Strategic Issues in Management: Starbucks Essay Sample | SpeedyPaper

Published: 2022-04-04 05:23:03
Strategic Issues in Management: Starbucks Essay Sample | SpeedyPaper
Type of paper:  Essay
Categories: Starbucks Strategic management
Pages: 4
Wordcount: 900 words
8 min read

Starbucks Corporation is a famous international chain of coffeehouses and roastery reserves that became very popular during the second wave of coffee culture. The fact is that the international community loves coffee, and the company took advantage of the moment when the level of competition in the market was rather low. In the 70s, Starbucks offered Americans the best hot and cold drinks in the country. In addition, the company has concentrated all efforts to create the perfect whole-bean coffee, espresso, loose-leaf teas, and other products that people around the world now know.

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At the moment, you can visit approximately 34,000 stores, half of which are located in America. As a rule, these are company-operated and licensed stores offering the same high-quality products. Even the rise of craft cafeterias hasn't shaken Starbucks' global hegemony. But even such a coffee giant has certain strategic issues in management. Here are the key aspects that are very important for understanding all business processes and improving them.

Strategic Issues Facing Starbucks

People around the world still adore coffee and believe that this is the drink that uplifts the mood and tones the body. But the major challenge Starbucks is facing is the global financial crisis. People are losing money, companies are closing offices worldwide, and any coffee business is forced to adapt to new conditions. Moreover, the second challenge is the growth of competition. The fact is that Starbucks is no longer the only company that prepares delicious coffee for all people.

The modern coffee market has become quite crowded over the last decade. For example, you can choose Dunkin Donuts or McDonald's as an alternative if you are in the USA. Even Nestle offers hot drinks that are tasty enough and quite affordable for the average American. At the same time, the British may choose Costa Coffee or Caffè Nero as an alternative to Starbucks, especially if such stores are located near their homes or places of work.

The main strategic issues directly relate to pricing policy. So the fact is that the company buys elite coffee beans to adhere to the classic recipe and not change the flavor notes. That is why competitors can resort to dumping and offer cheaper coffee. In addition, the number of drinks in Starbucks is much lower than in other coffee shops, which is also an oversight. A conservative approach to the product range is not a good strategy in the current market conditions.

Strategic Marketing Issues

Another challenge is a conservative brand marketing campaign that has outdated motivational patterns. The fact is that the key goal of Starbucks is to sell cups of coffee but not to motivate people to stay with the brand and buy other products. The marketing campaign should show that this particular brand is number one in roasting and selling delicious coffee. It was only recently that Starbucks decided to sell packaged ground coffee in stores worldwide. This move is correct, but a bit belated, as the company has entered a market full of competitors. Starbucks' magic ends with no espresso machines and the right toppings. If the quality of ground coffee becomes mediocre, it will cause irreparable reputational losses.

Business Expansion Issues

Another strategic mistake is expanding the brand by maximizing the number of coffee shops. Also, senior management is only interested in increasing the number of coffee cups sold. The fact is that such a strategy has many risks, even though the key goal of companies is to maximize profits. First of all, the huge chain of coffee shops is highly dependent on the quality of beans, proper roasting, toppings, and other ingredients. The main pride of Starbucks is the rich taste of hot drinks that have been stable for decades. That is why the company has become hostage to high standards. The rapid expansion of the business harms the quality of coffee.

No Franchising Policy

The owners of Starbucks are so focused on controlling the business that they don't see franchising as a way of passive expansion and steady income. Unfortunately, such a strategy will have an extremely negative impact on the brand in the next decade. The fact is that franchising is an ideal option for adapting the classic business model of a company. Most franchisees know the specifics of local markets, people's preferences, ideal locations, demographics, and certain business rules of the chosen region.

That is why franchising can give Starbucks a significant increase in revenue in just a couple of years. So the problem is that top managers are not ready to admit that the conservative coffee strategy only works well in the American and British markets. Asia, Africa, and South America have enough companies willing to offer the same product at a more affordable price. The company needs to be more flexible and follow global trends in such a situation.

Final Words

Starbucks is a popular coffee brand that is quite successful globally. At the same time, the company has faced several strategic issues that are already hindering its growth worldwide. Strategic, technical, marketing, and pricing aspects have become critical points for the brand. Maybe Starbucks needs to evolve and adapt to international markets that are very different from the US and UK. Long-term ignorance of obvious issues will lead to reputational losses and a serious decrease in revenue. Perhaps the company will change its development vector if it sees new competitors and their success.

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