Company Strategy
Interrelated Managerial Stages in Strategic & Organizational Planning
Five elements of strategy: Starbucks
Stage 1: Vision, mission, and values-setting
Starbucks' original mission was to bring a neighborhood coffee house to every location in the U.S., in the style of Italian cafes. It emphasized quality to a greater degree than any existing coffee brand available to the general public at the time of its birth. There are lower-priced coffees and higher-quality coffees on the market, but Starbucks attempts to offer an affordable luxury and a home away from home to its patrons. From the beginning, "Howard Schultz strongly believed that Starbucks' success was heavily dependent on customers having a very positive experience in its stores. This meant having store employees who were knowledgeable about the company's products, who paid attention to detail, who eagerly communicated the company's passion for coffee, and who had the skills and personality to deliver consistently pleasing customer service" (Thompson & Gamble: 1997:2). When Starbucks felt that the coffee it was serving was suffering in quality, it shut down all of its stores for a day to enable all extant stores to engage in a massive retraining effort.
Setting objectives
Starbucks strove to super-saturate the market during its initial phases of expansion, to whet the public's appetite for better coffee. "When Starbucks' store expansion targets proved easier to meet than Schultz had originally anticipated, he upped the numbers to keep challenging the organization" (Thompson & Gamble: 1997:2). Starbucks adopted a hub-and-spoke expansion strategy in which it expanded...
While some franchises preferred to limit expansion to avoid stores competing with one another, Starbucks did not (which is why Starbucks on different sides of the street in New York City are so common), rationalizing that the personalization of the stores would create different client bases.
In 2007, Starbucks set a goal of having 30,000 stores worldwide. "That dream died a year later and just over halfway there with sales and profits sliding before other retailers really felt the recession. The Seattle company has since closed nearly 900 stores and eliminated more than 34,000 jobs" (Allison 2010). It refined its strategy to focus more on under-served markets abroad, particularly in the Far East.
Crafting a strategy to achieve the objectives
This emphasis on international expansion is currently tipped in favor of China. Starbucks is using the lessons it has learned from its expansion into Japan and other East Asian nations regarding the differences between Starbucks' original product and different tastes and preferences abroad. "In markets outside the continental United States (including Hawaii), Starbucks' strategy was to license a reputable and capable local company with retailing know-how in the target host country to develop and operate new Starbucks stores. In some cases, Starbucks was a joint venture partner in the stores outside the continental Untied States" (Thompson & Gamble: 1997: 3). Joint ventures enable Starbucks to better navigate the waters of the local regulatory economy and understand different consumer taste preferences.
Executing the chosen strategy…
