STARBUCKS’ line up strategy

By Eirini Tougli
Penny Vlagos
Global strategies
New York college
Executive Summary

A business can use basic business strategies to grow in the industry in which it operates. In the coffee

industry, the most important strategies are cost leadership, diversification of products, and services.

This essay examines Starbucks, which is the largest coffee chain company. Starbucks' strategy is based on

differentiation. The company maintains its competitive advantage through the specialized products and

ingredients it offers. Starbucks needs to continue to improve and innovate ahead of its competitors to

maintain its growth.

The purpose of this paper is to analyze the company's environment, to define its core competency, and to

develop strategic actions, where they will strengthen its position in the industry in which it operates.
Contents

1. Introduction................................................................................................................4

1.1. Company Background......................................................................................4

1.2 Mission.................................................................................................................6

1.3 Goals.....................................................................................................................6

1.4. Starbucks Coffee’s Key Stakeholder....................................................................6

1.5 Vertical Integration Strategy................................................................................6

2. External Analysis........................................................................................................8

2.1. PEST Analysis.......................................................................................................8

2.2. Porter’s Five Forces Analysis...............................................................................8

2.3. Threats and Opportunities..................................................................................9

3. Internal Analysis.......................................................................................................10

3.1. Value Chain.......................................................................................................10

3.2. Core Competency Framework..........................................................................10

3.3. VRIO Analysis.....................................................................................................10

3.4. BCG Analysis......................................................................................................11

3.5. Positioning Map................................................................................................11

3.6. Strategic Group Mapping..................................................................................12

3.7. Strengths and Weaknesses...............................................................................13

4. Company’s Corporate and Business Strategy..........................................................14

5. Identification and Evaluation...................................................................................15

5.1. Ansoff Matrix.....................................................................................................15

5.2. Strategic Options...............................................................................................15

 5.3 Implementation..................................................................................................15

6. Conclusions & Recommendations...........................................................................17

References....................................................................................................................18

Appendixes...................................................................................................................23

1. Company’s Background........................................................................................23

1.1. Starbucks Key Stakeholders..........................................................................23

2. External Analysis..................................................................................................23

2.1. Starbucks PEST Analysis................................................................................23

2.2 Starbuck 5 Forces’ Analysis............................................................................24

3. Internal Analysis...................................................................................................26

3.1. Starbucks Value Chain Analysis.....................................................................26

3.2. Starbucks VRIO Analysis................................................................................26

3.3. Starbucks BCG Analysis.................................................................................27

3.4. Strategy Group Map......................................................................................28

4. Identification........................................................................................................28

4.1. Starbucks Ansoff Matrix................................................................................28

4.2. SFA Framework.............................................................................................29

1. Introduction

Today's companies often face unique challenges. Implementing business strategies can help entrepreneurs

achieve success (Barton and Court, 2012). The choice of objectives is the core of the strategy. However, a

complete approach can describe how the company plans can meet these objectives. Hence, a strategy

explains a company differentiates itself from competitors, where it earns margins and how it earns revenues.

Many different business models and strategies are possible, even for companies in the same industry. In the

coffee industry, the most significant strategies refer to cost leadership, product diversification (Leigh and

Hoelzel, 2012).

The present essay examines Starbucks, which is the largest coffee chain company in the world (Starbucks

Coffee Company, 2020). This paper will analyze the company's external and internal environment, define its

core competency, and develop strategic actions, where they will strengthen its position in the coffee industry.

1.1. Company Background

Starbucks was founded in 1971 in Seattle, USA, and quickly expanded worldwide. The rapid growth of

Starbucks is one of its main trademarks. In less than two decades, Starbucks has opened thousands of stores

around the world. The company is known for its high- quality coffee at high prices, comfortable sofas, and soft

music. Today, the company operates more than 30,000 stores in 80 markets. Starbucks is the world's largest

coffee maker and retailer of high-quality coffee (Starbucks Coffee Company, 2020).

