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Starbucks Corporation is one of leading roasters, marketers, and retailers of specialty coffee that started operating in the 1971 in Seattle, United States (Thorn, 2014). Alfred Peet who operated Peet’s high quality and equipment company inspired the business. The original store still stands until the present. Starbucks bought Peet’s in 1984. The business operates widely throughout the world. It has over 7,300 coffee kiosks and shops in the US and approximately 3,000 in other countries. The highest concentrations are in Japan, UK, Canada, Taiwan, China, the Philippines, Thailand, South Korea, and Malaysia amongst others (Gilleard, 2014). Starbucks shops also deal with pastries, Tazo teas, espresso machines, other food items, coffee brewers, and other tea- and coffee-related items. The success of a supply chain of Starbucks translates to intelligent strategic planning and highlevels of customer satisfaction.
Starbucks has developed to a level of selling its products through mail-order and even online at starbucks.com. The company also sells its products to the restaurants, healthcare and educational institutions, businesses, airlines, and hotels. The company also collaborates with other companies to broaden its business scope (Gilleard, 2014). For instance, Pepsi-Cola Company works with Starbucks. In this case, the firm bottles Starbucks DoubleShot espresso drink and Frappuccino beverages, then sells them via drugstores, supermarkets, and convenience stores.
Starbucks has turned into a huge global company, but it managed to reach such level due to a particulat factor. The company’s supply chain is extremely successful. It spans over about nineteen countries. The chain involves coco beans coming from one country and milk coming from an entirely distinct country. This supply chain plan is a global resource, which expands the roots of Starbucks and which allows the company to reach more and more places.
The company sends all raw materials to roasting, manufacturing, and packaging plants. The company has six roasting centers that prepare the beans. The number of the centers seems small for such a global company, but the centralized system is extremely effective (Lee, 2010). The operation of all the roasting centers is exactly the same. The roasting machines prepare, manufacture, and package every single bean in the same manner. Starbucks has a well-thought delivery process once the beans are ready. The amounts of coffee the company delivers each day are stunningly large. The amount of coffee delivered on a daily basis exceeds seventy thousand pounds. Therefore, the company is responsible for supplying each store with enough coffee.
Like any other company, Starbucks has its business challenges. One of the principal challenges Starbucks faces is competition from retailers that deals with identical or similar concepts. Timothy’s Coffee and New World Coffee are examples of competitors (Starbucks Corporation SWOT Analysis, 2013). Another challenge is a lack of experience in carrying out business in the market that is price sensitive. Starbucks should strive to maintain its position and outperform the competing retailers. It is possible for the company to outshine them because it has taken extensive initiatives, which have enabled it to sustain its brand advantage.
In addition, Starbucks, has formed distribution alliances with other companies. For instance, Dreyer’s Grand Ice Cream, Capitol Records, Pepsi-Co, Barnes and Noble Booksellers and Nordstrom widen its distribution portfolios and expand its product base. Sound business management taps into such potential of joining hands with established organizations that can help with marketing products. Starbucks attempted this opportunity and has succeeded. The challenge of competition does not pose a great threat for Starbucks. Starbucks as the market pioneer has formed the above alliances and established its retail mix, giving the company an upper hand against competitors. However, there is a looming problem facing the company, which involves problems because of overall economic conditions.
Retail Strategy
Starbucks company has designed its strategy to focus on maintaining loyalty and influencing repeated transactions from its customers. The strategy entails recruiting and training sharp counter servers, baristas, educating customers about the company’s specialty coffee drinks and associated products (Lee, 2010). It also involves providing companies with opportunities to take breaks from their busy lives in the relaxing atmosphere.
Retail Mix
Retail mix is a crucial ingredient of Starbucks’ success. Here, the company always targets centralized towns or cities and highly conspicuous places, which act as hubs or regional centers. The company has a stock variety consisting of coffee beverages (58 percent), food items making 16% and whole coffee beans making 17%. The company also has coffee-related paraphernalia making 9% of total products (Gilleard, 2014). Starbucks uses minimal budget for advertisements and promotions. Because of the company’s dedication to a high degree of customer service and quality of products, Starbucks has been able to establish an excellent product pricing. The company is well endowed with sufficient space in its stores. Customers can wander in the stores as they take sips of their coffee considering the products to purchase.
Starbucks’ Strengths
The company has recently focused its major advertising rallies on customer satisfaction. The company has utilized the Internet to get feedback from its customers. In this case, Starbucks uses MyStarbucks.com. There have been groundbreaking changes to revitalize the company’s goals ensuring that they match the consumer demands (Starbucks Corporation SWOT Analysis, 2013). New concepts have been introduced encompassing infant entrepreneur’s mindset: taking risks and working nonstop. The company has a significant strength of rapid store opening and focusing on the remaining shops. The company also enjoys increased sales because of promotions through social media.
Starbucks’ Weaknesses
It is noteworthy to recognize that the company is known for its creativity and product development. However, this business is subject to a tendency to falter in the future in case the management does not take necessary precautions (Starbucks Corporation SWOT Analysis, 2013). The company has over three-quarters of its cafes in the home market, the United States. Starbucks should consider finding places in other countries where to establish a business in order to spread the business risk. Retail coffee business is the main specialization of Starbucks, and this narrow focus makes diversification difficult. The company should consider dealing with other products related to coffee, which will enable diversification. The company has another weakness of product pricing. Some customers complain that the company sells its coffee at high prices. Additionally, Starbucks has not scored well in the environmental concerns, tax evasions, and treatment of its suppliers.
Starbucks has seen success for a long time. The transformation of the supply chain had the support from management. Management influences what happens in business through such decisions. Starbucks should resolve to maintain its business and encourage more growth than before. The company ought to continue its culture of recruiting and training highly talented staff, which can come up with new inventions that will keep the company in its current leading position.
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Although the company faces challenges and has several weaknesses, it can capitalize on many opportunities for improvement. They include expanding retail operations, increasing product offerings, expanding to emerging economies, and extending supplier networks. Through these opportunities, the business can survive any cycles of business. The management should carry in-depth research to make rational decision making regarding the opportunities to avoid rushing only to regret later.
In conclusion, Starbucks is a progressive and successful business. With the continued persistence in its business strategy, the company is bound to remain at the top. Management should continue looking for additional and unique ingredients to blend with the existing business mix to ensure sustainable business growth.
