Core Business Skills

1. 0 INTRODUCTION This particular assignments aim is to discuss the application of the strategic precaution exhibit in a retail persistence. I reach chosen Starbucks cocoa as my food and drink industry to research on, and to thoroughly explain the strategic management process implied by them. Starbucks cocoa bean family was founded by English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker back in year 1971 Seattle, Washington. Starbucks hot chocolate association is cognize as the worlds leading java retailer, roaster and last but not least pit of specialty coffee tree.Apart from providing except coffee, Starbucks java also cater light snacks same sandwiches, delicious pastries, healthy salads and and so on Since Starbucks Coffee is the worlds leading brand in coffee, they serve up to 35 million customers from all oer the world weekly. Beca use of profounds and services of their great reputation, they beat success extensivey opened up t o 17,000 put ins worldwide. The partnerships mission statement is to inspire and encourage human spirit. Firstly, Starbucks Coffee focus to provide a great work environment to their members so that they argon hard-boiled with respect and dignity.Secondly, Starbucks Coffee also believes that conducting c atomic number 18 ethically is the master(prenominal) key to be successful in a business. As a worldwide and leading-brand company, Starbucks Coffee insists strongly on upholding a culture where diversities atomic number 18 substantially valued and respected. These diversities include inclusion human connection and engagement, equity fairness and justice, accessibility simplicity of use and barrier free so that employees with diverse background argon fairly treated and respected to regard a comfortable and enjoyable workplace (www. starbucks. com 2011). . 0 Strategic abstract 2. 1 Internal Analysis 2. 1. 1 Strength atomic number 53 of the main strength possesses by Starb ucks Coffee is the strong brand plan they have. In terms of the coffee industry, they are considered to be most reputable compared to Coffee Beans, Gloria Jeans, and new(prenominal) competitors among the industry. Starbucks Coffee manage to prove themselves as a laid-backly resorted brand by getting rated as the make it 100 most seeked after brand. Apart from having a high brand value, Starbucks Coffee has managed to globalise their nates trade in to all parts of the world.This opens up the opportunity for Starbucks themselves to monopolise the foreign mart as well. 2. 1. 2 Weaknesses No matter what industry a firm is in, they leave face certain failinges that they have to always try to improve on. As for Starbucks Coffee, mavin of their main weaknesses is the product set. In many countries, Starbucks Coffee is considered as a premium product where the prices of their products are higher compared to other coffee shops (Lee S, 2007). Another weakness that Starbucks Coffee h as is that they are too focused in their domestic market which is the United Stated of America.This will lead Starbucks Coffee into a vulnerable position where it is hard for them to predict unforeseen replaces in the industrys market at other countries. 2. 2 Stakeholders in Starbucks Coffee Stakeholders in Starbucks Coffee includes all the workers which are known as partners. This is because Starbucks Coffee wants to spend a penny an environment where all their employees would feel comfortable and relaxed (Kembell B, 2002). The second stakeholders for Starbucks Coffee Company would be their highly valued customers. These customers play an important role in Starbucks Coffee because they are the ones who image the coffeehouse almost e rattling(prenominal)day.In distinguish to feel connected to Starbucks Coffee, customers bottom easily hear and engaged with the employees and products of Starbucks any age, anyplace (Hanft A, 2005). The other crucial stakeholder in Starbucks Coffe e will be their coffee farmers. These coffee farmers are really the backbone to Starbucks Coffee because Starbucks swear mainly on coffee products. In set out to uphold the cordial and economic well- macrocosm of their coffee farmers, they have decided to pay a premium price for high quality coffee beans from them (Robertson H, 2006). 2. 3 Core CompetenciesAs we all know, core competencies in any industry is actually their comparative payoff. As for Starbucks Coffee, one of their core competency is human resource. Firstly, Starbucks Coffee is a company that values their employees greatly. Starbucks shows their appreciation to their employees by giving them the opportunity to receive full healthcare benefits, spud options/discounted stock purchase plans (Weber G, 2005). Starbucks Coffees tangible resources will be their high-quality coffee beans called the Narino Supremo Beans. The Narino Supremo Beans have the highest quality and is the largest bean in capital of South Carolin a (www. melita. om, 2011). In a recent report, it is said that the president of the Columbias National Federation of Coffee Growers have confirmed the purchase of 6 to 7 percent of Starbucks shares (Castaneda S, 2009). This shows that Starbucks Coffee has sole ownership everyplace the high quality beans which is an advantage for them. Starbucks Coffee has a good reputation and is well accepted passim the world. This reflects on their intangible resources to attract customers. Having a good brand pro go, friendly employees and high quality coffee beans are the main traits possessed by Starbucks Coffee. 2. 4. 0 External Analysis 2. 4. 1 OpportunitiesStarbucks has always use their opportunities to expand their business in to a whole new level. Firstly, Starbucks has created an opportunity for themselves to expand their brand name to foreign countries. It is reported that Starbucks are be after to open up to 15,000 new stores across the world in the years to source (Datamonitor, 2 005). Apart from that, Starbucks technological advancements has given them a good opportunity to conveniently mete out products to customers through the internet. Starbucks has also equipped all their lounges with WiFi services to accommodate their valued-customers to boot (Elgan M, 2008). . 