The significance of its shares on the stock market rose rapidly, attracting the attention of investors, who saw

Starbucks as a profitable investment. In 2020, the company opened 255 clean new stores, delivering a 6%

annual unit increase, reaching 32,050 stores worldwide. Shops in the US and China account for 61% of the

company's global portfolio. In addition, it consolidated net income of $ 6.0 billion fell 5% from the previous

year due to lost sales associated with the COVID-19 outbreak (Starbucks Coffee Company, 2020).

The company offers a range of excellent products that customers enjoy in stores, at home, and on the go. In

particular, Starbucks has over 30 blends and coffees of unique origin, handmade drinks, sells coffee and tea

making equipment, mugs and accessories, packaged items, books, and gifts. Moreover, it offers fresh food,
such as baked goods, cold and hot sandwiches, salads, cereal bowls, and fruit bowls. Furthermore, Starbucks

intends to balance between profitability and social consciousness. Due to the growing threat of climate

change, the company works to help coffee producers find innovative ways. Additionally, it tries to create

franchises and operate stores while reducing the environmental impact of cups, straws, and lids. Starbucks

has strong values related to the ethos of employees, coffee producers, and suppliers. The company's retail

supply chain has created new partnership opportunities (Starbucks Coffee Company, 2020).

Starbucks' organizational success is achieved due to the high-quality products and the constant commitment

to face effectively new challenges. Starbucks contributes to creativity by applying three key components

related to expertise, motivation, and new ways of thinking. Starbucks' innovation can fuel the company's

prosperity and promote the product development process (Mankad and Thadamalla, 2012). Overall, Starbucks

follows the strategy of differentiation emphasizing on quality coffee and distinguishing from many other

coffee shops.

1.2 Mission

The company wants to create a culture of warmth and promotes the feeling that everyone is welcome

(Starbucks Coffee Company, 2020).

1.3 Goals

Starbucks goals refer to (Starbucks Coffee Company, 2020):

 Acquire new methods of better service, promoting respect and dignity.

 Design and Develop new products aiming at better quality.

1.4. Starbucks’ Key Stakeholder

The company continues to increase its corporate practices to address different stakeholders. Starbucks’ main

stakeholders are employees, customers, suppliers, environment, investors, and governments (Appendix 1.1).

1.5 Vertical Integration Strategy

Vertical integration is carried out in the internal activities of the business chain to implement an internal

organization to reduce the market failure of intermediate goods, and the transaction costs resulting from the
use of the market mechanism (Scudder, and Byramjee, 2012). Therefore, this internal organization leads the

business to follow a specific strategy. Moreover, vertical integration implements a well-organized

coordination and better control of several forward and backward functions. There is an exchange of

information regarding raw materials, intermediate good, work-in-process inventory, and components

(Scudder, and Byramjee, 2012).

Starbucks applies a backward vertically integrated supply chain. More specifically, the company is involved in

every step of its supply chain process, from the coffee bean to the cup of coffee sold to customers. The

application of a vertically integrated strategy means that Starbucks works directly with its approximately three

hundred thousand worldwide coffee growers. The direct interaction with farmers guarantees that all of its

coffee beans will perform the same flavor and quality standards (Geereddy, 2013).

Additionally, Starbucks corporates directly with coffee growers because the company is committed to only sell

Fair Trade coffee (Mankad, and Thadamalla, 2012). Consequently, the company implements this vertically

integrated strategy with all its suppliers leading to ethical, sustainable, and quality standards through its

supply chain. Apart from the processes and simple tools, Starbucks also applies digital technology to operate

its supply chain. It applies an automated information system that supports monitoring demand, capacity,

scheduling in real-time and, inventory. Hence, Starbucks can immediately adjust its procedures and actions as

required.

