Small Business Management For Starbucks

Analysis of Company’s Entrepreneurial Characteristics

Discuss about the Small Business Management for Starbucks.

Starbucks is an American based coffee giant company and was first established in 1971 in Seattle, Washington. At present it is one of the largest coffee chain retailers over the globe. Howard Schultz is the chairman of this company. Along with the coffee it also provides many beverages to the customers and takes care of the needs of the customers. It has expanded its stores worldwide and earned a great profit out of it. This company has a superb public relation with the customers and is active on the social media and on different web pages as well.  Earlier when it started it had many issues regarding so many things but eventually it improved its strategies and now it is a successful coffee retailer (John, 2004). In this report starbucks has been discussed in detail which gives proper knowledge about the company.

Starbucks is one of the most favored and recognized brands in today’s era. This company is actually the first company that introduced emerging tech and innovative practices as a part of their total contribution (Melody, 2013). There are many characteristics that make this company innovative and recognized in the areas of leadership, marketing, finance and many others. Main characteristics of this company are:

Starbucks is the company that believes in embracing the feedback. They respect every kind of feedback that they receive from the customers and even from the employees.  In earlier times the employees of the company were given a post card sized card and were told to right the feedback of their experience in the company. And these feedbacks were kept confidential. Now the time has changed and everything is done on the emails and the internet. Everything has been replaced by the modern technology. But when it comes to the feedback of the customers, the company is still willing to listen to them and try to satisfy the customers. A company cannot make innovation without listening.

This plays a vital role in the organization as the executive leadership in the Starbucks is projected to lead from the heart. The leaders of particular organization can lead from other places also like from the head as analytical abilities are necessary for the company. But in case of Starbucks leaders are expected to take themselves seriously and are also expected to take others seriously and at the end of the day they lead from the heart. Starbucks also provide leadership training and they provide the best possible training to the employees about the culture of the organization.

Startup Issues

Starbucks launched a site for the customers called MYStarbucksIdea.com. It is basically a place where customers can give new ideas to the company and can even advocate for the change in the policies that are existing in the company.  Starbucks also provide superior delivery with  the desired benefits to customers and with that it also maintains the innovation and provide relevance for the brand (Simonds, 2013).

Starbucks is a Seattle based coffee giant and had suffered a massive outrage that caused them to shut down the point of sales system at many stores across the U.S and Canada.  This had cost starbucks a massive cost of millions of dollars. There are also many other issues that have occurred in this company. Earlier customers did not get the in-store experience due which they were losing their customers as compared to the other coffee giant companies. There was also a loss of aroma in coffee which many customers complained about. However it was failing to attract more customers (Starbucks, 2013). One more issue that was brought up was regarding the feeling one gets when they enter the store. Hence there was a loss of warm feeling in the Starbucks. Besides the issues about the commoditization of the experience of the company, there were also issues regarding the increase in competition. Starbucks was facing huge competition from other recognized brands that were also doing well in their business. There were also many other coffee retailers like McDonalds, dunkin Donuts and Caribou coffee. Not only there were issues in the increasing competition there were also issues in the management of the company. There was a mismanagement of the supply chain that was followed in the company and starbucks was even lacking behind the discipline. Eventually over the years starbucks expanded its store in many different countries and cities to increase the marketing of the company. This was actually beneficial but again there was an issue as with the rapid increase of stores starbucks lost control over the stores.  Although starbucks expanded its store in many different areas of the cities but most of them had the poor locations of the stores.  Starbucks eventually lost their focus on the core values which they used to follow. Due to increase in competition from other coffee retailers there was a huge decline in the economy sector of this company. McDonalds gave a tough competition to starbucks as according to a consumer report test McDonald’s coffee was much better than starbucks and the Dunkin donuts. These were some of the startup issues that took place in starbucks.

Business Model Development

There is a framework that clearly explains the core competencies of a business model from the perspective of entrepreneurial. It basically consists of three key components that help in defining the business model development of starbucks.