4. 2 Threats one(a) of the nemesiss that will be faced by Starbucks coffee is the price fluctuation of diary and coffee products. The price of theese products can also be affected by the income levels of customers in upcoming or developing republic as goods over there are highly inflated (Pinkasovitch A, 2011). In every industry that we are in, there will always be competitors trying to penetrate the market . Competitors for Starbucks Coffee would be other coffehouses that sells coffee. Coffeebean, San Francisco Coffee, and Gloria Jeans are put competitors for Starbucks. 2. 5 PEST Analysis 2. 5. 1 Political Factor bingle of the semipolitical factors that posses as a study issue for Starbu cks is the unstability of political issues that would directly affect the growth rate of Starbucks Coffee. From a recent report, it says that up to five Arab states have decided to boycott American goods with their primary target being Starbucks Coffee shops (Antievil, 2008) 2. 5. 2 Economic Factor Apart from that, Economic factor is also a very important matter to look into when executing a strategic analysis. One of the economical problems that affected Starbucks was the receding in Switzerland, Japan and Germany in the early 2000s.In a more recent report, the Company had revealed a 70% drop in their quarterly profits to only $64. 3m. Apart from that, they are also planning to keep out down up to 300 stores (Clark A, 2009). 2. 5. 3 Social Factor Starbucks has always prioritise on their fond issues and responsibilities. Starbucks always participated in upholding the importance of the environment. A move by Starbucks to create a partnership with the preservation International, ma inly to put their attention on environmental protection such as waste step-down and energy and water saving programs (David, 2009).A move like this proves that Starbucks are cautious about the social responsibilities. 2. 5. 4 Technology In terms of technology, Starbucks has always been up to date. All of Starbucks outlets are fitted with Wi-Fi services. Another move to be technologically involved will be the creation of music CDs that will suit the specific moods of customers. They are available for purchase at any Starbucks outlet (Lodi K, 2006). 2. 5 Porters Five Forces Framework The Porters Five Forces modelling is apply to go in to a more in depth analysis of an industry.The five forces ordinarily includes industry competitors, new entrants, suppliers, customers, and substitutes. In all industries, companies will have to face strong competitors in order to dominate the markets. For Starbucks, their main rivalries would be Coffee Bean, San Francisco Coffee, and other coffee l ounges that falls into Starbucks category. They do not only compete domestically, but also internationally. Sometimes, rivalry from other industries can also be a threat. For example, McDonalds could pose as a threat to Starbucks because they are a fast-food chain yet they still provide coffee in their menu.They could be one of the strongest competitors for Starbucks to face (Gregory S, 2009). Another forces that Starbucks faces is the emergence of substitute products. Because Starbucks is a premium product, hence their prouct prices are usually very high. During a recession, there is a high possibility that customers from Starbucks look for a substition to first-class honours degreeer down their expenditure. Products like Coca-cola or Pepsi-cola could be one of the substitues for high quality coffee beans. barely there is a big difference in the taste and smell when it is being consumed. Therefore the main substitute for Starbucks will be basic coffee.This will be a threat to St arbucks because they are an make-up that caters to high-income earners. One other factor that might affect an industry will be the customers buying power. However, this depends on the plaque itself. If they are an attractive organisation then the bargaining power of buyers will be low and poses no threat to the company. For Starbucks, the bargaining power of its buyers are low. Althought prices of Starbucks are high, customers still buy it because of its differentiated and not bad(p) products. The other forces that will directly affect an industry is the suppliers bargaining power.The suppliers bargaining power will dress up when there is a rise in demand of the product that they supply. Starbucks could be facing this threat because they rely on central american to produce the coffee traded. Since there are more demand in high-quality beans, main suppliers will naturally have a stronger bargaining power. An over-crowded market will give the coffee suppliers bargaining power. The re are no substitute products for the coffee beans Starbucks must buy. This is a potential threat to the company, (Hanft A, 2005). 3. 0 Strategy Formulation 3. 