Τhe frequent communication and the close relationship between the company and its suppliers, lead

Starbucks' supply chain to be less sensitive to major disruptions, such as worker shortages or overplanting

(Geereddy, 2013). Therefore, the benefits of Starbucks' vertically integrated strategy include the improved

efficiency of its operations, heightening the product differentiation, increasing the bargaining power over

suppliers, and enhancing its flexibility capabilities (Scudder, and Byramjee, 2012).
2. External Analysis

2.1. PEST Analysis

PEST analysis identifies specific factors that give an overall picture of a market or industry (Srdjevic, and

Bajcetic, 2012). These factors refer to the political, economic, social, and technological environment of a

business (Carrière, [Link], 2012). According to the PEST analysis (Appendix 2.1), Starbucks is trying to

incorporate drinks and coffees close to the taste preferences of consumers in the domestic market. It follows

the laws that prevail in the country. In addition, it has incorporated modern information systems into its

practices, maintains its machines to offer high-quality coffee, and offers fast Wi-Fi to customers.

2.2. Porter’s Five Forces Analysis

The analysis of the five forces was developed by Porter to give a picture of five key areas of a sector (Porter

and Heppelmann, 2014). Appendix 2.2 analyzes the coffee industry in order to show the competitiveness

capacity of Starbucks.

According to analysis (Appendix 2.2), the price of the product does not affect the existing competition. In

contrast, new entrants may force Starbucks to reduce the price of its products to sustain its market share and

development. Although the coffee industry has several substitutes, the threat is considered low. Moreover,

suppliers are responsible for providing high-quality coffee raw materials. Overall, buyers focus more on the

quality of the offered coffee by a brand than on other factors.

2.3. Threats and Opportunities

According to the above-mentioned, Starbucks has an opportunity to expand into emerging markets since it

operates coffee stores and franchises mainly in the US. Future penetration in some regions such as India and

Africa can be a great opportunity. Another opportunity refers to product development according to customer

preferences in the target market. The company should continue to design drinks taking into account the

domestic market. Starbucks has the opportunity to develop partnerships with large companies. This would

strengthen its presence and market share.

Nevertheless, the company needs to consider some threats as well. Many cafes offer affordable coffee

products. This could threaten Starbucks' stability as it offers its products at higher prices than its competitors.

Aggressive competition with multinationals companies such as Dunkin Donuts and McDonald's could consider

as a threat to its market position. Additionally, many buyers support small independent cafes in their

neighborhood. Another threat refers to COVID -19. The company had to close thousands of stores due to

pandemic, reducing its profits.

3. Internal Analysis

3.1. Value Chain

In order to define strategic competitiveness, a company can optimize its activities through a value chain

(Stadtler, 2015). A coffee company needs to create bonds between its activities to accomplish the

performance of core competency over its competitors. Appendix 3.1. presents in detail the value chain of

Starbucks.

3.2. Core Competency Framework

Core Competency Framework is a model that describes performance within a company that ultimately leads

to key strategic decisions (Agha, Alrubaiee, and Jamhour, 2012). The purpose of the framework is to highlight

the company's best capabilities. Starbucks' core competence includes the ability to effectively leverage

differentiation strategies by offering high-quality products. Therefore, the company carefully selects suppliers

to distribute the best quality coffee beans. Also, it provides each consumer with an exclusive Starbucks

experience, which comes from excellent customer service, due to the well-maintained and clean stores,

creating a high level of customer loyalty. Another core competence refers to the human resource

management. The company establishes strong external and internal relationships with its stakeholders. The

company has also managed to develop its business strategy by expanding to international markets, through

smart acquisitions and alliances.

3.3. VRIO Analysis

According to the above, Appendix 3.2 presents a VRIO analysis. The analysis summarizes Starbucks' core

competencies.

3.4. BCG Analysis

BCG analysis provides a tool that analyzes a company's products according to growth and market share (Gite,

and Kumar 2014). Appendix 3.3 presents the graphic display of Starbuck.

Starbucks offers a wide range of merchandise such as mugs, T-shirts, and many other accessories (Simon,

2011, p. 4). Most are limited edition, seasonal, or sold out in a few days. Due to the premium brand name,

customers feel proud to own Starbuck products. Even though there is a strong demand for the brand's

products, it is considered that there is room for growth in order to create a strong footprint in the brand's

clothing and general merchandise industry. Therefore, the best place for these products is the Question Mark.