This is the first component of the framework. This component includes the elements of the new business model which provides value from the firm (Flamholtz, 2012). Starbucks creates a unique value by creating an improved experience of the customer. It has provided the new service as this includes the starbucks mobile phone application.  This new app consists of many new and unique ordering processes that allow the customers to find the nearest store available and choose from the menu they wish to have.  This helped starbucks in enhancing their customer experience.  This app will also in help in keeping the customer database which will directly help in the marketing communications.

This is the other competence which is concerned with the market of the organization to which it has to create value for. This particular framework mainly focuses on the nature and the scope of the marketing that helps in the success of the organization. Mainly the target market was the consumer target which aimed the younger generation because this is the generation that is most attracted towards such coffee giants. Starbucks has also aimed to increase the consumers throughout the world to increase the marketing.

This framework describes the internal source of competence of the company. It is also used to explain that this framework is basically used to internment internal capabilities of the firm that provides benefits to the customers.  This framework also includes any kind of process that is happening in the company and even allows it to work efficiently and most importantly deliver the results as source of value creation to the customers.

Starbucks marketing strategies can be explained with the help of Porter’s five forces (Michael, 2008).

This force helps in analyzing the organization to the current environment which will help the firm to compete in the market (Grundy, 2006). There is a huge rise in the coffee industry. Many other organizations such as Dunkin Donuts and McDonalds have a large distribution channels at deliver coffee at the low cost. In this case starbucks have to be cautious as other organizations are earning profit by purchasing the coffee beans in bulk from the farmers so that they can sell coffee at lower prices.

Marketing Strategies of Starbucks

There was a decrease in the coffee chemistry and threat was increasing because soft drinks like Coca-Cola and Pepsi were getting consumed by the costumers. The reason behind it was that these drinks were available at low cost as compared to the coffee which was expensive and many people could not afford it on regular basis. So to increase the marketing of coffee Starbucks actually negotiated with the suppliers of coffee beans. Therefore starbucks purchased the coffee beans at lower prices and reduced the capacity of the buyer to another (Greenspan, 2017).

Rivalry of starbucks has changed over the years as in early days it had to compete with the small coffee shops but now things have changed for this company. Now it competes with the large recognized companies. More of its competition is with the Minneapolis based Caribou Coffee.  Starbucks have also made changes to compete with the competitors and even introduced Wi-Fi to attract the customers.

Most of the buyers of the coffee industry is single customers which makes easy for the company to negotiate with the customers (Schultz, 2014). This negotiation is dependent on the type of buyers and the company itself. There are two types of buyers, the individual buyers and the children.

Ø  Starbucks has the strong brand equity that lends to the competitive edge. Ø  This company has the wide range of geographic presence. It is one of the biggest coffee chains across the globe. Ø  This brand has managed to provide the high quality commodities.

Ø  Starbucks is totally dependent on the coffee beans and the price of coffee beans. However it is price sensitive to the fluctuations in the price of coffee beans. Ø  Starbucks was also accused for violating the “Fair Coffee Trade” principles. Ø  The prices of the commodities are high so customers prefer other outlets for the coffee instead of starbucks. Ø  There is no diversion in the product range.

Ø  Starbucks has chances to expand its supplier network (Forbes, 2016). Ø  This company also a huge opportunity in its expansion into the emerging market. Ø  Starbucks can also diversify in the product offerings as this will help in the more business opportunities (Birkinshaw, 2004). Ø  This company can also expand its network of retail stores.

Ø  Starbucks has a threat from the rising prices of coffee beans. Ø  Misusing the brand and using the logo is a threat. Ø  Competition from other coffee retailers Ø  Faces challenges because of its global supply chain.

Starbucks has a strong web presence and utilizes many other platforms in order to reach to their customers (Virginia’s community colleges, 2016).  The main website of starbucks keeps on changing the landing page so that they can coincide with the current promotion they are offering. It also engages itself in many marketing campaigns (Dan, 2011). For example Starbucks ran its advertisement on the website of MTV.com. Beside its web presence, starbucks has created an ecommerce site that allows for the online sale. Starbucks is also active on the social media including Twitter, Facebook, YouTube, and Goggle Plus. This company even has its own online community called MY Starbucks Idea.