1 BusinessLevel StrategyFor all the industries, they have to chose a business system that can successfully dominate the market. The formulation of this strategy is very crucial in a busines because it helps to find customers. One of the tools that can be used to formulate an industrys business level strategies is the porters generic strategies. Starbucks uses the focused differentiated strategy withholdd by Michael Porter to run their business. As we all know, Starbucks is known as a food and drunkenness company. But to be specific, Starbucks is a food and beverage company that focuses on coffee brewing.They are well known for their high-quality beans and comfortable lounges. Starbucks chooses a segment to market their products to. This includes coffee fanatics and people who are looking for a place to relax. However, Star bucks caters their products to mostly high-income earners because their products are expensive. This shows that the focused differentiation strategy is used to seek their competitive advantage in the market through uniqueness of their products (Campling J, 2007). The advantage of Starbucks focus on a single market can give them the chance to handle all autobusial, financial, technological, and capabilities in one business.Starbucks has always been trying to come out with more creative and innovative products to be differentiated among their competitors. This has certainly made them the biggest winner in the coffee based industry (Guarriello T, 2008). Although the prices are high in Starbucks, they are very differentiated in terms of the coffee beans they use and they way the serve. This shows that the focus differentiation startegy that Starbucks uses is an effective way to attract customers since they are the world leading brand in its industry. Another way to formulate a business -level strategy in an industry is to apply the product disembodied spirit cycle method.The first stage of a product life cycle is introduction, followed by growth, maturity, and decline (Campling J, 2007). 3. 2 Corporate-level Strategy The corporate strategies are used by industries to direct their organisations towards a sustainable competitive advantage (Campling J, 2007). The main purpose for the use of this strategy is to set a target and verify resources allocation for an enterprise. The first approach to formulate a corporate strategy is the portfolio planning approach. The portfolio planning approach are designed to help managers to decide on investing scare organisational resources among competing business opportunity.This straregy is very useful for multibusiness enterprises like Starbucks. Growth strategy can be used as one of the corporate level strategy to effectively expand and increase the size of a companys operations, through store expansion and global market penet ration. In order for Starbucks to successfully expand their stores, it is required for them to have full concentration on their products (Campling J, 2007). Starbucks has been very aggressive in store expansion, this includes them opening up to a 12 of stores in China in year 2007 (Yan Z, 2008).In addition to that, Starbucks has also put their main focus on diversifying their growth to other products. 4. 0 Strategy Implementation 4. 1 Organisation Structure An enterprises organisation bodily structure is the mixture of task and reporting relationships that allows the company to control its lines of authority and communication at the same time allocating rights and duties. There are three types of organisational structures, the divisional structure, matrix organisation and hybrid structure. Starbucks has adopted the matrix organisation structure to focus on.All the employees in this firm would report to both a functional and divisional manager and lastly to a project manager. Failu res of strategic planning happens most of the time. The most common strategic planning failures are failures of substance and failures of process. Failure of substance happens because there is inadequate attention being paid to major(ip) strategic planning elements. Failures of process will be caused by poor handling of strategy implentation like lack of participation error and goal displacement error. Therefore, the organisational structure in a company is very important to avoid unwanted uprising problems. . 2 Corporate Governance The corporate governace is the system of control and performance monitoring of top management (Campling J, 2007). This task is usually done by the boards of directors, and other major stakeholder in the company. For Starbucks Coffee, they currently have 9 directors including the CEO of Starbucks Howard Schultz. These directors of Starbucks are responsible for ensuring goals and objectives in the company are met. The directors are well aware of their resp onsibility to provide a stable managing process so that the companys goalds are met (www. starbucks. com). 4. Strategic Leadership Strategic management is a leadership responsibility. Whereas strategic leadership is the capability to arrange others with the ever-changing strategies in the market. Michael Porter says that the strategic leader of an enterprise has to be the CEO of an organisation (Campling J, 2007). One of the most crucial task for a strategic leader is to be a guardian of trade-offs. countless commitment and disipline has to be put in by a strategic leader in order for the business the be successful. Another trait that a strategic leader must posses is the ability to create a sense of urgency.By having a sense of urgency, the strategic leader is able to give out a strong message to its organisation and their members that the need for consistent improvementwill always persist. A strategic-chief will also have to ensure that everyone related to the organistion unders tands the strategy that they are using. Leaders in an organisations will have to keep their members updated with their in vogue(p) business strategy. Furthermore, the task of a strategic leader also includes being a teacher and a good communicator. 5. 0 Conclusion 5. 1 Importance of Strategic Management In conclusion, strategic management involves many processes.This includes identifying the mision, objectives and strategies of an industry. Strategic management is very important for a business as it is used to derive the main strategy for your business. With good strategic manangement skills, leaders are able to adopt to the sudden change in the market and they can also prepare themselves to the different needs and wants of their customers. An industry with a good strategy will always be succesful. Strategic management can also be applied to analyse the internal and external environment of an industry which can give leaders of an industry a better understanding of the market.