As Zheng and Forgacs (2017) mentioned 25% of Starbucks’ total revenue comes from food sales. High

customer demand for protein and healthy snacks has increased food sales by more than 60% since January

2017. Hence, it is considered the Star of the company. Starbucks aims to double its food sales by 2021 (Sakal,

2018). The company has created its position in the coffee industry, covering a specific customer group.

Without a doubt, Cash Cow for Starbucks is coffee. The company has managed to efficiently compete and

create a significant percentage of loyal customers. Starbucks Consumer Packaged Goods presents a low-

growth and currently holds a low market share (Sakal, 2018). This uncertainty classifies coffee packaging as

Dogs.

3.5. Positioning Map

Starbucks is positioned in 80 markets around the world. The company owns a significant number of owned

stores and franchises. As mentioned above, the company operates most of its stores in the US. Apart from its

expertise in coffee drinks, the company is positioned in other areas since it offers soft drinks, tea, food,

merchandise, and CDs (Mankad, and Thadamalla, 2012).

The company's customers buy an expensive high-quality product, but they also have a personalized

experience in the store. A characteristic example is the customer's name on the cup in which its drink will be

served. The unique sales idea helps Starbucks diversify its products and services gaining a competitive

advantage over its competitors. Starbucks is also well- known for its good store experience. Customers can

take advantage of a friendly and comfortable environment and fast Wi-Fi. They can also quickly buy their drink

and continue on their way. These ideas are important in a fast-moving world where technology is becoming

more personalized and where social interactions are declining (Cusumano, Kahl, and Suarez, 2015).

3.6. Strategic Group Mapping

In order to have an accurate comprehension of the company’s strategic group and its competitors, it is

important to outline strategic groups. Strategic group mapping refers to a technique that involves examining a

company's position in a particular area so that the company can determine the extent to which its

competitors (Yiannakopoulos, Magoutas, and Chountalas, 2017). Appendix 3.4. shows that Starbucks has

several competitors. More specifically, Costa Coffee and Café Nero are the main competitors as they provide

high-quality products, while at the same time charging a high price.

Although the company faces strong competition, it can compete effectively with these competitors since it

provides high-quality products and services. Nevertheless, Starbucks needs to ensure that it applies innovative

strategies so that it can compete effectively with competitors.

3.7. Strengths and Weaknesses

Starbucks is the most popular and powerful brand in the food and beverage industry. The size, capacity, and

the number of loyal customers continue to increase over the years. At the same time, the number of new

stores and profits is increasing. Moreover, Starbucks has an extensive global network of suppliers. The

acquisitions of companies such as Tazo have proven to be quite successful for Starbucks. Another strength is

strategic planning and reinvestment strategy. The company also diversified its business activities by

introducing innovative products and food items. Like any company, Starbucks has weaknesses. For many

middle-class consumers, Starbucks prices are more expensive than other brands. Starbucks does not have

unique products on the market. This leads to an easy imitation of Starbucks products. Moreover, some of its
products do not align with the cultural standards of the domestic market. For example, in some areas,

beverages are not associated with consumer preferences.

4. Company’s Corporate and Business Strategy

According to Porter's generic strategy model (Tanwar, 2013), Starbucks uses the differentiation strategy.

There are several ways to achieve this, as there can be many differentiation bases. Starbucks diversified its

products based on quality and set a completely different customer experience. It has created a distinctive

brand image that is also a basis for differentiation and helps it compete better.

The company implements a market penetration strategy by opening more stores to maximize growth and

revenue in the current markets. Additionally, Starbucks applies a growth strategy through merchandise and

franchising. More specifically, Starbucks uses market growth to generate revenue in new markets or market

segments. For example, Starbucks intends to enter more countries. These countries are mainly located in

Africa and the Middle East. In this strategy, Starbucks can develop and expand its position in the global

market. Moreover, Starbucks Coffee uses product development. The product development strategy includes

designing new products to earn more revenue. Through new products, Starbucks aims to grow further.

