Program me – MSC Management

                      Executive Summary

Business policies and strategic management play a very significant role in attaining the objectives of the organization and setting the path for success. These strategies help to formulate the overall management within the organization in an effective manner. It also helps to achieve the long term success plans in a well-organized way. It guides the Managers to connect with the customers, generating the profits and managing the resources available in an optimal manner. These policies help to maintain the responsibilities as well as guides to the set the clear objectives. Business policies are closely related to the business strategies as it helps to put the strategy in action and help to overcome the problems related to the management.  This business report will present the strategic analysis of the “Starbucks”, which is a repudiated name in the coffee retail, the report will present the external as well as an internal environmental review of the company strategy. It will present the recommendations to eliminate the weak areas and achieve business goals.

Table of Contents

Introduction 4

External Environmental Analysis 5

Industry overview and analysis of………………………………………………………………………………………………………6

          Analysis of the competitive advantages of the company ………………………………………………………………..7

          Porter’s Five forces analysis…………………………………………………………………………………………………………….8

         Internal Environmental Analysis…………………………………………………………………………………………………… 14

          Starbucks core competencies………………………………………………………………………………………………………15

         SWOT Analysis…………………………………………………………………………………………………………………………….17

Recommendations………………………………………………………………………………………………………………………………19     

Part-B  Starbucks Stakeholder Report 20

Type chapter title (level 2) 5

Type chapter title (level 3) 6

 Part –A   Starbucks Business Report (3500)

1.0   Introduction   (500 words)

The business development is the process that is performed to achieve the objectives of the organization in a strategic manner to achieve better business profits and customer satisfaction. The main aim of the business development strategy is to provide the strategy to achieve these goals in the well-versed form. Firstly it is required to turn the decision easy for the prospects that help to convert the opportunities in the clients. Then the next step is to deepen the engagement with the set goals and prospects and turn them into the qualified opportunities then lastly it is required to attract the potential buyers, influencers and referral sources through it.  A business strategy is a course of action and set of decisions which assist the entrepreneurs in achieving the specific goals (Iwan 2019).

The main objective of designing a business strategy framework is to provide the road map to make the effectiveness, Perceiving and utilizing the opportunities, mobilizing the resources, securing the market position, meeting the challenges, facing the business threats, directing the efforts and behaviour and gaining the command over the situation.

Here in this assignment, the business strategy report for the coffee retail company –Starbucks in an analytical manner. Till 2015 the Starbucks was a leader in the retail coffee business with over $16 billion annual turnovers. Starbucks has its brand café in 60 countries along with this, Starbucks has also owned Seattle’s  Best coffee, Torrefazione Italia, Teavana’s heaven of tea brands. Though the company has its well-established reputation in this business still, the organization is facing many business challenges in the past years. The annual turnover of the company has also slowed down. The company is facing many challenges, including competition in the speciality coffee segment worldwide. According to the reports till 2012 U.S.A was the top supplier of the coffee worldwide but Brazil has given good competition and has developed its big market. Initially, Starbucks had a 50 % market share in the USA coffee market, but the increasing demand for Brazil coffee retail has put an effect on the market segment of Starbucks too.

The second biggest competitor for Starbucks is the Carbine coffee company has developed a big market in South Korea and the Middle East. Another competitor for the Starbucks are Mc Donald, and Dunkin donates who are themselves a big name in their speciality food products and are serving coffee along with their products which are putting a significant impact on the business prospects of the organization.

Understanding the effects of the above factors and impact on the turnover of their company, the management of the Starbucks is seriously taking strategic planning for achieving the high business goals and better business profits. In this process, the organization is firstly focusing on pampering its employees as the management believe that happy employee is the key to competitiveness and growth of the company. Most importantly, the business objectives cannot be achieved without the right workforce at the organization.

2.0   External Environmental Analysis (1,250 words)

As mentioned in the above section that Starbucks is facing many challenges in the coffee business retail. In this phase, it is required to analyze the resources, capabilities and competencies, the value chain, competitive advantages, value creation cycle and other factors. It is very important that the firms should formulate and implement strategies from an environmental perspective. The operation of the firm is affected by the environmental aspect.  The environmental factors include the firm’s labor practices, product sourcing, energy efficiency, environmental impact and practices of business ethics. These factors put a profound impact on the productivity of the organization. It is required that firm should develop strategies that support green environmental business practices, policies that promote products in low cost, less waste, minimization of energy use, conserving natural resources and other sound environmental practices.

