1. Do you agree/disagree with the set of recommendations included in the business analysis below? Why?
2. Offer potential critical directing questions and specific and constructive ideas for improving this analysis.
STARBUCKS STRATEGIC MANAGEMENT REPORT
EXECUTIVE SUMMARY & STRATEGIC RECOMMENDATIONS
The present document has been prepared for Starbucks Corporation. The document aims to provide Starbucks Senior Management Team with a Business Strategy Analysis along with a series of strategic recommendations.
The report is structured in 5 different sections that cover our analysis of the Company's strategic intent, innovation strategy, strategic position, general ecosystem and competitive analysis as well as a general internal environment evaluation.
Our study revealed that Starbucks possesses a strong strategic intent mainly focused on positioning the brand in the market, making sure it stays atop the competition and always true to their vision and mission to be the "premier purveyor of the finest coffee" and achieving it "one person, one cup and one neighbourhood at the time". We have also recognised that once the brand was well positioned an aggressive expansion and growth plan was laid out and it i's currently being implemented internationally.
From a Corporate Social Responsibility our report found a strong CSR policy in the company that has made them "be regarded as one of the most socially responsible firms" (Peng, 2009:490), however all these efforts extended the company's social reach well outside their direct set of partners andneighbourhoods around their stores, and therefore a sudden collapse of the market and the organisation will have a devastating effect in multiple communities around the globe.
Furthermore, Mr. Schultz vision ‘to bring the Italian coffeehouse tradition back to the United States" ensured a successful beginning of the business as he created a new blue ocean within the coffee industry, as defined by Kim and Mauborgne (2004), and then, thanks to their persistent innovation, theorganisation has been able to take a prime share of the market and sustain it over the years.
Our exploration of the general ecosystem, which was made with the use of the SCANSTEP tool and Porter's Five Forces model, led us to identify the key challenges posed by external sources and specific recommendations are made in section 4 to handle these appropriately and shield the company against the threats.
Among the issues that could potentially impact the business we identified some legal and political changes in the coffee-producing countries that may generate uncertainties about continued supply of raw materials as well some security concerns in the troubled Middle Eastern Region.
Finally, a resource-based view, also referred to as "inside-out perspective" (Pitt and Koufopoulos, 2012), allowed us to identify the core resources, skills and capabilities that would create the most value to the company and all its stakeholders. Additionally, a SCOT and a VRIOS evaluation are presented to complement the internal environmental analysis.
Among the resources identified as key for the success of the organisation we can highlight the strong brand recognition, their market leadership position, their well-developed innovation capabilities and most importantly the leadership skills, vision and experience that Mr. Schultz has brought and continues to bring to the enterprise.
With the above in mind and as a conclusion to this strategic management evaluation, we have laid out the following set of recommendations to ensure the company continues to grasp the best share of the markets it enters ensuring the sustainable growth and revenue goals are achieved:
• Since Starbucks main source of revenue comes from the sales of coffee products, and this is their area of expertise and where their core skills and capabilities lie, it is highly recommended that they concentrate their efforts in the value adding elements that are directly related to the production and offering of their main products
• It is highly recommended that Starbucks continue investing in embedding their brand into their customers with an excellent customer service and high product quality propositions.
• Product innovation is also a core skill that definitely adds value to the organisation, therefore it is recommended that this skill is further developed andutilised to its maximum capacity in order to make it more difficult for the competition to imitate.
• The introduction or alternative drinks (such as fresh juices, teas and other local drinks) as well as a wider range of snacks will add to their already rich offerings and this can support the company's smooth entering into new markets to widen their business reach.
• The diversification of their raw material sourcing (e.g. purchasing from multiple countries in different geographical regions) and the establishment of long term deals with their suppliers can minimise the impact that political or legal instability can have on the business.
• It is also advised to seek contractual agreements with suppliers that include long term deals with frozen prices in US dollars in order to avoid cost increases due to local exchange currency fluctuations.
• As Mr. Schultz is recognised as a very valuable asset, it is highly recommended that a well-structured succession plan is put in place to ensure business continuation after he decides to step aside from the leading role of the organisation.
Finally, it is our sincere hope that the report hereby presented meets Starbucks Management expectations and that it would enable them to continue striving towards an excellent business performance in the years to come.