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At global level there are many developed and successful organisation which have powerful strategy, modern technology, good managerial system and sound financial conditions. StarBucks is one of the famous and successful organisations. StarBucks is a global organisation. This case study is going to describe about the StarBucks value at global level and relation with theories of trade. Main thing is strategy of StarBucks that which type of strategy StarBucks have adopted and what the impact on the organisations was. StarBucks has used well structure strategy to develop the organisation at the global level. So that is why StarBucks have achieved its aim, objectives at domestic and global level. StarBucks has faced many challenges during its success. There are some supporting theories which have explained about the national advantage of the StarBucks like Porter’s diamond model. There is also analysis of SWOT Matrix which explains about the strengths, weakness, opportunities and threats of the StarBucks. SWOT Matrix is the alternative of the strategy of the company. Market development of StarBucks was diversification in culture, marketing mix and development of product. There are some unrelated developments like WIFI internet connection is available on the stores, entertainments, music etc. StarBucks have also partnership with different organisation.
2. History of StarBucks:
Starbucks has launched in 1971 in Seattle. Three friends have opened a small coffee shop. There name were Jerry Baldwin, Zev Sigel and Gordon Browker. They were found of fresh coffee. They started to sell fresh roasted, gourmet coffee beans coffee beans. Then things started change in 80s. In 1981 sales man of plastic has noticed about the usage of drip prepped thermoses which StarBucks was buying from Hammerplast. Starbucks sold out from Zev Sigel. In 1982, Howard Schultz haired by Baldwin as a new marketing head and he is sent to Italy for attending the international show. Schultz noticed an important point rather than the coffee that customers came to coffee shop and enjoy every sip of coffee it was inspiration moment for him. Schultz explained that impressive moment and said change old world with new world and make a place where people can do gathering by using the marketing techniques. Baldwin did not allow Schultz to do. After that Schultz has opened its own coffee shop with name of Il Giornale and start selling 700 coffees per day it was great success for him. In 1987, Schultz pushes up the business and forces the investors to open 125 outlets in next five year. Starbucks started outlet from 17 stores in 1987 then business expanded in Vancouver, Chicago, and Portland as well. StarBucks also started mail order business and licensed on airport. Business also expanded in California, United States, Japan and Singapore. Star bucks also started WIFI free internet connection, selling CDs, producing ice cream and also make relation with Apple Company as well. StarBucks have 1334 stores all over the world and got success.
We can define globalisation that it is a process, in which we can reduce the distance, time, easy access, connection by using the global networking. It will call global village as well. Regional, economical and cultural activities become incorporated with each other by globalisation. Globalisation helps to reduced and minimized the barriers between national borders and flow of goods, capital, services, and labour. Globalisation has made easy access to the products, services etc. We can see the example of KFC, McDonalds, Domino’s pizza many other organisation which are worldwide spreader. Globalisation is not a minor term, it is board term. There is one more example of StarBucks which is world’s famous organisation. It has a lot of branches on different countries globally.
StarBucks and Globalisation:
StarBucks is a multinational organisation in America. It has more than 16000 StarBucks’ branches in the world. Starbuck sale out coffee and espresso and many other products as well. Almost 70 percent branches are in United States and rest of percentage in the world. Starbuck speciality is whole bean coffee. It also offers frapaccino, baked goods and beverages as well. A star buck is the one of the successful organisation of the America which is globally spreader business.
4. Theories of international trade:
International trade mean import and export of goods and services across the boundaries of the countries. It helps to increase in the gross domestic profits in the countries. International trade is affected by industrialisation, modern technology, and advance infrastructure system and by many other factors as well.
Theory of international trade includes four types of theories.1) comparative advantage2) absolute advantage3) trade theory4) mercantilist theories. Two theories are most important one is comparative advantage theory and other is absolute theory. Comparative advantage means two counties are committed they want to increase production by their motivational power and want to reduced consumption because they prior to trade lower relative marginal cost than other goods. Absolute advantage theory means take advantage by using the cheapest source by doing trade of products which was totally unattainable at domestic level.
StarBucks and theory of international trade:
StarBucks is the well known multinational organisation. StarBucks import and export their products in the different countries. StarBucks outlets are scattered on the whole world. So it has connected with the theory of trade. Star buck expended its business. It opened first coffee warehouse in Tokyo then it open its branches in different countries and adopted the theory of international trade. Absolute theory is related to StarBucks because America has StarBucks which is specialist in coffee and food and extended its business across the boundaries of the country.