The main objective of designing a business strategy framework is to provide the road map to achieve the effectiveness, Perceiving and utilizing the opportunities, mobilizing the resources, securing the market position, meeting the challenges, facing the business threats, directing the efforts and behaviour and gaining the command over the situation.

2.1 Industry overview and analysis

Star bucks, as discussed primarily operate and competes with the coffee makers and the snack store industry. The company has experienced the slow -down in the market in terms of profit in comparison to the benefit achieved in the previous years. The company experienced the loss due to economic slow -down and changing the taste of customers, and before that company has experienced a stable financial position and gain in the business. Even after stability in the economy worldwide the company has experienced slow down in their business due to emerging competitors such as casbeeie coffee and other companies who are providing new products for the customers and advance form of the coffee products too.

The coffee industry is in its mature position as coffee is one of the traditional products worldwide. Starbucks and Dunkin brand has equipped the 60%of the coffee market worldwide.

1. A) Industry Demand determinant and profitability drivers

These days the customer has become more aware of the latest trends in food and are have become more health-conscious due to digital awareness and health hazards. Most importantly, the Coffee Industry is driven by many factors which include the disposable income, per capita coffee and demographics. Most importantly, the coffee industry is susceptible to the macroeconomics factors that affect the overall growth of the industry. A second important factor for analyzing the coffee consumption in particular region helps in setting the supply and other business activities in the specific locality. Another essential element of analyzing the business prospects in the coffee industry is to access how much revenue the competitive companies are giving to the shop keepers, vendors and suppliers. The main driver to increase the profit is to increase the per capita consumption of the coffee by providing the appropriate products with health benefit highlights too

Analysis of the competitive advantages of the company

Distinctive competencies evaluation

1.  a) Resources

The Starbucks is a well-established company the critical resources of the company are –

• Own coffee production land and rich experience in coffee beans production.
• Well established infrastructure and centres at the primary location in various countries.
• Starbucks has its brand café in 60 countries along with this, Starbucks has also owned Seattle’s Best coffee, Torrefazione Italia, Teavana’s heaven of tea brands.
• The well-trained staff with rich experience in the coffee Industry.
• Good experience in the coffee industry.

1. Capabilities and competencies

Due to extensive experience in the coffee industry, Starbucks management team knows to handle the market fluctuations in a well-established manner. Moreover, the company has a high level of scope and well-implemented policies to manage the business processes at their organization.

1. c) The value chain- . The coffee beans are the primary input in the value chain system in the coffee industry; most importantly, the prevailing volatile cost of the coffee beans determines the market costs and profitability margin. Most importantly, the world prices of the coffee have been increased in these years due to growing demand for coffee worldwide as the production of coffee is not available in all countries. But in recent years as the production of coffee beans worldwide, the cost of coffee beans is lowering down, and peoples are becoming more health-conscious, so the overall cost of coffee is dropping down. Most importantly currently the customers are getting attracted to the products that provide complete detail of nutrients value and rival companies are presenting food products with overview of the health benefits, this is serious threat for the company. The main factors for the value chain are its coffee beans and premium Arabica coffee grown by them in the selected areas. This makes switching low and also provide cost stability too (Azhar Khazmi Adela Khazmi , 2008)

Porter’s Five forces Analysis of the Retail coffee and snacks Industry

1. Threat through new entrant: Moderate

• According to the study conducted, it is observed that there is a moderate threat that new entrant is creating many problems for the organization as it is increasing the competition for the organization.
• The industry is facing high and monopolistic architecture in the business competition.
• For the new entrants in the coffee, the industry does not require having much investment.
• Most importantly, in the case of the local market, the local shopkeepers and eateries are giving serious competition to Starbucks than rival companies.
• Entering the coffee market is relatively easy, and it does not require much investment. There is a moderate barrier for the new entrant to join in this business as they can present their products at relatively less cost.
• Many companies like Starbucks have developed their good market in not only coffee but also in other food products at their franchise.
• Another threat is from the well-established companies in a particular region as they have their market share and have eateries and café at the best localities in the area.

The threat of Substitutes- High

• These days as customers are drifting towards the healthy foods, so they are getting inclined towards tea, juices, health drinks, natural foods and other eateries more, the company should also get its inclination towards healthy food substitutes.
• These days ready to make coffee vouchers provided by the companies is also a high threat in this fast life and consumers are getting attracted towards these homemade coffee products due to less cost and time-saving.
• There is no switching cost for the customers from one coffee label to another, so they change their preferences too.
• The Starbucks has also applied an innovative way of providing the coffee to the customers and has also adopted new delicacies in its menu at the café. They are giving huge benefits and margins to the grocers too.

