Paper Example on Starbucks Generic Competitive Strategy

Introduction

The main competitive strategy that Starbucks employs is broad differentiation. The strategy emphasizes producing commodities different from those of competitors while having a higher quality. The products that Starbucks offers are better than those offered by rivals are and therefore are more expensive compared to those of their competitors. In addition, Starbucks gives their clients a comfortable place where their consumers can sit down and enjoy their meals. The customer service provided by the company is also unique and cannot be compared to any competitor (Flamholtz & Randle 2012).

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Value Chain Activities That Make Starbuck's Strategy Effective

Starbucks produces high-quality products for consumers. The high quality is because of investment in quality raw materials such as obtaining the highest quality of coffee beans in the market. The high quality translates to the production of high-quality goods. In addition, the organization has invested in its employee by training them on the coffee brewing process for a minimum of 24 hours. The company also discourages employee turnover, which leads to increased experience among the workers. The strategy of ensuring that quality products reach the consumer added to exceptional services from the staff makes Starbuck's strategy impressive (Flamholtz & Randle 2012).

The Resources and Capabilities Starbucks Possesses

Starbucks is one of the few companies that owns close to all its stores, with the only exception being the ones strategically located in areas where only licenses are required such as stadiums and airports. This strategy gave Starbucks the ability to dominate the market. In addition, the organization has been successful in the international market, which increases the revenues at the company's exposure. The capability of producing quality products has also enabled the company to increase their customer bases who give the organization a stronger market foundation.

Sources of Starbuck’s Sustainable Competitive Advantage

A strong connection between Starbucks and its customers has enabled them to feel emotionally attached to the company. The great customer service and high-quality products to the workers give the company an upper hand against other clients. Also, the company has continually procured the highest quality coffee beans to enable them in maintaining the highest quality of beverages in the market.

Major Trends Affecting The Coffee Business

Among some of the trends that have gradually affected the coffee business are the increased customer experiences where customers are continually improving valuing their experiences in coffee shops. The customer experience is the basis of customer loyalty. In addition, coffee drinkers are continually demanding for higher quality coffee. The customers can discern the quality of coffee and thus giving coffee companies the urge to focus on delivering premium coffee to the customers (Gallaugher & Ransbotham, 2010). Customer loyalty is also another trend in the coffee business that has made the coffee business able to track the habits of coffee customers and adjust themselves to the behaviour of customers.

Key Issues Starbucks Should Closely Monitor in the Coffee Industry

Coffee consumers are demanding for high-quality products over time. Starbucks should take a keener interest in the tastes and preferences of consumers. The company should then align itself on the tastes and preferences of the customers. Second, the mushrooming of small coffee bars is an area of interest that Starbucks should monitor and consider avenues to enable the company to exploit the market of low-income earners (Gallaugher & Ransbotham, 2010).

The Strength of Starbucks' Competitive Position

Starbucks remain one of the key players in the coffee industry. The increasing trend of revenues combined with recurrent customer loyalty is a clear indicator that Starbucks remains a strong competitor in the coffee industry. Success in the international market cements the highly competitive nature Starbucks has created.

Evaluation of Starbucks' Performance

Starbucks has proved to be a highly successful company and the consistent and upward trend of increase in the sales and revenues from 1993 to 2012. Production of high-quality beverages, customer loyalty and proper valuing of employees are some of the factors that have led to the impressive performance of Starbucks.

Starbuck's Recommendations After McDonald's Announcements

I am of the idea that Starbucks should stick to the same plan that has worked for them and improved the organization's status. Great customer service and producing a great beverage has been the reason Starbucks has had a successful been successful. On the other hand, most of the customers who prefer McDonald's or other organizations dealing with fast foods do not seek the services Starbucks offers. Instead, Starbucks should target on attracting different consumer unit that prefers to relax and enjoy their drink while reading or attending to some work online (Flamholtz & Randle 2012). Therefore, Starbucks should invest more in their unique services so that customers come back more often.

Conclusion

In conclusion, taking a keen look from the marketing front, low prices are directly correlated to poor quality products. Starbucks should, therefore, beware of sending wrong signals to consumers by reduction of prices. On the contrary, I think that Starbucks should capitalize on the endorsement of the trending "Hipster" and improve on the marketing strategies. Since Starbucks produces quality beverages, there is no urgent need to invest in advertisements. On the contrary, they should work towards ensuring that customers who visit Starbucks come back because of the exceptional experience of high-quality drinks and highly trained staff members.

References

Flamholtz, E. G., & Randle, Y. (2012). Corporate culture, business models, competitive advantage, strategic assets and the bottom line: Theoretical and measurement issues. Journal of Human Resource Costing & Accounting, 16(2), 76-94.

Gallaugher, J., & Ransbotham, S. (2010). Social media and customer dialogue management at Starbucks. MIS Quarterly Executive, 9(4).