Achieving success has always been a challenging task for the companies belonging to highly competitive environments. The performance of every company reflects its historical struggle in combating the negative influences of the competitors, which resulted in the formulation of effective business strategies. The success of Starbucks depends on the company’s ability to intensify the influence of its advantages and strengths along with the consequent minimization of the negative influences coming from disadvantages and weaknesses. The company mastered this philosophy throughout the years of endless competition and market tension. A precise evaluation of the company’s mission and vision statements, competition forces, SWOT analysis, and strategies aimed to maximize competitiveness show the secret elements in the development of an effective leadership and communication system at Starbucks.
Mission, Vision, and Stakeholders
The main management concept at Starbucks focuses on quality and regulates the implementation of every process. As long as the customers’ needs take a central part in shaping the company’s performance, it is crucial to the performance of Starbucks to regulate the flow of processes according to high-quality standards. The official website of the company offers every visitor a brief glance at the company’s mission, which states the following: “one person, one cup and one neighborhood at a time” (Haskova, 2015). This is the simplest representation of the company’s goals and objectives of strategic performance, which encompass the company’s ambitions regarding expansion and satisfaction of needs of every visitor. As for the vision, Starbucks works on continuous growth, quality improvement, and strong adherence to the changeable environment. Quality is the main regulator of performance, which expands the horizons of the common boundaries of the company’s territory (Paryani, 2012). Starbucks also selectively defines the role of partners and suppliers in their strategic success, which finds its explanation in the desire to be the leader in the field of coffeehouses. The primary stakeholders including partners and suppliers willingly engage in long-term business relations with the company and provide it with high quality resources due to its leading position and growing potential on the market. Customers, in their turn, contribute to the financial growth of Starbucks, which allows investing in new projects.
Five Forces of the Competition
Starbucks has suppliers with significant bargaining power. Coffee beans are a valuable resource, which is in demand all around the world (Haskova, 2015). The uniqueness of the resource makes suppliers in charge of raising prices on raw materials get purchased by coffee companies. This way, Starbucks is not cabale of regulating the flow of prices in accordance with the customers’ tastes and needs.
The bargaining power of customers is one of the most important business opportunities for Starbucks. The company successfully uses seasonal promotions and offers to attract loyal and potential customers. Starbucks realizes the value of every customer in the establishment of high quality products and services.
Competition is another factor of the external environment, which threatens the productive and effective performance of Starbucks. The company has to perform in a market full of rivalry, which makes it dangerous to make wrong strategic decisions. Starbucks has to be more creative and innovative than its competitors that are penetrating the market in order to win competitive advantages.
The existing threat of substitute products challenges Starbucks to be an optimal leader in the field. The company has to consider the penetration of the market by companies offering tea, juice, coffee drinks, soft drinks, energy drinks, water, donuts, cakes, and bagels, which represent a major threat to the company’s supply and demand balance (Haskova, 2015). The main areas of distribution of substitute products include bars, cafes, restaurants, pubs, and bakeries.
In addition, Starbucks faces the threat of new entries, which results in the accessibility of coffeehouse business. Small businesses willingly get involved in the same industry and become a threat to Starbucks’ sustainability. As a result, Starbucks should stay alert in order to withstand the negative influence of new companies operating in the same sector.
The primary strength of Starbucks lies in its ability to maintain the leading position on the market of coffeehouse chains, which identifies the company’s uniqueness in regulating the development and growth according to the myriad of available resources. It is the main aspect in the articulation of the company’s implementation of the strategic plans, showing the value of Starbucks’ performance (Chua & Banerjee, 2013). The operating efficiency of Starbucks is another strength, which contributes to the balance in plans implementation and investment opportunities. Nevertheless, Starbucks has to face its main weaknesses, such as the inability to regulate the pricing strategy according to the customers’ interests and financial opportunities. The company cannot escape the negative influence of the suppliers’ bargaining power, which makes them the ones responsible for defining the level of products’ prices (IESE Insight, 2012). Another weakness lies in the company’s low presence in the Middle East and East Asia. The company still has not expanded to those regions, which have a high potential for revenue growth. However, Starbucks has opportunities to expand its performance to the emerging countries, which will solve the problem of global presence. In addition, the company can use the advantages of the digital era and benefit from incorporating the latest technological trends in customers’ service (Paryani, 2012). Unfortunately, competition remains the main threat to the company’s financial sustainability and strategic growth. The market has a high penetration of companies selling substitute products, which puts a significant pressure on the performance of Starbucks.
Strategy to Increase Strengths and Opportunities and to Minimize Weaknesses and Threats
A precise analysis of Starbucks’ performance shows that the product mix, international expansion, raw materials, growth of the coffeehouse chain, and distribution of services and products are the most significant elements. All these elements represent parts of the major focus of the company’s strategic planning, with its complexity reflecting the basic principles of the decision-making process.
First, it is worth focusing on the intensification of the company’s market positions and leading performance. For example, Starbucks may focus on international mergers as the keys for the company’s further strategic development. It would be appropriate for Starbucks to use international expansion for the benefit of the company’s global presence (Paryani, 2012). Regardless of the challenges faced by Starbucks, it is possible to see new opportunities opening the horizons of international performance.
Second, Starbucks should have a more intense focus on the external environment in order to predict the changes caused by competition. This way, the company will be capable of moving forward in the implementation of its competition strategies. As long as suppliers have a stable contribution to the development of the pricing strategy of the company, it should be necessary to focus on the slightest changes in the performance of competing companies. In addition, Starbucks can analyze the external environment by creating new tastes of drinks and beverages in order to attract the attention of its customer base.
