Starbucks Corporation Competing a Global Market Follow Case Study
- Length: 5 pages
- Sources: 10
- Subject: Business
- Type: Case Study
- Paper: #74776527
Excerpt from Case Study :
starbucks corporation: competing a global market.
follow 6 parts detailed description assessment. assessment structure 6 main parts: 1. Overview situation. 2. Statement main problem: Level analysis Level 1 -- Industry Issues Level 2 -- Organisation Issues Level 3 -- Discipline Issues Problem type 3.
Overview of the Situation
Starbucks Corporation is one of the most famous worldwide brands. The company's success on the American market has determined Starbucks' managers to expand the activity in numerous countries. The strategy developed by the company's managers is based on several factors. However, Starbucks' strategy has been criticized in numerous countries. The company faces strong opposition in addressing certain markets from anti-globalization activists. It is important that Starbucks develops strategies that can reduce the effects of their protests.
The most important problem that Starbucks must work on is represented by anti-globalization. This process is creating important difficulties in entering new markets. The company was forced to handle the pressure of anti-globalization activists that targeted brands like Starbucks, Nike, and McDonald's in their attempt to fight the effects of globalization (Talk about Coffee, 2011).
There are several reasons behind these activists' protests. They target well-known multinationals because they are considered convenient symbols, making it easier for them to make a point. In these activists' opinion, these multinationals pay very small salaries for workers in poor countries, and they prefer cheaper destinations because these countries allow them to develop practices that are outlawed in the U.S. Such practices refer to labor, environmental, and competition strategies.
The problem with these activists is that their protests can be enlarged by media attention. These protests usually take place on local level, but the increased media coverage can bring them in the attention of the entire world. This situation determines a series of image problems for Starbucks on international level (BusinessWeek, 2005). These problems are reflected in the company's sales. The company can also face important difficulties when trying to enter new markets. The efforts of activists are supported by celebrities, which are able to significantly influence the public against Starbucks.
The most important industry issue that affects the company's activity is represented by the competition in the coffee beverages segment. Starbucks' primary competitors are quick-service restaurants and specialty coffee shops (Starbucks Corporation, 2009). The company must develop and implement strategies intended to counteract the effects of the activity of numerous competitors in the ready-to-drink coffee beverage market. Based on several market studies, the company's targeted customers select their coffee retailers in accordance with product quality, service, convenience, prices, and others.
The increased competition in this field has determined the company to expand its activity on international level in order to increase its market share. Therefore, Starbucks has oriented its resources towards investing in new markets. However, the company's market entry strategy is questionable for some specialists in the field. Some of them consider that Starbucks has engaged in anti-competitive practices in certain countries.
In order to ensure its success, Starbucks relies on its relationship with business partners and suppliers. This is because the company's strategy is based on a series of initiatives that refer to developing stores, foodservice, branded products, and others. These activities are developed in collaboration with local and international business partners. In addition to this, the quality of Starbucks' products depends on the materials purchased from suppliers. Therefore, it is important to develop strong relationships with suppliers.
Another organizational issue that can affect the company's activity is represented by the performance of its employees. Starbucks focuses on developing motivation strategies intended to improve the efficiency and productivity of its human resources. However, it seems the activists have a different opinion. Starbucks promotes an equitable work environment for its employees, but this strategy is usually applied in the U.S. market. In the other countries that Starbucks addresses, people complain about not benefitting from similar working conditions.
In order to be successful in this globalized business environment it is necessary to ensure a certain level of discipline within the company. This refers to employees following their superiors' directions, but also to managers following the strategic direction developed by Starbucks. It is important that the company is consistent in continuing its strategies.
There are several factors that can significantly influence the company's activity. These factors are represented by the competition, the anti-globalization protests, and the economic conditions on international level. The competition in the field is an important factor that must be taken into consideration. This is because the company's activity is influenced by the actions of its competitors. In other words, Starbucks' strategy is a response to the strategies of its competitors, or an anticipation of their actions. The importance of this factor relies on the fact that the activity of competitors determines the strategy of Starbucks (Kohn, 1992).
The protesters that fight against the process of globalization represent another important factor that can affect the company's situation (Wit & Meyer, 2010). The importance of this factor is represented by the international influence that the protests organized by these activists can have. Basically, the company's expansion depends on these protests. This is because the company cannot be successful in addressing new countries if the targeted public is not in its favor. These protesters have the power of influencing the masses through increased media coverage. This makes it very difficult for Starbucks to attract an important number of customers that can ensure its leader position in these countries (Carmichael, 2010).
Another important factor with great influence potential is represented by the economic conditions on international level. The company's financial and technical resources depend on these conditions. The purchasing power of customers also depends on this factor, increasing its importance. In order to properly evaluate market potential, it is important that Starbucks analyzes the economic situation of the countries it intends to address.
There are several alternatives that Starbucks can evaluate in the attempt of improving its situation. Such an alternative is represented by improving the company's relationships with anti-globalization activists. This is because many of Starbucks' problems are caused by these protesters that associate the company's image with the disadvantages of the process of globalization. They attribute to Starbucks problems like not having higher salaries, environmental problems, and others. However, it is difficult to counteract such a strong position of activists. The advantage of this solution is that if successful, it could provide great image capital to Starbucks on several levels. The disadvantage is that the company could be associated with consumerism.
Another solution is represented by the company's collaboration with the media in the countries it intends to address. This is because a great deal of the success of these activists' protests can be attributed to the media coverage they benefit from. If Starbucks could attract some of the media in these countries on its side, the company's risks cold significantly reduce. There are several advantages to this solution. For example, this could help Starbucks reduce the influence of anti-globalization activists. In addition to this, the company could improve its PR activity in these countries. The disadvantages are represented by the fact that it is difficult to apply such a strategy, and that in certain situation it could determine certain media wars.
The company could also intensify its efforts in promoting their environment friendly orientation. This should be included in the company's mission statement. However, not many activists are likely to take the company's strategy into consideration. Therefore, Starbucks should invest in supporting important environmental projects with great impact on these activists' groups. The advantage of this solution is that it would increase the company's visibility and it would better promote its interest in environmental issues. The disadvantage is represented by the significant investments that are required (Timm, 2005).
Another important alternative is represented by addressing the coffee production in the countries Starbucks wants to address. It is a well-known fact that customers are interested in purchasing products and services from their national production, in order to support the country's economy. Therefore, Starbucks could address this opportunity in countries with coffee production. In addition to this, the company can show the number of jobs created in these countries. The problem in this case is that this strategy is not likely to convince activists (Baker, 2011).
The company could also work on selling franchises instead of establishing partnerships. In the case of franchises, the company can rely on the owners' interest in developing Starbucks' activity. However, the problem with franchises is that the company cannot control and influence their strategy and activity. The advantages of business partnerships are represented by the fact that it is easier for Starbucks to control the activity, and by developing the correct strategy.
In Starbucks' situation it is recommended to address a combination of alternatives. The company should focus on developing a strategy based on promoting its environment friendly orientation and addressing the local coffee production in the countries Starbucks intends to address. In order to reach…