5. Globalisation strategies of StarBucks:
StarBucks faces many up and down to expand its business. To become a multinational company StarBucks have to mage globalisation strategy which have give the benefits and also accepted many challenges. On the 40th anniversary of StarBucks chair man, CEO told about the global strategy of StarBucks which explain about the achievement of discipline, profitable growth by approval the global market place, forcing our brand strength through new and existing ways. He also describe about the good customer services, new innovation in the market. In the global strategy of StarBucks also include about the employees which are providing good customer service and trying to maximize the satisfaction of the customer. StarBucks basic object is providing good and valuable quality coffee and food to the customer and make them happy. Global strategy is helpful to achieve their objective, vision, and mission. It also explains about the financial the conditions, strengths, weakness, environmental condition of StarBucks and also explains about the cultural and organisational behaviour of the StarBucks.
Challenges for StarBucks:
A star buck has faced different challenges during the journey of success. StarBucks have challenge the economical and consumer environmental condition in US and across the boundaries in many countries. StarBucks adopted those trick which has developed in the financial condition, operating performance and also its fiscal health. StarBucks also handling the disciplines and strategy growth in US and in retail business and also in global market. Most of these challenges were related to the organisation global strategies.
6. Supporting theories:
There is one of the famous theories which are porter’s diamond theory that explain about the comparatives advantage of the country. This theory includes some factors which are labour, natural resources and size of population.
Michael E. Porter has explained in this theory that nation can create new advance factors as well.
Porter’s diamond national advantage:
There are four factors which can affect the comparative advantage.
Availability of natural resources.
Important information which help in decision making.
Goal of individual of company
Pressure on company to invest and innovate.
Factor condition means a country create its own skilled factors like StarBucks has created its own value and specialised in coffee. StarBucks have labour force and also a lot of strengths it can achieve its goals. Market of specific product demands more important rather than the international level whenever local market will not be strong then bunnies will not extent so StarBucks did the same thing so that’s why it is globally famous organisation. Related and supporting industries show about the market competition. StarBucks have competition with Costa coffee. StarBucks strategy, structure and rivalry also effect on the organisation.
7. Effectiveness and efficiency of operations:
There are some operations which are StarBucks doing and focusing on them. These operations are effective and helping in progress of business.
Recycling system was started in 2005 but plastic cup could not be recycled then they have changed the material of cup for recycling. Many stores did not have bins to store the recycle but now many stores have arranged it and it is effective because they can easily collect the rubbish and recycle it.
In 2004 StarBucks, StarBucks have reduced to use the napkins and the store garbage bags because the usage of these thing s very high. The usage of water was also so much high23.4 million per day. It was continues usage of water during washing utensils. Then StarBucks have started to use machine push button for washing the utensils. Efficiency of this operation was it has reduced the usage of water 150 gallons per day.
StarBucks also started staff training. This training was give for the properly coffee making. Except it StarBucks have stared some charitable operations like Ethos water which was way of charity to the children, product red was launched foe the AIDS medicines and New Orleans is different employees working different projects like gardening, planting trees in urban areas.
8. Strategy of StarBucks and its alternatives:
Strategy of StarBucks is very simple and unique. Their mission statement is always providing good quality coffee to the customers they grew coffee and roast them with great care. They also care about those people who grew the coffee. StarBucks are worldwide famous organisation so there is diversity fall but they respect each other. StarBucks also serve the customers with the nice smile and with good beverages. StarBucks think that their store is place where customers can come and enjoy their precious time together. They can do get together. StarBucks also explain about the relation as a neighbour which positive. Basic objective of StarBucks expanding their business whole the world and good customer service and make employees proud on it.
If we do SWOT analysis of StarBucks then we can find out the alternatives of the strategy of StarBucks. Best way is SWOT matrix which is more help full.
Use strength take advantage of opportunities
Overcoming weakness by taking advantage of opportunities
Use strength avoiding threats
Minimize weakness and avoid threats.
StarBucks is good market leader and have good ability to attract the customers. StarBucks have well train employees and good working environment. StarBucks are strong financial organisation and it is spreader all over the world. StarBucks have also good relation with customers as well. Through using its strength StarBucks can take advantage from the opportunities. StarBucks can use new technology and can expand also retail business. StarBucks can also launched new and branded product by emerging with the other organisation at global level.