Moderate to low pressure

• There are many buyers in the market, so the bargaining for the coffee cost is comparatively low.
• Company provide various ranges of their coffee products and many ranges due to its high cost, and unique taste has fewer buyers in a comparison study, but this is a moderate threat as the company is itself taking care of the supply at a particular region of their coffee products.
• Consumers have moderate sensitivity towards the quality of coffee beans in general sense, and many consumers is ready to pay for the premium products.

Low to moderate pressure

• The main factors for the value chain are its coffee beans and premium Arabica coffee grown by them in the selected areas. This makes switching low and also provide cost stability too.
• As Starbucks is well established brand and is highly repudiated, it can take hands with local companies under its franchise and can moderate the business pressure over it.
• By maintaining the clear policies for the partnership and franchise, the moderate business pressure can be achieved easily.
• The suppliers also provide threats to the business so by taking the appropriate logistic mechanism the danger in this concern can be reduced to a high level and can develop strategic steps in this concern for providing the better opportunities to the suppliers.

High to moderate

1. Starbucks has a high level of market share in the coffee market worldwide and is providing its best services for many years, so brand value development is not an issue for it.
2. But customers frequent switching to other brands due to their great marketing features and advertisement is a significant threat for the company.
3. The industry is mature and in the growing state, so making the market value is not an issue for the company.
4. The Starbucks should take advantage of its market value, competitive policies and better avenues to get the desired results in the well-versed form.

1. d) Competitive advantages –

• Starbucks is already a well-established brand and is highly repudiated, so making the market edge is not a problem.
• Hiring an excellent staff for a business plan will not be difficult as employees prefer to work with the well-established employees.
• Star bucks have 60% of the market share, and currently, it is required to develop better strategies for the implementation.
• Most importantly, as discussed above, its coffee beans and premium Arabica coffee is grown by them in the selected areas. This makes consumer switching low and also provides cost stability too along with this it helps in maintaining the quality and uniqueness of their brand.

1. e) Value creation cycle

• The primary process of creating the value of the product is to provide high quality in the products.
• The second step is the price fixation, Starbucks has to maintain the prices not only according to the international market but has to consider the local market too.

The primary activities required to be performed for developing robust strategies for Starbucks will be as follows-

1. Research and development

Though Starbucks has its own dedicated Research and development department still organization should provide extensive support to this department so that by applying the innovative methods the market research, customer inclination can be well understood. Then according to the results found, the products should be designed. Along with this Starbucks should also focus on the quality of service provided and should provide the training to the staff members (Thomas.L , 2009)

2. Developing strong strategies

The Starbucks management team should provide the policies and guidelines to all its concerned franchise so that the quality standard is not degraded at their centres. The guidelines should contain complete detail from preparing standard recipes to the presentation key techniques of the food products provided at the centre’s Moreover the policies should give instructions on the hygiene and interior designing of the café under the star buck’s franchise. The standard guidelines to handle the customer issues should be adequately addressed in the policies too.

3. Production

Starbucks should adopt innovative methods for production at its department. There are lots of innovative ways for the products that are widely available, and Starbucks should provide secure techniques for logistics and supply at its centre. Most importantly, the production strategies should focus on providing high-quality products with lower costs so that the market cost of the product can be lowered down.

4. Marketing and Sales

As discussed in above section too The Starbucks should take the advantage of its market value, competitive policies and better avenues to get the desired results in the well versed form. The company should adopt the advance methods for the marketing and sales for its products in the well inclined manner. The sales of the products should e done according to the customer requirement and feedback.

5. Customer service

All customer services and the policies should provide instructions about the hygiene and interior designing of the café under the star buck’s franchise. The standard guidelines to handle the customer issues should be adequately addressed in the policies too. All the queries and problems of the customers should be treated in the responsible manner and customer services should be kept at the priority.

6. Human resource

The organization should develop strong recruitment policies for the selection of the staff members as the quality, and trained staff is the essential driving force to achieve the set goals.