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Strategies to Maximize Competitiveness
Starbucks should continue working on the development of its opportunities aimed to maximize the competitive advantages in terms of globalization. A flexible discount system can be a beneficial aspect in the performance of the company. For example, the customers could receive an opportunity to get one coffee drink free of charge after purchasing at least five drinks. This way, the company would be capable of increasing the customers’ retention along with customer loyalty. Starbucks should become the company offering its visitors clearly defined privileges, which other companies do not have.
Another aspect of the company’s performance that could be potentially beneficial should focus on the inclusion of the latest technologies in combination with customer awareness on how to use these technologies. For example, installing online payment systems may require teaching visitors to see the benefits of quick online payments that reduce their time in the queue. In general, optimization of the technological devices improving the performance of Starbucks should be the primary goal of the company’s performance in order to preserve its competitiveness.
The final recommendation in maximizing Starbucks’ competitiveness lies in active integration of the company in cooperation with other companies. It will be a significant boost to the company’s international expansion and global presence at the same time. In addition, the company may create public projects and attract the attention of customers, who will be proud to belong to the legion of loyal Starbucks visitors (Paryani, 2012). Starbucks should look for cooperation options in order to enhance its business development and growth. Regular interactions with partners will strengthen the company’s position on the market along with further integration in every country.
Productive management of the Starbucks department’s activities depends on the effectiveness of the communication system commonly used by the company. The company should take care to inform every employee about the existing changes in the communication system. It is necessary to make meetings more regular in order to discuss all the valuable changes with top managers. Top managers, in their turn, should be capable of analyzing the performance of their departments in order to evaluate the latest tendencies in key performance indicators. This way, it will be possible to hear out the needs of the subordinates and respond to their requests. Thus, the company will take care of creating a nourishing environment with an appropriate communication background. For example, Starbucks can take care of integrating social networks in their communication system. There will be no need to accommodate the employees’ skills and communication techniques thanks to their fruitful social interactions via networks (Chua & Banerjee, 2013). Social networks will integrate the employees’ habits of using contemporary communication methods with active discussion of work-related problems.
Corporate Governance Mechanisms
Internal corporate government mechanisms include oversight management, independent internal audits, policy development, and segregation of control. Starbucks has an Audit and Compliance Committee in its structure, which takes care of regulating financial and accounting reports (Paryani, 2012). The committee regulates the implementation of the strategic plans in order to avoid failures and critical mistakes. In addition, the company does regular internal audits in order to identify the failures in the performance of the company. Policy development and its regulation also help Starbucks clarify the procedures of holding internal audits and analyzing all departments.
External agencies, in their turn, include audit agencies, financial institutions, and the government itself. External agencies interact with Starbucks in order to ensure that the company meets the standards of the commonly accepted rules. The government also overviews the annual financial reports of Starbucks, which prevent the company from engaging in fraudulent activities. This way, external corporate governance mechanisms ensure that Starbucks remains transparent in its financial transactions and performance indicators.
Starbucks considers leadership to be one of the most important elements in bringing consensus to the decision-making process. The company invests in training sessions of the subordinates in order to bring their skills, knowledge, and abilities to excellence. The company believes that career building at Starbucks allows the employees to feel the essence of responsibility and its role in shaping the performance of others. The continuously increasing number of stores proves that Starbucks moves in the appropriate direction in the enhancement of leadership positions. Employees willingly follow their leaders, guiding them towards the implementation of the strategic plans. Starbucks made it a priority to connect the performance of top management to the contributions of every coffee store. Teambuilding, cooperation, and mutual support unite Starbucks employees into a single mechanism, which proves that the company has a deep understanding of every employee’s contributions (IESE Insight, 2012). As a result, leadership and quality have a deep connection, which has a positive influence on the development of high quality goods. In terms of leadership, Starbucks can introduce leadership programs, which would define projects among common employees and outline the internal leadership skills of every single one of them. It will create new opportunities for the expansion of the company. Employees, in their turn, will have a chance to develop their careers and obtain higher job positions by showing their potential.
Corporate Social Responsibility (CSR)
Starbucks pursues transparency in its performance and willingly shares its Global Responsibility Reports with the target audience. Every visitor of the company’s official website can take a look at the recent environmentally friendly activities of the company. Starbucks focuses on youth, the framing sector, and environmental issues in rising social awareness on the problems of the surrounding world (Trong Tuan, 2012). The company actively contributes to the development of farming, which remains the primary source of fresh and natural products. Moreover, other sections of the report show the company’s readiness to change the perception of the contemporary society regarding environmental issues.
Environmental issues represent the core of these reports. The company realizes its personal responsibility for regulating the manufacturing processes in terms of CSR. Starbucks’ global presence emphasizes the need to take care of every area (Trong Tuan, 2012). As a result, Starbucks plants trees, creates environmental campaigns aimed to reduce pollution, and encourages visitors to use recyclable cups. This way, Starbucks created a space for personal environmental responsibility, which provides other companies and communities with appropriate examples.
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A precise analysis of the company’s performance showed that the company worked hard to obtain its leading position. Starbucks has enough knowledge, experience, and resources to address its major problems. The company is capable of reducing the negative influence of threats coming from the external environment by wisely allocating its resources. The opportunities will also help strengthen the company’s financial stability and strategic development. Nevertheless, the company should remain attentive to the negative influence of competition, which can use substitute products to attract the attention of potential customers. Starbucks should continue focusing on personal uniqueness and competitive advantages in order to avoid threats coming from the external environment. Strong market position is the result of effective managerial decisions and beneficial usage of the available resources aimed to meet the needs of both customers and employees.