StarBucks can overcome the weakness by using the opportunities. StarBucks are focusing the size of the business. It trying to expand the business but it’s not focusing on internal factors. Numbers of competitors are increasing in the growing market so StarBucks should have to think about it. StarBucks have also weakness of cross functional management. Product pricing of the StarBucks is also high. StarBucks have to take advantage of the opportunities which includes new distribution of channels, distribution of products and segmentation at domestic level and adopting new managerial systems.
By using the strengths StarBucks can avoid threats. StarBucks have threat of competition which includes other coffee shops and super markets. There is also fluctuation of prices in other developing countries. Some cultural and political issues also threats for StarBucks. By suing the power and strength can achieve its goals. StarBucks are knowledge based and board organisation. It has strong financial resources as well. StarBucks have trademarks and patents rights as well.
Last strategy alternative is minimizing weakness and avoid threats. StarBucks is focusing on the expansion of the business but it’s not expanding the business but have to do analysis its internal factors. It should reduce to adopt the cross functional managerial system. It should have to reduce the prices. Through this automatically threats will minimized as well.
9. Market development alternatives:
Market strategy of StarBucks is to expand the business at high market level and also in global market. StarBucks have leadership quality as well. StarBucks have good relation with its suppliers and have ability to be an industry market leader. Customers accept its products and like to eat it. It’s have its competitors like Costa coffee and cafe Nero.
Starbucks prefer diversification to their customer, Communities, partners and supplier. There is diversification in employees because in different areas have different employees according the countries. There is also diversification between the customers according to the cultural of the people. Starbucks do contributions to their neighbours have partnership with different companies and organisation. Starbucks always try to develop its business by doing relationship with other new suppliers.
Product and market growth:
StarBucks have to launch new products with good and developed taste. StarBucks can do brand extension as well. It will be help full to increase demand of products and market development at domestic level and also at global market. Market growth can be increased by doing good advertisements. It will maximise market development.
Marketing mix also an alternative of development of a market. StarBucks have competitive advantage and also good leadership quality. By adopting the marketing mix StarBucks can develop the market at domestic and global level.
10. Unrelated developments:
StarBucks is well known organisation at global level. Its coffee quality and taste is also liked by the customers. Their strategy is to give good taste and good quality coffee to customers. They want to make happy to the customers. StarBucks try to do some direct development but it also affect directly. There are some indirect developments which are as follow.
StarBucks is offering free internet connection at their stores. Every customer can get easy access to the internet while taking coffee. There is no charge, no need to use password and user name and no restriction. It’s unlimited usage of internet connection. StarBucks try to do direct development but it was indirect development because StarBucks is an organisation where providing coffee not WIFI system.
I Phone Apple:
StarBucks did agreement with Apple Company. They offer the customer to get free music. In 2007, in ITunes stores StarBucks entertainments option added. These were similar songs which were played in StarBucks store. StarBucks want to entertain their customers as well. StarBucks want to do directly development but it indirect development of entertainments.
StarBucks have relation with Moring news by name of “brewed by StarBucks”. It shows logo changed in company as well StarBucks as well. StarBucks wants to give up to date news to customers. It was indirect development in media in StarBucks
11.Strategic alliances, joint ventures and routes to survive:
StarBucks have different joint ventures and used different strategic alliances. One of them was HEAR MUSIC which is purchased by StarBucks in 1999. StarBucks realised it first album with name of opera. This album includes famous singer. StarBucks use this strategy and get development and extension in business. StarBucks have partnership with the Apple Company which is very well known and famous at global level. StarBucks did joint venture with it and add option of music of StarBucks in ITunes store. People love to listen music and like the barded products so that is why StarBucks had taken advantage. StarBucks also having partnership with the BT for free WIFI connection. It was successful strategy to develop the business and get attraction of customers.
12. Conclusion and recommendation:
At the end, StarBucks is the good competitors and successful organisation in the world. Starbucks has achieve its aim , goal and objective in very short time period by adopting well structured strategy by using at global level and domestic level as well. StarBucks have good and valuable roast beans coffee and also well trained staff and employees with good managerial system. Starbucks has good strengths and opportunities through it can competitor its rival and also can over the weakness and can avoid threats as well. In my opinion is that StarBucks is expanding its business day by day but it not giving attention to its internal factors like financial condition and cross function managerial system. It should have to make strategy to minimize its weakness and threats that can be a cause of its loss. Starbucks is famous all over the world and people like the taste of coffee.
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