5. Identification and Evaluation

5.1. Ansoff Matrix

The Ansoff Matrix is a tool used by companies to examine and design their strategies for growth (Hussain, et

al., 2013). The matrix displays four strategies that can be used to support a company analyzing the risk related

to each strategy. Appendix 4.1 indicates Starbucks' Ansoff Matrix.

5.2. Strategic Options

To evaluate the strategic options of Starbucks, it is important to comprehend the Starbucks environment. The

external environment was analyzed by presenting the company's opportunities and threats (Paragraph 2.3.).

Additionally, through internal analysis, Starbucks' strengths and weaknesses were developed (Paragraph 3.7.).

Appendix 4.2. presents the SFA framework. More specifically, this framework includes three measures:

suitability, feasibility, and acceptability. Suitability is a measure for evaluating the degree to which a
recommended strategy implements the situation and how to maintain or improve the company's competitive

position (Chen, Delmas, and Lieberman, 2015). Feasibility is related to whether this strategy can be

successfully implemented. Additionally, acceptability considers a difficult area, as it is closely related to

people's expectations (Bang, et al., 2012).

5.3 Implementation

According to the above-mentioned, the suitable strategy that Starbucks could implement is the development

strategy. More specifically, Starbucks' development strategies should be aligned with the company's overall

strategy. As Starbucks does not have a significant presence in Africa and the Middle East, it can use the market

development strategy in these areas. Also, the product development strategy can be used to provide products

that meet the specific cultural preferences of consumers in Africa and the Middle East. By implementing this

strategy, Starbucks will be able to maintain its competitive advantage and continue its development. Also, by

providing products according to the preferences of the domestic market, the company will be able to meet

the expectations of the market and stakeholders.

6. Conclusions & Recommendations

Starbucks' strategy is based on differentiation and adds value to its products as it creates an image of luxury.

Starbucks' core competencies are visible in its ability to harmonize its expertise, operational efficiency,

management capabilities, and human resource management. The business aims at a specific segment of

consumers in the coffee industry. Thus, the company's strategy focuses on this sector and its products and

services are specifically designed to meet the needs of that particular consumer audience.

Starbucks' diversification strategy ensures that the company can maintain a competitive advantage through

specialized products and ingredients. Nevertheless, Starbucks needs to continue to improve and innovate

ahead of its competitors to sustain its growth.

Starbucks' development strategies can be aligned with the company's overall strategy. However, there is a

lack of a significant presence in Africa and the Middle East. Therefore Starbucks can use the market
development strategy to penetrate in these areas. Also, the product development strategy can be used to

provide products that meet the specific cultural preferences of consumers in Africa and the Middle East.

Overall, it is recommended to penetrate emerging markets, design products that meet the exact customer

preferences according to the domestic market. Another recommendation could be to offer more healthy food

and beverage as there is a great demand for healthier choices. It could also invest more in its merchandising

since there is an upcoming demand from loyal customers.

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Appendixes

1. Company’s Background

1.1. Starbucks Key Stakeholders

Starbucks prioritizes employees in its corporate efforts. As stakeholders, employees typically

demand better working conditions, job security, and higher wages. Starbucks’ organizational
Employees
culture emphasizes the employees-first attitude. However, the company’s performance in
addressing employees as stakeholders has room for improvement.

Starbucks considers customers as among its top stakeholders. The interests of this stakeholder
group are high-quality service and products, such as coffee and related beverages. As the
world’s most popular specialty coffeehouse chain, the company includes customers as major
Customers stakeholders by extending the Starbucks culture to customers at its cafés. For example, warm
and friendly relations are emphasized within the company and in how baristas interact with
customers. Thus, Starbucks Coffee’s corporate efforts fulfill the interests of this stakeholder
group.
Starbucks suppliers are composed of wholesale supply firms and coffee farmers. The main
interest of this stakeholder group is compensation and growing demand from Starbucks.
Suppliers
Farmers aim to increase coffee yield to generate more revenues. Starbucks addresses the
interests of these stakeholders through a number of corporate social responsibility programs.
Starbucks has corporate social responsibility programs for environmentally sound business.
The company’s CAFE program has led to higher biodiversity and shade quality in certified
Environment coffee farms. Currently, 90% of Starbucks’ supply is from CAFE-certified farms. This significant
figure shows that Starbucks is effective in addressing its corporate social responsibility to this
stakeholder group, although there is always room for improvement.

