Question

Anyone can help me answer those question around 200 words each with typing!!! (Business Strategy) need it asap!!!

• Based on your experiences as a coffee consumer, does Starbucks’ strategy (as described in Illustration Capsule) seem to set it apart from rivals?
• Does the strategy seem to be keyed to a cost-based advantage, differentiating features, serving the unique needs of a niche, or some combination of these?
• What is there about Starbucks’ strategy that can lead to sustainable competitive advantage?

Answer 1

I have to be honest I like my coffee but I don’t get why people are so fascinated with paying so much for coffee. That being said I will say that Starbuckdefinitely has set itself apart from its competitors. I know people whose day is just ruined if they don’t have their Starbucks coffee in the morning. I guess the reason they enjoy and like Starbucks is because Starbucks has quality products, with guidelines so detailed that they outline how much time it should take for their coffee to be prepared. I believe Starbucks uses a broad differentiation strategy because it focuses on a broader segment of the total coffee market.

Starbucks’ Strategy: The Key Elements
Expand number of Starbucks stores domestically by blanketing metropolitan areas, then adding stores on the city’s perimeterMake Starbucks a global brand by opening stores in an increasing number of foreign locationsView each store as a billboard for the company and as a contributor to building the company’s brand and imageBroaden in-store products to include coffee-flavored ice cream, teas, fresh pastries, music CDs, and coffee accessoriesFully exploit the growing power of the Starbucks’ name and brand image with out-of-store salesDisplay corporate responsibility and environmental sustainabilityControl costs of opening new storesPromote customer-friendly service and enhance store ambience by making Starbucks a great place to work.

Starbucks’ strategy appears to be well-matched to its industry and competitive conditions. Since 2000, the company’s sales had grown by more than 20% annually to reach $9.4 billion in Net earnings had increased from $95 million in 2000 to $672 million in However, profit margins are not provided in the Illustration Capsule; in the final analysis, a company’s success must be evaluated based on its profitability.Starbucks’ strategy appears to be based on a mixture of the following: an emphasis on differentiating features and resource strengths and competitive capabilities, i.e. a differentiation strategy. It is the world’s leading specialty coffee retailer, offering a variety of unique, coffee-based drinks in 11,000 locations in the U.S. and approximately 4,500 stores located in 43 countries outside the U.S. In addition, its in-store sales included coffee beans, coffee-flavored products, pastries, and coffee accessories. A key aspect of Starbucks’ strategy was to fully exploit the growing power of the Starbucks name and brand image with out-of-store sales. Examples of such out-of-store sales included the sale of ground coffee and coffee beans in U.S. grocery stores. Starbucks also sold Frappuccino in U.S. grocery and convenience stores through a partnership with PepsiCo and sold coffee flavored ice creams in grocery stores through a partnership with Dreyer’s Grand Ice Cream. There are several other key aspects of Starbucks’ differentiation strategy. First, the company viewed each store as a contributor to building the company’s brand and image. Each detail was scrutinized to enhance the mood and ambience of the store, to make sure everything signaled best-of class and reflected the personality of the community and the neighborhood. The thesis was “Everything matters.” Next, Starbucks emphasized customer-friendly service and store ambience. It wanted Starbucks to be a great place to work. CEO Howard Schultz’s thesis was that high employee morale would spill over to inject energy, positive vibes, and a feel-good atmosphere into the operations of its stores, thereby making the Starbucks experience more pleasing to patrons.While its specialty coffee products are a key factor in obtaining a competitive advantage, a key to sustaining a competitive advantage will be based on providing exceptional customer service to support its sales. For example, the company went to great lengths to make sure the store fixtures, the merchandise displays, the colors, the artwork, the banners, the music, and the aromas all blended to create a consistent, inviting, stimulating environment that evoked the romance of coffee, that signaled the company’s passion for coffee, and that rewarded customers with ceremony, stories, and surprise. While Starbucks strategy was largely on target, Schultz announced that Starbucks would slow the pace of store expansion in the U.S. and close 600 of its U.S. stores that were underperforming; over 70 percent of the stores scheduled for closing had been opened since 2006 and were in areas where Starbucks already had a number of other stores nearby. The basic reason why so many new Starbucks stores had failed to reach the expected sales and profit levels had to do with putting stores so close together that they cannibalized each others sales.