Starbucks,an American company headquartered in Seattle, Washington has clearly embracedglobalization with more than 27,000 stores in over 50 countries around theworld with a reported total revenue of over $22B in 2017. (Number of Starbucks stores worldwide from 2003 to 2017, 2018)There are over 13,000 locations in the US alone which attributed to Starbuckscapturing 39.
8% market share and with Dunkin’ Brands Inc. coming in second with21.9% market share.
(Market share of the leading coffee chains in the United States in 2016, 2018)The US leads all other countries with total number of stores, but the second-placestop goes to China with just under 3,000 locations. There are only 2 additionalcountries, Canada and Japan, with over 1,000 locations. The Starbucksglobalization strategy for 2018 is to add 2,300 new locations globally,compared to the additional 2,250 that were added in 2017. (Starbucks Opens Store in Puerto Rico, Expands Global Presence, 2018)Starbuckscontinued global expansion into different and emerging markets around the worldinevitably has led to more companies in other countries who supply their productsto expand their reach to these additional markets as well and increase theiropportunities. For instance, Starbucks coffee comes from places like placessuch as Latin America, Africa, and Asia-Pacific. (Do You Know Where Your Coffee Beans Come From?, 2018)With the ever-expanding strategy for Starbucks this globalization stimulatesrevenue those areas, which tend to be lower income nations, and increases theoverall export of goods.
Withthe ever-changing world of technology, like many companies Starbucks must adoptand innovate on many different forms of technology to keep and increase theiroverall industry market share on a global scale. For example, with the increaseof mobile payment systems, such as Android Pay and Apple Wallet, making sureall your locations can support that infrastructure to not dissuade the newgenerations from using a location. Starbucks has stayed with the youngergeneration trend and created a strong social media presence on all theplatforms like Twitter, Instagram and Snapchat to stay in contact with theircustomers as well as their competitors.Embracingtechnology from a global perspective assists in providing a culture of ondemand training programs. Starbucks ability to adequately train employees onspecific procedures consistently the same way throughout the whole company,regardless of where they are in the world, ensures their ability to providecustomers with the best possible service experience.
Leverage different vendorsyou can deliver carefully crafted training programs that employees mustcomplete to ensure they are adequately trained for their assigned position inthe company. Thereare five areas in the industrial organization model that are referred to as thefive forces of competition. They are the external environment, the industry,strategy, assets and skills, which will all be used to implement the company’sstrategy. Starbucks would do well using this model to earn above-averagereturns. They would need to look at other companies such as Coffee Bean, Keurigand Dunkin Donuts. Starbucks would have to go through each company’s filingsand profiles to be able to determine which of the companies have documentedabove high average returns. Once a company is selected, Starbucks management wouldformulate an above average strategy for analysis. After completion, requiredassets and skills would need to be developed and then examined for execution ofthe strategy.
The last step would to implement the approved strategy to pursueabove average returns as the company they selected. Whenusing the resources based model it would be a more of a detailed analysis of aspecific successful company in the coffee industry. The areas that are studiedare the company’s capability and competitive advantage within the industry. Initiallythe goal for Starbucks would be to identify the target company’s resources andstudy their strengths and weakness as compared to Starbucks own shortcomings.Then once the capabilities are established that will allow Starbucks to chart aplan to do even better than any of their competition. In the third step, thecompetitive advantage must be established based on the potential of the evaluatedcompany’s resources and capabilities. In the last step is the obviousconclusion where the strategy that best utilizes the Starbucks’ resources andcapabilities must be selected and then implemented to acquire superior returns.Starbucks’svision statement was not clearly displayed but overall it is being aresponsible company.
The achieve this by emphasizing the importance of strikinga balance between profitability and having a social conscience. Starbucksachieves their vision by practicing ethical sourcing of their coffee, actingwith consideration of their impact on the environment and actively workingtowards giving back to their local communities. (Starbucks Company Profile, 2018) Starbucks clearly states their missionstatement on their website as, “Our mission is to inspire and nurture the humanspirit – one person, one cup, and one neighborhood at a time”. (Starbucks Company Profile, 2018)Capitalmarket stakeholders have a large effect on the overall success of the company.
They would consist of institutions such as banks and shareholders who areheavily invested into the company and want to preserve and increase theirwealth. The capital market stakeholder’s make their money when the share pricegoes up and they continue to see increases in quarterly dividends. The productmarket stakeholders are people who benefit directly from the business withoutnecessarily investing money, such as suppliers and some customers. Thesesuppliers would be the companies that provide essentials such as coffee making equipmentused to operate Starbucks locations. They are dependent on Starbucks success tocontinue selling their products to Starbucks as they are most likely theirlargest buyer. Finally, you have the organizational stakeholders, who are youemployees, the baristas and managers who brew the coffee and serve the productsplay the most significant part in the entire process.
The employees run theday-to-day operations and ensure the company’s success by providing an elevatedlevel of customer service that keep patrons happy to create return visits. Starbucksrewards its employees very with attractive benefits and provides to eachemployee the best training it can to develop the skills needed to advance theircareers. Starbucks offers college tuition reimbursement to its employeesseeking to further their education. Starbucks invests heavily in theiremployees because they see immediate and lasting returns on their investments.