Starbucks and Krispy Kreme the Term Paper

  • Length: 8 pages
  • Sources: 4
  • Subject: Business
  • Type: Term Paper
  • Paper: #75042151

Excerpt from Term Paper :



In this, Krispy Kreme's strategy appears to be more focused upon monetary profit than risk-taking strategies for the sake of long-term customer relations. The company's franchising practices for example show that monetary strategy takes precedence over long-term quality assurance, whereas Starbucks' focus is upon using the company's inherent strengths to ensure the company's future growth.

3. Outcomes

In general, both Krispy Kreme and Starbucks show favorable outcomes as a result of their new management strategies. Krispy Kreme's most successful strategy is its individual focus on the customer's culinary experience. Customer responses to this testify to the excellence of the company's product, and the fact that these doughnuts are practically irresistible. It is interesting to note that the rise of health consciousness over the past decades have not influenced the company's sales significantly. While the company has added beverages to their menu, the main attraction of Krispy Kreme is its doughnuts.

The greater control that the company has begun to exercise over its franchises have also paid off in terms of increased revenue.

A possible area of improvement is the focus of the company's training. While implementing the newest of technology and media, it is better to develop training materials for employees at different levels rather than providing a "one size fits all" affair to be adjusted to the various needs within the company. Indeed, the needs at entry level differ vastly from those at management level.

Another possible area of improvement is Krispy Kreme's focus upon human relations.

The company appears to be focused more upon monetary profit than other, more human issues facing the workplace in terms of employees. Nevertheless, the company seems to have followed a fairly conventional business pathway towards improvement and strategies to provide an increase in cash flow. It should however be kept in mind that the nature of the modern workplace has changed.

This is something that Starbucks appears to be fully aware of. Since the arrival of Howard Schultz, Starbucks' strategies have made little sense from a purely business point-of-view. Nevertheless, in the long-term, all risks appear to have been successful. The first of these was the coffee bar idea. Until this idea was implemented, Starbucks was a somewhat obscure, small business. However, as soon as the coffee bar atmosphere was implemented, the company's popularity escalated to such a degree that international expansion became an option.

The risks associated with international expansion are also significant, especially in terms of a company such as Starbucks. There are several elements involved in this: the company is very focused on ownership and standards of operation. Local managers and partners in foreign countries need to be made aware of every aspect relating to the original company policy. A further risk is that expansion means a certain relinquishment of control. The risk involved is that local managers may take advantage of this by abusing worker's rights or embezzling earnings. Nevertheless, this appears not to be the case with Starbucks.

Another issue that seems to carry greater weight for Starbucks than for Krispy Kreme is corporate responsibility. Schultz for example created the Starbucks Foundation in order to focus on humanitarian issues in third-world countries. Incidentally, these are also countries from which the company buys its coffee. In this way, Starbucks takes responsibility for the world it affects, which in turn tends to create a favorable impression with customers.

Krispy Kreme does not seem as concerned with humanitarian and social issues, if their stance on health is considered. The company makes an essentially unhealthy product. They appear concerned only with making this product as tasty as possible without adding an element of wholesomeness to even some of their products. Nevertheless, the same could be said for Starbucks, as coffee is hardly a drink for the health conscious.

As such, all Starbucks' strategies, and particularly those initially losing the company money, are focused on Schultz's strategy to create a "company with soul." In this, Starbucks has succeeded, as it has eventually in monetary terms as well. Concomitantly with the risk of the coffee bar implementation, Starbucks' aggressive expansion strategy also worked, with more stores eventually opened than was initially envisioned.

The similar strategy of product focus and diversification seems to have had a favorable outcome for both companies. Krispy Kreme has added beverages to its menu, with Starbucks specializing in a wide range of high quality coffees.

Like Krispy Kreme, Starbucks also adjusts its strategies to suit the apparent needs of location and specific customers. While Krispy Kreme has however adopted this as a company-wide strategy, Starbucks has used it only after the more radical changes have been implemented.

Starbucks and Krispy Kreme are examples of companies who have pursued their goals, implemented them as strategies, and succeeded. As such, both companies can be admired for their tenacity in a highly competitive business world. Both companies have a fair share of strong competitors. The most successful strategy for each company is also the most unique in each: Krispy Kreme's display window and Starbucks' coffee bars. Both these elements provide a unique edge in a market that is not often friendly towards new entrants.

Sources

Krispy Kreme, Inc.;

Starbucks in 2004: Driving for Global Dominance in Thompson, a.A., Strickland, a.J. & Gamble, J. (2004). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases, (14th ed.). New…

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