The Starbucks Corporation, Research Paper Example

The Starbucks Corporation has enjoyed phenomenal growth since its early days in 1971 as a quaint coffee shop in Seattle, Washington. The rise of Starbucks can be directly attributed to the following factors; the emphasis placed on product quality, high employee standards, and creating the perfect cup of coffee (Coffee.org, 2013, pg.1). Starbucks has a reputation of caring about the community, environment, and people. “We aim to foster a better future for farmers and a more stable climate for the planet. Doing this helps create a long-term supply of the high-quality beans we’ve been carefully blending, roasting and packing fresh for more than forty years.” (Starbucks, 2013, pg.1). The company has a loyal customer base willing to pay premium prices for Starbucks products. Starbucks has strategically located its stores in the community, which is a competitive advantage. Starbucks is ahead of most competitors when it comes to financial strength and profitability. One of the strongest advantages of Starbucks they have years of experience delivering quality blended, premium coffee to its customers that are met with a warm atmosphere, which results in incomparable customer service.

Starbucks products may be more expensive than those offered by the competition, however, their customer service, different brands of coffee and community connections offset. The customers of Starbucks have shared the experience as a community event where they can meet friends, business meetings or just a place to relax while working on school assignments. The atmosphere that that Starbucks has created allows the customer to choose the setting. The stores are set-up with roomy tables that has the feel of a high-class restaurant. The added feature is the Starbucks is set-up to enjoy the weather outside. The customers like the feeling of vacationing on a beach under a sun shade with friends.

Starbucks has managed to engrain its style of coffee into the fabric of the community as a natural place to meet. The trendy place to meet in the neighborhood shows no sign of slowing down. The Starbucks major strengths enable the firm to meet customer’s needs because they allow the customer to experience a rich, exotic blend of coffee, and a way of life. They focus on the quality of their product so that the customer can taste the difference between their gourmet cup of coffee and the traditional, cheap cup of black liquid found in convenient store. Starbucks has the praise from employees concerning flexible hours, great training, excellent benefits, and the collaborative style of management.

Competition

Competition is rising, from both lower priced alternatives and premium players. Starbucks has enough differentiation power to sustain its market share and expand into different business lines and geographies. Starbucks’ dominance in the U.S. and tremendous growth opportunities overseas make its expansion a good strategy. However, competition has intensified, in both domestically and abroad over the last couple of years. With no switching costs, Starbucks must continually refine its in-store environment and product mix to justify its premium pricing.

The threat to Starbucks is lower price coffee shops that are slowly adapting the Starbucks way of delivering coffee and some with a different philosophy. Dunkin Brands has one important advantage over Starbucks; while Starbucks builds and manages its own stores; Dunkin Brands sells franchises to independent owners. Investors can make the case that Starbucks captures more of the upside by owning its stores, but Dunkin Brands’ ability to rapidly expand its store presence with little capital investment makes it a major threat to Starbucks’ lead if Investors can make the case that Starbucks captures more of the upside by owning its stores, but Dunkin Brands’ ability to rapidly expand its store presence with little capital investment makes it a major threat to Starbucks’ lead in store count.

However, this competition with competitors has been good for Starbucks because they are branching out globally to ensure they remain the number one choice because they modified their product to meet the needs of the clients. This strategy will work well when Starbucks enters the globally market because they will have experience developing a niche. This strategy will work well when Starbucks enters the globally market because they will have experience developing a niche. Dunkin Brands is another relevant competitor with lower prices than Starbucks. High-end competition is increasing too, with companies like Panera growing strongly both on a total sales and comparable store sales basis. Panera offers high quality food and coffees for premium prices, and in that sense, it goes after a similar customer group. Starbucks is exposed to commodity price fluctuations and possible supply problems in coffee and other products.

Opportunity

Starbucks has an opportunity to expand internationally because coffee is a commodity in every country. There is plenty of room for growth in emerging markets that offer more juice, energy drinks, and even potentially some food items that will leverage the brand and attract different kinds of customers. Starbucks already has a market based so the strategy would be add another product or niche to the stores that bring in other customers such as WI-FI stations, other food items for lunch, discounts for return customers and providing other products such as Starbucks water. Starbucks is not satisfied with staying stagnant they are always seeking to add value for the customers. Those visitors are using Starbucks’s tools to find nearby stores, gain loyalty rewards, and load money on their Starbucks cards (Carr, 2013, pg.4).

Reference

Carr.A. (2013).Risky innovation. Will Starbucks leap of faith pays off? Retrieved from http://www.fastcompany.com/3009040/risky-innovation-will-starbuckss-leap-of-faith-pay-off

Coffee.org (2013).History of Starbucks. Retrieved from http://www.coffee.org/history-of-starbucks

Starbucks. (2013).Coffee: Ethically sourced coffee goals and progress. Retrieved from www.starbucks.com