Paper on Business Operations of Starbucks Corporation - 2750 Words

Paper on Business Operations of Starbucks Corporation (Essay Sample) Content: Starbucks CorporationNameInstitutionTable of Contents TOC \o "1-2" \h \z \uExecutive Summary PAGEREF _Toc462965312 \h 3Starbucks Cooperation PAGEREF _Toc462965313 \h 4Introduction PAGEREF _Toc462965314 \h 4Sources of Cost and Differentiation Advantage in the Coffee Industry PAGEREF _Toc462965315 \h 5Starbucks Corporation Value Chain Analysis PAGEREF _Toc462965316 \h 7Starbucks Corporation SWOT Analysis PAGEREF _Toc462965317 \h 8Recommendations PAGEREF _Toc462965318 \h 12Conclusion PAGEREF _Toc462965319 \h 13Executive SummaryThis report is about Starbucks Corporation. This is an American coffee company and coffee house chain that was founded in Seattle Washington. This company offers the world some of the finest fresh roasted fresh bean coffees. The growing global position of this corporation is due to its unique taste. This was put in place when Howard Schultz joined the corporation infusing Italian coffee tradition in this coffee business. In addition, he wanted the coffee houses owned by this company to provide consumers with a sense of connection and a homely environment to hold conversations. This report will provide an in depth analysis of this corporation examining its objectives, ownership structures and governing controls. Additionally, it will analyse the basic sources of cost and differentiation advantage in the coffee industry and how Starbucks uses these strategies to gain competitive edge against other companies in the industries. Through a value chain analysis and a SWOT analysis, their resources for competitive advantage are identified and analyzed. Based on this analysis, recommendations will be made on how these strategic resources and the corporate governance can be developed to achieve competitive advantage for this corporation.Starbucks CooperationIntroductionStarbucks Cooperation is an America company that was founded in 1971 in Seattle CITATION Koo10 \l 1033 (Koomsub, 2010). This company is a coffee company that has expan ded its operations to diverse locations including Asian, European and American markets. This company is a marketer, retailer and roaster of high quality coffee. In addition to coffee Starbucks also sells beverages, tea and other food products. They have retail stores all over the world. Starbucks Cooperation aims to provide its customers with high quality accessible and affordable products. Starbucks has a culture of corporate social responsibility. This is emphasized by their mission statement to inspire and nurture the human spirit-one person, one cup and one neighborhood at a time  CITATION Sta16 \l 1033 (Starbucks Corporation). With a focus on this mission, the Starbucks Cooperation promotes cultural development and acceptance. This is reflected in the diversity of their staff, suppliers and their customers. In addition, the company believes that performance can be achieved without sacrificing humanity. For this reason, the company has embarked in many community building pr ojects that bring about development of the communities where they invest in.To ensure smooth running of operational and business functions of this corporation, an organizational structure has been implemented. The company runs its main operations from the Seattle headquarters. The executives of the company oversee operations. In addition, they implement decisions made by the board of directors CITATION Sta161 \l 1033 (Starbucks Corporation). The board of directors makes decisions based on the needs and requirements of their shareholders who amount to over 1500. Starbucks stores are corporate owned of licensed by the corporation to serve as retail stores for their products. This is unlike many of their competitors who function as franchises. Owing to its unique ownership structure, the company has put in place a governance mechanism to ensure efficient and effective operational running. As earlier stated, the Board of Directors of the Starbucks Cooperation ensures the long terms goa ls of the organization are met as well as meet the expectations of the shareholders.Sources of Cost and Differentiation Advantage in the Coffee IndustryStarbucks belong to the coffee retail and snack industry. This is because they mainly deal with coffee, tea and other beverages. These beverages may be accompanied by pastries and other confections prepared in their coffee shops. In this industry, there are several factors that provide cost and differentiating advantage. Firstly, we have the product. Various companies in the coffee industry strive to brings products that are both unique and of high quality to the market. They may do this by targeting specific market groups and meeting their needs. Another source is the price of the commodity CITATION Ylv11 \l 1033 (Bruzelius Johansson, 2011). Affordable products