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Starbucks perspectives on operations strategy
Starbucks perspectives on operations strategy
Starbucks perspectives on operations strategy
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Economic 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). Today, they have expanded lunch programs to a total of 4,150 stores and introduced the ability to warm pastries and provide hot breakfast sandwiches to stores across the nation. Starbucks retail stores are operated through a number of joint venture and licensing arrangements in South East Asia countries as well as Thailand, Singapore and China. When they do the business in foreign countries, the most important issues will have to be aware of the exchange rates. They are planning to open 2,400 stores internationally in 2007, and they have approximately set financial growth targets for total revenue 20 percent and annual earnings-per-share 20 to 25 percent for the next three to five years. In addition, they have proposed new stores count target to 40,000 worldwide (20,000 U.S. and 20,000 International) in the long-term (Starbucks Financial Release, 2007). Starbucks have succeeded several economic factors as well as price elasticity of demand.
“For most organizations, particularly for-profit firms, the end game is a change in financial performance… Most company strategies aim for long-term, sustainable financial growth,” (Balestrero & Udo, 2014, p. 251). Being a publically traded company, Starbucks legally must adhere to strict financial reporting regulations. Nevertheless, by tying into their SEE model of organizational sustainability, Starbucks can further sway investors to participate in supporting their business (in big and small ways) in order to continue thriving. Marshal Goldsmith is credited with the phrase: “What got you here, won’t get you there.” This means, in order for Starbucks to truly remain sustainable, hard-nosed economics, measuring their full-range impact will be necessary via triple bottom line definitions.
This strategic capitalises on weaknesses since will decrease the cost of coffee beans/beverages but also Starbucks operating cost which they regularly ship across the world to various stores. Starbucks can capitalise on this weakness to improve their brand options. It adds value in the inbound logistics activities, operations and procurements. Starbucks should consider this option since it will decrease their operating cost and therefore will reduce the prices on their menu. The attractiveness is the exact same as mentioned in option 1.
Opportunities available to Starbucks include growth of its supplier range, expansion to emerging economies, increased diversification of its product offerings and the growth of its retail operations; which are aimed at growing Starbucks’ profitability and market presence.
More so than ever in an age of rapidly evolving technologies and global expansion, sustainable competitive advantage depends foremost on a clear sense of organizational purpose (mission) and a compelling vision for success (Campbell & Alexander, 1997). Together, these two key elements define the guiding framework for the insightful creation of value (Campbell & Alexander, 1997) that differentiates an organization from its competitors (Porter, 1996). Thus, knowledge of the critical elements that comprise meaningful mission and vision statements (Aguinis, 2009) becomes essential for achieving sustainable competitive advantage. As testimony, this paper assesses the strategic guidance provided by the mission and vision statements of the Starbucks Coffee Company. More specifically, the discussion defines the characteristics found in good mission and vision statements, describes the salient characteristics of the Starbucks mission and vision, and concludes with a summary assessment of their relative effectiveness as a guiding framework for strategic decision making in developing and implementing a competitive strategy that links organizational priorities with performance.
Although Starbucks sell teas, salads, drinks, muffins, and cakes, its primary product line is coffee. This is how management described its operations “Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with handcrafted coffee and tea beverages and a variety of fresh food items, through company-operated retail stores” (Starbucks Corp., 2016) Starbucks Corp. is an American company with locations all over the world. As of 2015, it had 23,043 stores of which 10,808 were licensed stores and 12,235 company operated. Most of these licensed stores are international locations. In terms of revenue generation, the Americas (US, Canada, and Latin America) stores accounted for 69% of the total revenues in 2015 (Starbucks Corp., 2016).
e number one concern in all business is profit. When someone wonders why Starbucks’ business is so successful they can find their answer in the statistics. In Q3 2015, the total net revenues rose about 18% amassing a new record at $4.9B. The company cited this substantial increase in revenue to obtaining Starbucks Japan and the opening of 1,592 new stores in the last year.1 The company also witnessed a 22% rise in profitability credited to sales leverage.2 Starbucks saw continued growth globally, in the Americas, and the China/Asian Pacific at 7%, 8%, and 11%, respectively, accounting for an increase in customer transactions climbing towards 18M in the U.S. and 23M globally.3 These increases across the board could be accredited for the 21%
Shah, A. J., Hawk, T. F., & A, T. A. (2011). Starbucks' Global Quest in 2006: Is the Best Yet to Come. In A. A. Marcus, Management Strategy: Achieving Sustained Competitive Advantage (pp. c468-c495). New York: McGraw-Hill.
When starbucks enter the Australian market in 2000, It was successful. Starbucks targeted the capital cities before going into regional centers. The reason is simple, as demand for pricey coffee is higher in the capital cities, and during that time less competition are expected. Starbucks became the leading and competitive company in the coffee chains globally. By 2007, Starbucks has opened more than 84 company-operated stores across the country. It was until mid 2008, that Starbucks realise its peak of success has ended in the Australian market.
Another challenge that Starbucks has faced in 2008 was the number of store closings. In July 2008, they announced to the public that they will be closing 600 stores in the United States. Starbucks set , store closures may differ depending on various factors, but not limited to risks associated with the final stages of a third-party agreements , expected cost savings, income tax and other benefits associated with store closures in the anticipated time frame at all . While Starbucks stores do close location, they did the right thing by first informing the appropriate stores but also let the public know what is happening. There are many press release that discusses this and what to do about it.
... middle of paper ... ... Strategic planning kit for dummies, 2nd edition. Retrieved from http://www.dummies.com/how-to/content/strategic-planning-diversification.html “Starbucks”.
accessories and equipment, a selection of quality teas and a line of compact discs. Starbucks has over 8,700 retail locations in North America, Latin America, Europe, the Middle East, the Pacific Rim and is continuing to grow. When coffee is considered Starbucks has developed a worldwide name for itself and has become a huge success.
When refer to Starbucks Coffee’s utilizes growth strategy as it supports the growth of firm by maximizing revenues from existing markets. The Starbucks Company applying this strategy by opening more company-owned stores and through licensing for merchandise and franchising in some countries such as Dominican Republic. Moreover, Starbucks plans to enter most countries such as Africa and the Middle East by expanding its global reach and Starbucks continues to transform their product mix, for an instance they started to offer Frappuccino and introduce sodas in 2014. Starbucks needs to keep improving and innovating ahead of competitors to support its growth. (Starbucks Coffee Company,
Starbucks 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
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.