks supports the washington state bill to legalize same-sex marriages.
- Explains that competition is an ongoing problem and needs to be dealt with appropriately to ensure that new and existing competition do not dominate the global coffee market.
- Explains that starbucks is one of many coffee/snack bars in the industry. there are multiple companies that are current existing competitors for starbucks.
- Opines that starbucks needs to be able to defend their business against other retailers with identical concepts such as new world coffee, gloria jean and timothy’s.
- Opines that starbucks should invest more in market research and not feel complacent with their market position and competitive advantage. this can be noticed in the kanban theory of management, where managers should continuously redevelop their management styles and upgrade their processes.
- Explains sigalas, economou, georgopoulos, and mitchell, in doing different things–functional upgrading.
- Explains higbee, liaw, c. y., & ting (2012). the future of starbucks.
- Cites kim robertson's book strategically desirable brand name characteristics. kluyver, c. d., koehn, besharov, & miller.
- Cites lu, d. j. and miller, r. (2012). cengage advantage books: fundamentals of business law: summarized cases.
- Cites niemi, n, nyri and oldham, j. m., tasman, a, and riba.
- Cites the puree's restaurant industry trends for 2014, and weissman, m. (2011). god in a cup: the obsessive quest for the perfect coffee.
1881 wordsRead More