As India is the largest growing market starbucks can open many stores in the country. India is pre dominantly the tea drinking nation so starbucks can launch “Teavana” which is a tea brand along with some packaged goods. Starbucks will also benefit if they bring the mobile and digital technology to India as this will reduce the long queues in populated nation. Moreover there will be a competitive edge for Starbucks (Thompson, 2004).

Many companies have complex structure and even make it difficult for the customers to reach them. But in case of starbucks it’s not the same, this company goes out of its way to solicit the feedback of the customers and even gets engaged in the conversations. Starbucks provides feedback brochures with many districts so that customers can provide feedback in number of ways. Not only through the feedbacks but also through social media it communicates with the customers and provides them the best experience and manages to form a healthy relationship with the customers (Green,2012).

Conclusion

From this report it has been concluded that starbucks has designed itself in an effective way that attracts customers.  It uses all the latest technologies to involve with the people which are actually beneficial for them as more people now days are using communication media to interact. Starbucks have always responded and connected with the customers to maintain a strong relationship.  From this report it can also be depicted that this brand has a huge global opportunity and follows a particular strategic planning to achieve their goal. Although it has many competitors still it has managed to survive in the market which makes starbucks special.

References

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 Dan. B. (2011). Starbucks Breaks Interactive Rich-Media Ad Campaign Targeting iPad Users. Starbucks. Retrieved on: 13 February 2017. From: https://www.mobilemarketer.com/cms/news/advertising/9403.html.

Flamholtz, (2012). Corporate culture, business models, competitive advantage, strategic assets and the bottom line: Theoretical and measurement issues. Journal of Human Resource Costing & Accounting 16(2) 76-94.

Forbes, (2016). How Starbucks Plans To Grow Its International Operations. Forbes. Retrieved on: 13 February 2017. From: https://www.forbes.com/sites/greatspeculations/2016/01/18/how-starbucks-plans-to-grow-its-international-operations/#19b074c55fc7.

Green, A. (2012). Starbucks Corporation: Global Expansion & International Marketing. Scribd. Retrieved on: 13 February. From: https://www.scribd.com/doc/123247528/Starbucks-Corporation-Global-Expansion-International-Marketing.

Greenspan, R. (2017). Starbucks Coffee’s Five Forces Analysis (Porter’s Model). Panmore Institute. Retrieved on: 13 February 2017. From: https://panmore.com/starbucks-coffee-five-forces-analysis-porters-model.

Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Wiley online library.  15(5) 213–229.

John, L. T. (2004). Strategic Management: Awareness & Change; Cengage Learning. U.K.

Melody, (2013). What Organizational Characteristics Make Starbucks So Innovative? StarbucksMelody. Retrieved on: 13 February 2017. From: https://www.starbucksmelody.com/2013/05/04/what-organizational-characteristics-make-starbucks-so-innovative/.

Michael. E. P. (2008). On Competition; Harvard business school Publishing Corporation, US.

Paul, A. A. (2004). Collaborating with Activists: How Starbucks Works With NGOs. University of California press 47(1) 91-116.

 Schultz, H. (2012). Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Ti; Hachette UK.

Simonds, L. (2013). Starbucks: A Model of Success. Time. Retrieved on: 13 February 2017. From:  https://business.time.com/2013/08/27/starbucks-a-model-of-success/.

Starbucks, (2013). As you taste different coffees from around the world, try to compare and contrast the coffees by identifying the four tasting terms for each coffee: aroma, acidity, body and flavor. Coffee Taste Characteristic. Retrieved on: 13 February 2017. From:  https://www.starbucks.com.au/Coffee-Taste-Characteristics.php.

Thompson, J. C. (2004). ‘The Starbucks Brandscape and Consumers’ (Anticorporate) Experiences of Globalization’. Journal of consumer research. 31 (3): 631-642.

Virgina’s Community Colleges. (2016). Web Site Analysis. Starbucks. Retrieved on: 13 February 2017. From: https://sites.google.com/a/email.vccs.edu/starbucksportfolio/web-site-analysis.