3.0 Internal Environmental Analysis (1,250 words)

3.1 Star bucks core competencies

The core competence of Starbucks has been its ability to leverage its cornerstone product with its strong strategic policies effectively. The main objective of the business development strategy is to provide the strategy to achieve these goals in the well-versed form. Firstly it is required to turn the decision easy for the prospects that help to convert the opportunities in the clients. Then the next step is to deepen the engagement with the set goals and hopes and turn them into the qualified opportunities then lastly it is required to attract the potential buyers, influencers and referral sources through it.  A business strategy is a course of action and set of decisions which assist the entrepreneurs in achieving the specific goals. The biggest strength of the Starbucks is its high quality and understanding of its customers. The brand equity is built through selling the most excellent quality of the coffee and providing the unique features in their product ranges. As discussed above it is highly required to provide a high level of services with proper presentation and hygienic procedure for delivering the products to the customers. The core competency of Starbucks is in its human resource system. Along with this, it is also required to develop the appropriate policies and value system at the organization. Most importantly strong business strategy is needed to operate in the international market and this can be achieved through smart integration of the acquisition and alliances that help in maintain the strategic objective for the long term goals.

3.2 Starbucks SWOT analysis

Strengths

Global   Market repudiation and Strong market opposition

As discussed above, Starbucks has its brand café in 60 countries along with this, Starbucks has also owned Seattle’s  Best coffee, Torrefazione Italia, Teavana’s heaven of tea brands. Though company has its well established reputation in this business and has 60 % market in the coffee range in the worldwide. The Starbucks is well known for its unique quality in its product and is commercializing their brand value by giving the franchise to its associated companies. This helps Starbucks to gain a strong position in the competition.

Products of high quality

Starbucks is very particular and has its strong policies in maintaining its quality that has helped the company to sustain in the market in such a long run.

Location and aesthetic appeal of the café’s

          Starbucks has its café in the premium location and has the best interior as well as quality products; the entire store is well approachable.

Human Resource Management

The company has best and experienced staff members at its organization, it is well known for selecting the high knowledge-based staff at its organization and is well known for its rich working culture too.

Goodwill among the customers

Starbucks has developed its brand value through its best customer service and good quality. It is famous for using the recycling techniques that are environmentally friendly and is helping the company to promote the goodwill ( Shekhar 2008)

Diverse product ranges

The Starbucks portfolio provides a diverse range of food products that make it more accessible.

Use of advance technology

Starbucks is using advanced technology for its production as well for the promotion.

Weakness

High Cost

The products of Starbucks are comparatively costly. Due to the high cost, the consumers are switching to other brands.

Self –destructing due to overcrowding

Starbucks is doing aggressive expansion and high saturation in the market that is affecting its consideration on maintaining the quality of the product that is creating many problems for the long term goals.

Over-dependence on the US market

The entire business of Starbucks is focused on the US market, and other companies have developed their strong presence in other countries, too, that is creating many problems for the long term goals.

American /European culture crash

The coffee culture in Europe is different in comparison to the American culture, but the company is not concentrating on this issue.

Opportunities

Expansion in the Emerging market

The company has an ample opportunity to increase its business in tee expanded countries and has to understand the regional taste and work on it.

Expanding the business by integrating healthy products

These days as customers are drifting towards the healthy foods, so they are getting inclined towards tea, juices, health drinks, natural foods and other eateries more, the company should also get its inclination towards healthy food substitutes.

Expansion of the retail market

With its quality and brand, value company can expand quickly in the retail market too.

Threats

• These days as customers are drifting towards the healthy foods, so they are getting inclined towards tea, juices, health drinks, natural foods and other eateries more, the company should also get its inclination towards healthy food substitutes.
• These days ready to make coffee vouchers provided by the companies is also a high threat in this fast life and consumers are getting attracted towards these homemade coffee products due to less cost and time-saving.
• There is no switching cost for the customers from one coffee label to another, so they change their preferences too

4.0 Recommendations 

• Starbucks should adopt innovative methods for production at its department.
• The organization should develop strong recruitment policies for the selection of the staff members as the quality, and trained staff is the essential driving force to achieve the set goals.
• By maintaining the clear policies for the partnership and franchise, the moderate business pressure can be achieved easily.
• The standard guidelines to handle the customer issues should be adequately addressed in the policies too. All the queries and problems of the customers should be treated in the responsible manner and customer services should be kept at the priority.

             Part –B   Starbucks Stakeholder Report (500)

1.0 Primary Starbucks Stakeholder Group- Customer

Starbucks consider the customers as the primary stakeholder.

1. a) Characteristics
2. b) Demographics
3. c) Size of the stakeholder

2.0 Analysis of Stakeholder Group

                                         References

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                          Appendix –A

1.0 Internal Stakeholder

2.0 External Stakeholder