What are the new main strategic actions of starbucks from 2012 to 2015?
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Question
What are the new main strategic actions of Starbucks from 2012 to 2015?
Answer
Starbucks first opened its doors in 1971 (Starbucks, 2016). By 2012 the portfolio comprised 18,066 stores, rising to 22,519 in June of 2015 (ibid). This period saw significant increases in net income from $1.38 billion in 2012 to $2.76 billion in 2015 (Marketwatch, 2016). The exception to this growth occurred in 2013 where net income was $8.8 million (ibid), due in main to a $2.76 billion settlement following a split with Kraft (Baertlein, 2013). Howard Schultz, CEO of Starbucks, now one of the world’s largest coffee houses acknowledged that there were different types of development, seeing growth more as a tactic rather than strategy and emphasising the need for profitable growth for the right reasons (Webb, 2011).
For Porter (2008), strategy begins by appreciating the powers that characterise business competition. According to Thompson (2015), Starbucks uses Porter’s broad differentiation generic strategy, creating difference from their competitors, primarily Dunkin’ Donuts and McDonalds (Woolfe, 2014; Hawley. 2015). Thompson (2015) further attests that Starbucks follow three intensive strategies which focus on product and market development plus market penetration.
In 2014 Starbucks outlined their five-year plan which resonated with Schultz’s desire ‘to build a great and enduring company’ (Starbucks, 2014). Matthew Ryan, Global Chief Strategy Officer, forecasted an increase in global stores to over 30,000 and annual revenue of approximately $30 billion (ibid), through completing seven strategies (ibid):
1) Be the Employer of Choice.
2) Lead in Coffee.
3) Grow the Store Portfolio.
4) Create New Occasions to Visit Stores.
5) Consumer Packaged Goods Brand Growth.
6) Build Teavana.
7) Extend Digital Engagement.
These strategies are comparable to the six aspects highlighted by Kanter (2011) for lasting organisational success, namely ‘common purpose, a long-term view, emotional engagement, community building, innovation and self-organisation’ (p: 69).
References
Baertlein, L. (2013). Starbucks says $276 billion Kraft split was necessary. [Online]. [31 October 2016]. Available from: http://www.reuters.com/article/us-starbucks-kraft-idUSBRE9AB17920131113
Hawley, J. (2015). Investopedia. [Online]. [1 November 2016]. Available from: http://www.investopedia.com/articles/markets/101315/who-are-starbucks-main-competitors.asp
Kanter, R.M. (2011). How Great Companies Think Differently. Harvard Business Review. (November), pp. 66 – 78.
Marketwatch. (2016). Marketwatchcom. [Online]. [31 October 2016]. Available from: http://www.marketwatch.com/investing/stock/sbux/financials/cash-flow
Porter, M.E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review. (November), pp. 78 – 93.
Starbucks. (2014). Starbucks Newsroom. [Online]. [1 November 2016]. Available from: https://news.starbucks.com/news/live-blog-starbucks-path-for-growth-outlined-at-2014-biennial-investor-day
Starbucks. (2016). Starbucks Coffee Company. [Online]. [31 October 2016]. Available from: http://www.starbucks.com/about-us/company-information/starbucks-company-timeline
Thompson, A. (2015). Panmore Institute. [Online]. [31 October 2016]. Available from: http://panmore.com/starbucks-coffee-generic-strategy-intensive-growth-strategies
Webb, A. (2011). Starbucks’ quest for healthy growth: An interview with Howard Schultz. [Online]. [1 November 2016]. Available from: http://www.mckinsey.com/global-themes/employment-and-growth/starbucks-quest-for-healthy-growth-an-interview-with-howard-schultz
Woolfe, N. 2014. Starbucks faces growing rivals as coffee wars reach boiling point. [Online]. [1 November 2016]. Available from: https://www.theguardian.com/lifeandstyle/2014/dec/12/starbucks-faces-growing-rivals-as-coffee-wars-reach-boiling-point
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