Company Strategy Research Paper: Strategic Development of Starbucks Company
Starbucks Company is an American corporation established in 1971. The company is engaged into the premium coffee industry and is a large coffee retailer. Starbucks provides its customers with a wide variety of high quality coffee, fresh food and beverages. The company is considered to be a leader of the coffee market carrying out social and environment responsibilities (Chua and Banerjee 237). Even though Starbucks shows high financial results it still faces strategic challenges as a result of a high level of competition. In order to generate customers, it is necessary for the company to offer unique products and services.
The essay is aimed at developing of a strategic approach for overcoming the principal challenge faced by Starbucks Company. The paper is based on the consideration of the choice of food and beverages provided by Starbucks as the main challenge that prevents the company from achieving higher financial results. Moreover, the analysis of the company, its weaknesses and strengths is provided in the essay. Practical measures to overcome the challenge are listed in the essay.
Industry Overview
The industry of snacks and coffee stores is considered to be one of the most competitive spheres of economics. Starbucks is a famous operator of the industry. The level of competition maintains sustainable development of the industry. However, the industry is dependent on financial stability of world economy as people tend to reduce consumption of food and drinks outside during economic crisis (Chua and Banerjee 237). The main competitors of Starbucks Company engaged in the industry are Dunkin Donuts, Nestle, Costa Coffee and McDonald’s.
The main indicators of the demand in the premium coffee industry are related to coffee consumption per capita, net income, demographics, global prices on coffee and its productivity and changing opinions about the influence of coffee on health. The industry of premium coffee is sensitive to various macroeconomic factors. The decrease of net income of households caused by the growth of unemployment leads to decline in consumption of coffee. Decrease in coffee consumption has negative effects on profitability margins (Black et al. 276). In contrast, increase in coffee consumption per capita has a positive impact on revenue of snacks and coffee stores. The value chain in the coffee industry starts with coffee beans that are considered to be the primary input. Prices on coffee beans determine profitability margins as well as costs. In case of low productivity of coffee plantations prices and demand grow rapidly.
The influence of coffee on human health is identified as an important topic that has a significant impact on the development of coffee business. In turn, diets and healthy eating have an impact on the development of the fast-food industry. Consumers require additional healthy options in menu. Furthermore, customers do not hesitate changing the place if they cannot find food that is in line with their diets (Chen and Lee 195). From this point of view, it is important to be able to …
