Requirements

Write a six- to eight-page paper in which you do the following:

• Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion.
• Analyze the corporate-level strategies for the corporation you chose to determine the corporate-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion.
• Analyze the competitive environment to determine the corporation’s most significant competitor. Compare their strategies at each level and evaluate which company you think is most likely to be successful in the long term. Justify your choice.
• Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets.
• Use at least three quality references. Note: Wikipedia and other websites do not quality as academic resources. 

Running Head: STARBUCKS’ GLOBAL EXPANSION

STARBUCKS’ GLOBAL EXPANSION

5

Starbucks’ Global Expansion

Tabatha Hall-Politte

January 19, 2020

The Success of Starbucks

Both technology and globalization have an astounding effect on businesses. Globalization refers to the process through which companies expand to an extent where their operations become global. This is usually made possible by technological advancement that takes place day after day. In many ways, technological advances and globalization can affect business in both positive and negative ways.

A Background of Starbucks

An example of a company that has been profoundly affected by both technology and globalization is Starbucks. The company has managed to take a simple product and miraculously made it a lifestyle. Time is gone when people would take coffee only in the morning to get their dose of caffeine needed for the day. Currently, people drink coffee for the mere fun of it, any time of the day. All this revolution is attributed to Starbucks (Nair & Weber, 2017). When buying a cup of coffee, customers are not just buying coffee; they are buying an experience. For instance, they could be looking for the strong coffee smell, the rich taste of the specific variety that they purchase, and a laid-back atmosphere. Starbuck’s customers clearly understand the difference any other brand of coffee and the experience that they derive from Starbuck’s coffee.

Though it’s an American firm, Starbucks has been embraced by people from all over the world, regardless of the language that they speak. Originally, the firm started as a small store in Pike Place Market, Seattle. As at now, the firm has operations in over 50 countries and over 15,000 stores. Since 1971, the company has been providing one of the world’s most exquisite beverage to any consumer willing spend a good amount on a cup of coffee. It didn’t take sheer luck for Starbucks to become a market leader (Rizqiyanto, 2017). They have risen to the top by making strategic acquisitions, protecting a name that they have fought hard to protect and ensuring that they are differentiated from their competitors.

Starbucks’ Global Expansion

  Globalization is vital for the success of any company, and Starbucks is not an exception. Though the company was successful in its home country, the company leaders still saw the need to expand their operations to global markets to fully utilize their potential. In 2003, Starbucks embarked on an aggressive expansion process that is attributable for the growth of the company to its current worldwide status that we know of today (Nair & Weber, 2017). Globally, consumers began experiencing what would be referred to as the “Starbucks Effect”, which refers to the emergence of rivals that come with better, and more impressive business models that make firms to reevaluate the viability of their business ideas.

         As technology and globalization have helped to place Starbucks at the international level, the firm has experienced several problems. These problems have either originated internally from the firm’s business model or externally from overseas competition. Globally, rival coffee shops came up. Some copied Starbucks’ name, business practices and the firm’s logo (Shaburishvili, 2017). To counter this, Starbucks applied intellectual property laws to do away with the confusion that customers encountered in differentiating itself from rivals.

The Industrial Organization Model and the Resource-based Model

The industrial operations model uses an external approach to explain that external forces outside the organization have the greatest influence on the strategic actions of a firm (Rizqiyanto, 2017). This model is based on the following assumptions; the external environment imposes constraints and pressures that dictate its strategic actions that lead to superior returns, most firms that compete in the given market have similar control on relevant factors of production, high mobility of resources in the market, and, the rationality of decision-makers.

Being a big firm, Starbucks can make use of the industrial organization model to ensure that it controls a huge chunk of market share in the highly segmented market. In this economic model, Starbucks can outdo its rivals using advertising information, reducing production and transaction costs and forming strategic alliances (Shaburishvili, 2017). In addition to this, Starbucks can engage in deliberate acts that help to keep the competition pool small and create barriers that make it hard for new entrants to penetrate the market. Through this model, Starbucks should to try to maintain a strong foothold in the industry.

The resource-based model refers to an internal perspective that explains how the internal capabilities and resources of a firm can serve as an enabling factor for earning above-average profits. This model is founded on the assumption that the firm is a collection of unique capabilities and resources that serve as the primary basis for formulating strategy and source of income. The second assumption is that, over time, the firm puts efforts to acquire and develop unique capabilities and resources so as to stay strategically competitive. Finally, this model assumes that resources are not highly mobile across firms (Voigt, Buliga & Michl, 2017). Starbucks should apply this model to evaluate its capabilities and resources. This is because resources and capabilities are two core factors that determine the strategic appropriateness of the firm’s actions. The capabilities and resources of Starbucks are rare, valuable, costly to imitate and hard to substitute. If the company manages to safeguard its resources and capabilities, it stays competitive and good at what it does.

Vision Statement and Mission Statement

The mission of Starbucks is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” The vision of the company is to “treat people like family, and they will be loyal and give their all.” The mission and vision of Starbucks highlight the emphasis of the firm to lead the coffeehouse market (Voigt, Buliga & Michl, 2017). The firm’s mission indicates what Starbucks does so as to target its customers. The mission statement of Starbucks is focused on the philosophical purpose of the firm. Starbucks vision statement indicates what it desires to achieve in future. In a nutshell, the vision statement is focused on placing the firm in a position where it’s the market leader (Ziliani, 2019). The vision and mission statements of Starbucks are clear, concise and inspiring in terms of maintaining premier status in the coffee industry.

Role of Stakeholders in Success of Starbucks

The main stakeholders for Starbucks are; employees, suppliers, customers, investors, the environment, and governments. Starbucks’s employees play a critical role in the success of the company by ensuring that they have effective communication skills and that they have the ability to take customer orders accurately. The staffs are highly enthusiastic towards working. Suppliers ensure that the supply chain of Starbucks is sustainable (Ziliani, 2019). The farmers that supply Starbucks with coffee beans adhere to high standards which ensure that they are of the same flavor and quality. Starbucks’s investors play a critical role in funding the opening of new stores in new markets. In addition to this, investors ensure that they provide funds for research and development which consequently ensure that Starbucks keeps making new inventions (Rizqiyanto, 2017). Environmental factors such as weather, political stability and favorable financial conditions have provided a conducive environment for Starbucks to achieve global success. Finally, governments play an essential role in formulating policies that encourage the operations and expansion of Starbucks.

References

Nair, A., & Weber, T. (2017). borjo coffeehouse: Franchise, Independence, and Starbucks. Entrepreneurship Theory and Practice, 41(5), 861-875.

Rizqiyanto, S. (2017). Starbucks’s Fair Trade in the Edge of Globalization. Etikonomi, 16(2), 231-248.

Shaburishvili, S. (2017). The peculiarities of inclusive business development under globalization. Globalization & Business.

Voigt, K. I., Buliga, O., & Michl, K. (2017). Globalizing Coffee Culture: The Case of Starbucks. In Business Model Pioneers (pp. 41-53). Springer, Cham.

Ziliani, C. (2019). GETTING LOYALTY RIGHT: BARILLA AND STARBUCKS. Loyalty Management: From Loyalty Programs to Omnichannel Customer Experiences, 18.