Importance of understanding business strategy
Business success is often tied to effectively managed strategies. Pick a successful or unsuccessful company with operations in Singapore and comment on its strategy management process. The choice of company is very open; it can be a company where you worked before or the company where you’re currently working, or any company you’re interested in. Discuss its success or failure with reference to concepts presented in the text, in particular Chapters 2 and 3. The paper should be 3-4 pages long, 1.5 line spacing, 12 font size (excluding cover page, tables, diagrams and appendices). No table of contents is required.
In this assignment, you are suggested to
1. Give a brief introduction of the company and its current performance.
2. Tie your discussion to either the Industrial Organization (I/O) model or Resource Based (RBV) model or both.
3. Conclude with some lessons learned from the success or failure of the company picked.
· Read pp.14-18, and chapters 2 and 3. · Proper referencing, which include both in-text citations and reference list. No plagiarism please. Always refer to Harvard Referencing Guideline.
Importance of understanding business strategy
Starbucks Coffee Company
Singapore is one of the top countries outside the North America to start producing Starbucks to it potential customers who had embraced Starbucks experience. Starbucks coffee is owned by the Starbucks Coffee corporation since 2004 (June). The first Starbucks store was opened in December 14 1996 at a place called Liat. Starbucks coffee houses in Singapore are known for producing high quality and the finest coffee from across the globe. Starbucks stores’ layout and atmosphere are well designed to be intimate and cosy so as to provide people with enough space to use as they can wish for. Starbucks coffee product line has developed and the company has increased its brands such as fresh brewed coffee, Tazo tea, sandwiches, hot and iced espresso beverages, baked pastries and salads. The largest market share products of Starbucks coffee include bottled Frappuccino, espresso drinks, iced coffee whole bean coffee, coffee liqueurs , tea, and premium ice cream.
Starbucks coffee company understands the important of product brand identity and differentiation. This has helped the company to market its products more easily, attracting new customers as well as maintaining their customers. Starbucks coffee company has viewed this as a competitive advantage since it helps their customers identify and differentiate their quality products and services from those of their competitors. Currently, the company is still dominating the coffee products market share but it is faced with lot of competition from their competitors such as Dunkin’ Donuts, Panera Bread and McDonalds. The company has grown to become on of the largest greenhouse coffee companies in the world. Is has more than 16, 120 stores in different countries such as China, Australia, Puerto Rico, Canada, etc.
Industrial organizational (I/O) and Resource Based Models
Starbucks coffee company uses both models as a strategy to increase their market share, take advantage of their competitors, be able to take advantages of their strengths and opportunities that rises. These models also help the company to be able to work on their weakness and be able to eliminate threats that may rise in their operations. Industrial organizational (I/O) models usually works to develop and utilize the competitive advantage over their competitors which is attained through market analysis both internal and external analysis as well as organization operational practices. The company utilizes this model to identify its potential advantages which will help it to undo their competitors. Starbucks coffee company uses Industrial Organization model to assess a new business strategy which will help the company to identify opportunities that will increase organizations profits as well as threats that will lead to loss occurrence in the organization.
Despite the current situation of Starbucks coffee company inflated product prices, the company has managed to use Industrial Organization model to create a sense of brand loyalty with and an array of loyal followers which has enabled the organization to outdo their competitors in terms of product quality and customer satisfaction level. Starbucks coffee company has been able to establish standards for their coffee that should be meat before their products are distributed to their stores, retailers and to their customers. With the usage of the organizations logo, and trademark the company has been able to differentiate their coffee products from their competitors (Mizrahi,Charles2008).
Starbucks coffee company has used Industrial organization model to focus on its core competencies so as to differentiate itself into a coffee powerhouse. Starbucks coffee company has also used industrial organization model to create new marketing strategies, marketing plan and to conduct both internal and external market analysis so as to identify the weaknesses of their competitors so as to take advantage of that opportunity to attract more customers into their company thus increasing their profits in the long-run. This strategy has leveraged the Starbucks Company all over the globe due to its high quality products and services, creating production and marketing ideas that are hard and difficult for their competitors to imitate.
Starbucks coffee company usually operate in large production of coffee products and for that reason, it is able to enjoy economies of scale which is the minimization of production costs due to increase production volume. This has enabled the organization to be able to distribute and sell their products to customers at affordable prices thus increasing their sales thus leading to profit maximization (Goldman, David 2008)..
Starbucks coffee retail stores are strategically located to ensure that they are accessible to their customers and their distributors. Strategic location of Starbucks coffee stores also serve as a tool to create awareness about the existence of their products and to promote their product brands. The Starbucks Company is dedicated to selling only the finest whole bean coffees and coffee beverages therefore it purchases green coffee beans from coffee-producing regions around the world (Goldman, David 2008)..
The Starbucks coffee company also uses resource-based models whose views ad theories are less changeable since it focuses on the building a profitable and unique Resource-based views are less changeable, as they focus on building a unique and profitable enterprise from the inside out. The company use its available resources optimally so as maximize their production. The company also has managed to use this model to identify its strength and weaknesses thus being able to maximize its strength thus leading to realization of organization growth and development. The Starbucks coffee company has used resource based model to realize that its growth and expansion is proportionally dependent on the knowledge, capabilities, abilities and skills the organization has about their production level and strategies, marketing and their funding systems. This model has enabled the organization to diversify and to accomplish higher organizational performance. While Starbucks has a variety of beverage and food items that are low in caffeine and calories, some of the other products contain high fat and calorie count have been the focus of adverse health effects. This has caused a significant reduction in the demand for Starbucks products and an increase in the demand for healthier products.
Starbucks has had much market power in the gourmet espresso industry. They have pulled in clients due to their production of high quality product and distributing their product at affordable prices to their clients. The Starbucks coffee company current economic state has lead to the increase in their production cost thus leading to increment in products prices. High products prices has lead to decrease in their demand level since their clients are opting to buy the same quality and quantity from Starbucks coffee competitors since they are offering the same quality and quantity at affordable prices.
Starbucks coffee company has been forced with the changing coffee production methods, economic times and the increased completion in coffee production sector, the company has been forced to drive down their prices so as to compete in the industry. The closing of stores and the reduction of staff proves that their pricing model only projected a short term profit, as in the case of any firm operating in a monopolistic competition. This proves that the price of coffee is elastic and if prices are high than the demand for the good will decrease.
Goldman, David (2008). "Starbucks Puts the Brakes on New Stores." CNNMoney.Com. 12 Feb.<http://money.com/2008/01/30/news/companies/strabucks_earnings/index.html
Coffee Talk Supplier Guidelines at Starbucks. 2 Feb. 2008 <http://www.greenbiz.com/news/reviews_third.cfm?NewsID=26691>.
Holmes, Stanley (2008). "Starbucks: Keeping the Brew Hot." Business Week. 6 Aug. 2001. 7 Mar. 2008 <http://www.businessweek.com>.
Mizrahi,Charles(2008) "Starbucks Vs. McDonals." Gurufocus.Com. <http://www.gurufocus.com/news.php?id=21677>.