As in any business, Starbucks must address investors as stakeholders. Investors have interests
in the high financial performance of the company. Starbucks’ global expansion and continued
Investors
dominance in the coffeehouse industry indicates high financial performance. Even though it
suffered a considerable decline in 2007, Starbucks has recovered and is on a growth path.

Starbucks must address the interests of numerous governments as stakeholders, considering

the company’s global presence. In general, Starbucks complies with rules and regulations.
Goverments
However, Starbucks uses a network of locations in different European countries to exploit tax
advantages.

2. External Analysis

2.1. Starbucks PEST Analysis

Political factors include expansionary fiscal policy. They also allow foreign companies to invest in a
Political
country (Daniel, 2014). Starbucks operational practices show that the company follows the laws that
Factors
prevail in the country. Regardless of the political stability of domestic market, the company benefits
from investment activity and offers new job positions.
To analyze a possible investment in countries, it is necessary to take into account the most important
Economic economic indicators: GDP, unemployment, and inflation (Bikker & Hu, 2012). In recent years, inflation
Factors has recorded the lowest level in the eurozone (Lopez & Papell, 2012). Even though international
market has recovered from the financial crisis, Covid-19 overturned the positive situation in the
worldwide market (Chetty, et al., 2020).
Social factors refer to market trends and preferences (Chen, & Hsieh, 2012). In Greece, different types
of coffee are offered, which only exist in the domestic market. More specifically, Starbucks promotes
Social Factors
coffee flavors that are consistent with the coffee tastes of Greek consumers. Also, it provides a
comfortable environment where its customers can enjoy their coffee, they can work or study.
Today, technology is constantly evolving. The techniques offered by companies must follow
innovative technological developments (Zawislak, [Link], 2012). Starbucks has incorporated modern
Technological
information systems into its operational practices and maintains its machines to offer high-quality
Factors
coffee. It also offers fast wireless networking (Wi-Fi) for its customers.
2.2 Starbuck 5 Forces’ Analysis

In an industry, existing competitors can influence competitiveness and profitability

(Aghion, [Link], 2015). If competition within the industry is mild, or there are only a few
competitors, the profit could be high (Casadesus ‐ Masanell and Zhu, 2013), but if the
Competitive competition is rough, companies cannot expect great profits (McGrath, 2013). However,
Rivalry the competition in the coffee industry does not depend on the price of the product. The
differentiation of each product and other variables, such as the quality of customer
service, the brand, brand, or company image may affect competitiveness. Therefore, the
coffee industry does not adapt easily to new price adjustments. Therefore the risk in
competitive rivalry is considered high.
The entry of new companies into an industry can increase the level of competition (Poetz
and Schreier, 2012). New entrants are likely to present new innovative ideas and
Customers are a powerful force in any industry. They can pressure
practices as they want to gain range in the market (Tung, 2012). Also, new entrants may
companies to lower their prices, demand better services, and even
have significant resources and could rearrange today's competitive positions in the
improvement of the products (Siano, 2014). Consumers in the
Threat of New industry. Strong businesses are trying to push new entrants into a low-cost position, Bargaining Power
coffee industry tend to be more interested in the quality of the
Entry forcing them to spend and invest a significant amount of funds on production, research of Buyer
service and image than in the price of the product or where the
and development, marketing, distribution channels, financial resources, and more.
raw materials of the product come from, or what the price of the
Nevertheless, the risk of new entrants is considered low. The major obstacles for new
raw materials is. Therefore, the bargaining power of buyers is low.
entrants are the wide range of products and costs. Hence, new entrants may push
Starbucks to decrease the price of its products in order to maintain its development and
The bargaining power of suppliers can pose a potential threat to
industry profits. They have the ability to increase or decrease the
quality of products in a particular industry (Jean, Kim and Sinkovics,
According to Cusumano (2015) and his associates, substitute products are goods that 2012) as suppliers are responsible for providing high-quality raw
Threat of Bargaining Power
come from other industries and can be a bargain for the products of the underlying materials. The quality of the coffee in the coffee industry is
Substitute of Supplier
industry. In the coffee industry, non-alcoholic beverages such as tea, soft drinks, fruit considered important. So, if companies are not satisfied with the
juices, and energy drinks may be substitute products. However, the only real direct services offered by their suppliers, they are likely to turn to others.
substitute for coffee can be considered another coffee brand (Langen, 2011). Hence, the Consequently, the risk of bargaining with suppliers is considered
threat of coffee substitution is considered low. low.