attract a wider customer base even in times of economic crisis. In addition, companies may use distribution to gain competitive advantage by making their products accessibl e and available to their customers. Lastly, promotion can be used by companies in this industry as a source of cost and differentiating advantage. Starbucks has competitors both within and outside the coffee market CITATION Ylv11 \l 1033 (Bruzelius Johansson, 2011). These include Caribou Coffee, Tullys Coffee among others who specialize in the coffee industry. Other competitors outside the industry include Dunkin Donuts, McDonalds CITATION Nit14 \l 1033 (Geereddy, 2014).Based on this information, the following strategic group diagram illustrates the position of Starbucks compared to its major competitors.Based on this diagram, it is clear to see that Starbucks dominates the coffee industry with over 8097 stores in America alone CITATION Kat09 \l 1033 (Lee, 2009). Their competitors have smaller presence in the market. They are divided into second cup stores and other stores. These stores have nearly a third of Starbucks market share. However, competitors such as Dunkin Donuts hav e been growing at a fast rate in the industry trailing Starbucks with a 24.6% market share CITATION Ylv11 \l 1033 (Bruzelius Johansson, 2011).Starbucks uses the product differentiation strategy to gain competitive advantage over its competitors. This is the key strategy they incorporate in their business through offering unique products. In addition, they come up with premium mixes of their products such as the frapuccino. Moreover, their coffee shops and retail stores are situated in premium locations and provide customers with amazing customer service. The coffee company also produces coffee beverages that are unique, of high quality and exceptional. These aspects contribute to making Starbucks one of the worlds leading coffee retailers and producers. This business level strategy has been costly for their competitors to emulate.Starbucks also pursued a unique strategy when it comes to acquisitions. Rather than focusing on a franchising model, Starbucks followed a corporate-owned model with their new acquisitions. Through these acquisitions, they have been able to create a diverse product portfolio. Some of these acquisitions include Bay Breads, Evolution Fresh and Teavana CITATION Sta16 \l 1033 (Starbucks Corporation). Other than product diversification, Starbucks acquisition strategy allowed them to expand their customer base through spreading their stores into various geographical areas all over the world.Starbucks Corporation Value Chain AnalysisTo analysis the value chain of Starbucks Corporation, primary and secondary activities must be considered. Primary activities refer to activities that are mainly enthralled in the daily operations of the company. These activities aid in running the operations and meeting its service or product demands. Secondary activities are those that serve to enhance the efficiency and effectiveness of the primary activities CITATION Dav13 \l 1033 (Buckman, 2013). These activities act as supports thus enhancing the competi tive advantage of the company.The primary activities of Starbucks Corporation include inbound and outbound logistics. Inbound logistics are the elements within the corporation that aid in purchasing of the coffee beans from suppliers from the various locations all the way to the Starbucks storage facilities. From these facilities they are dispersed to their distribution centers. Outbound logistics are the agents through which the corporation is able to get their product to their consumers CITATION Rya08 \l 1033 (Larson, 2008). Starbucks owns retail shops across 65 countries. Moreover, they have licensed shops through which their products can be made available to the market. The outbound logistics is closely related with operations. This is another primary activity that aids the corporation in meeting its goals and objectives. Starbucks business operations are carried out through direct retail stores licensed stores. Another primary activity is service. This is an activity in which the corporation places great emphasis. Lastly, marketing and sales enables the company to run its business operations. Starbucks concentrates on high quality products that are both available and accessible to their customer baseThese activities are supported through the available infrastructure, management of human capital, procurement operations and technological advancements.Starbucks Corporation SWOT AnalysisSWOT analysis of a company or a strategy allows identification and evaluation of its strengths, weaknesses, opportunities and threats. This section of the paper provides a SWOT analysis of Starbucks Corporation. Through this analysis, aims to determine whether the sources Starbucks uses to gain competitive advantage in the industry are strategic resources. Th...