3. Internal Analysis

3.1. Starbucks Value Chain Analysis

Primary Activities Support Activities

Sourcing coffee from diverse coffee beans producers with The company has well designed aesthetically pleasing
Inbound logistics whom they have great relationships and building up an stores. It has an effi cient level of finance, accounting
Firm Infrastructure
efficient supply chain management system. and legal departments to support the firm’s
infrastructure

The company operates in 80 markets with its stores being Great benefits, employee empowerment and amazing
Human Resource
Operations modeled on company-operated stores and licensed corporate culture makes Starbucks drive efficient
Management
stores. management of human capital
Most of its product mix are sold in-store and some
through large box retailers. Payment around source Investments in innovative technologies like the well
Outbound logistics
through the point of sale, prepaid Starbucks Cards, and Technological like the mobile app.
mobile payments. Development
Investment in marketing activities have not been
significant and relied mainly on the growing reputation of Starbucks procures its products from a diverse group of
Marketing and Sales premium quality product mix and superior customer supplier and has fixed contracts with some of the
services to give the ‘Starbucks Experience’ to drive suppliers.
customers to their stores and products. Procurement
Starbucks has a reputation for providing a supreme level
Service
of customer services to its consumers.
3.2. Starbucks VRIO Analysis

Resources and Capabilities of Starbucks Value Rare Inimitable Organized

Prime and Strategic Locations YES YES YES YES
Global Brand Recognition & Equity YES YES YES YES
Aesthetic Appeal and Concepts of its Stores YES YES YES YES
Large Size and Strong Global Presence YES YES YES YES
Human Resource Management and Company Culture YES NO YES YES
Leveraging Technology and Mobile Outlets YES YES YES YES
Customer Loyalty YES YES NO YES
Good Corporate Social Responsibility Image YES NO YES YES

3.3. Starbucks BCG Analysis

Source: Sakal (2018)

3.4. Strategy Group Map

Source: Roby (2011)

4. Identification

4.1. Starbucks Ansoff Matrix

The company grows the sales of existing products in existing markets. For instance, writing
Market
names of customers on coffee cups. The intention of this is to increase sales as a result of greater
penetration
customer satisfaction.
Through product development, the company intends to increase sales by launching new products
Product
into an existing market. An example of this would be Starbucks introducing a new premium
Development
coffee made with rare and exclusive beans.
Market By launching existing products into new markets. Starbucks are a great example of this by having
Development coffee shops all over the world.
By launching new products into a new market, potentially increasing sales by a significant
amount.  However, this is the most risky strategy.  Starbuck’s latest plans to launch a new food
Diversification
range is a diversification strategy because the firm is using a new product to tap into a new
market for meals.

4.2. SFA Framework

SFA Framework
Development Strategy will enhance Starbucks strategic position and accomplish its
strategic objectives
Suitability
Through development strategy, Starbucks can make full use of its capabilities and
resources
Feasibility
By implementing development strategy, the company continues to offer new jobs,
strengthen the economy in the new market. In addition, it carries out activities that
contribute to the environment. Apart from development strategy, Starbucks can
implement a product development strategy by delivering products that meet
customers’ preferences. Overall, the development strategy will benefit Starbucks
Acceptability Stakeholders.