Corporate Strategy - Starbucks Case Study - Management Assessment Answer

• Subject Code : MGMT3015
• Subject Name : Management

Corporate Strategy and Starbucks Case Study

Part A:

QUESTION1:

Starbucks is a great example of best practices in the strategic management of ethics, corporate social responsibility, and creating shared value.

Argue for or against this statement (above) based on an analysis of the case and specific and detailed applications of at least one appropriate strategic management model, concept, or framework.

It has been identified that the corporate social responsibilities that are opted by the organization need changing regularly. The main driving force for the changing of these policies lies in the society's needs and wants that are not stagnant. It has been identified that Starbucks has implemented multiple changes to its strategy down the years. The sole reason behind altering the corporate social responsibility, again and again, lies with the fact that the organization wants to fulfill the needs of the society. 

Every organization throughout the world wants to earn profits, some try to exploit the society whereas some try to help society. However, in the case of star bucks, the organization tried to maintain a balance between profitability as well as social morality. Starbucks has set multiple milestones when it comes to the strategic management of ethics, CSR, and the creation of shared value.

It has been discovered that the organization has always worked for the society and in the process earned the trust of the local government, the stakeholders, the public, and its loyal customer. One of the biggest reasons how the organization was able to influence so many individuals in society is the sustainable business practices of the organization.

It has been identified that Starbucks follows five key strategies to enhance its CSR practice. These strategies encapsulated factors like giving back to society, helping the local farmers, organizing charity events, and environmental sustainability.

It has been revealed that the organization has majorly focused on helping the local farmers. The organization has taken this particular step to ensure that the local farmers can enhance their standard of living. As identified the organization majorly focuses on the welfare of the people to do so more effectively and efficiently the organization has employed its suppliers who practice the global supplier code of conduct so that the society can be provided with only the best services of the organization. 

Apart from that, the organization has been quite active in feeding the poor in America. It has been discovered that Starbucks take the help of other organization to reach people who require the basic amenities required for survival.

It has been discovered that one of the biggest elements of corporate social responsibility is the environmental aspect. If the organization provides all the resources but skips the environmental issue then it is quite probable that the people are not going to believe in the organization. To maintain its integrity and trust, the organization has tried to change the way it operates, the majority of the Starbucks outlets use renewable sources of energy. So that the conventional sources of energy do not pollute the environment. Along with this, the organization has made strict amendments to the recycling of waste material that will gradually lead to a decrease in waste generated.

It has been observed that the concept of corporate social responsibility has been confused with the fact that, CSR is only conducted for society. However, this particular concept is completely wrong, as CSR also comprises of all the employees that are working in any given organization. In the case of Starbucks, the organization has always identified the needs and wants of their employees. According to researchers, all the employees that are working in the organization are provided with a great working environment, where all the employees are given the respect they deserve. In addition to this, the compensation to the employees along with the insurance and other benefits are far greater as provided by the competitors of star bucks, which encourages employee satisfaction leading to employee loyalty.

The main reason why the organization is estimated to be one of the best organizations throughout the world lies in the fact that the organization, have a very diversified workforce the organization does not discriminate against the employees of the organization based on caste, creed, nationality or sex. Starbucks provides people from different backgrounds to showcase their skills and take the organization to a new level.

QUESTION 2:

Starbucks' growth can be best understood by recognizing how the company has strategically driven value through diversification and moving into adjacencies.

Argue for or against this statement (above) based on an analysis of the case and specific and detailed applications of at least one appropriate strategic management model, concept, or framework.

The growth of Starbucks can be easily identified as how the organization has driven value with the help of diversification. The above-provided statement can be deemed true. It has been identified that the organization has always tried to add something new to their menu. These new products can be quite helpful for the organization to identify the untapped market which might be lying near the organization. The organization has always been closely associated with the hospitality industry as the main product and services that the organization deals with are fast food and beverages. 

In the early days of operations, the organization only dealt with providing coffee to their customers. However, the organization was not happy selling their product to a smaller target market, the organization aimed to diversify its product line. This could be easily done with the help of the organization's wider distribution channels along with a larger market segment, which will, in turn, help the organization to create brand awareness, which will help individuals to identify the organization's product and services from a wide variety of its substitute. This will help the organization to lay its foundation for its long term goals. After analyzing the case study it was identified that the primary product and the most valuable product for the organization is coffee. However, in recent years it has been identified that the organization is trying to shift towards different products as well.

Currently, the organization holds multiple joint ventures with different organizations so that it can provide itself with a variety of products. The organization has taken every possible step to grow, one of the best strategies that the organization implement while operating in foreign lands is think global act local. With a particular strategy, the organization was able to capture multiple markets throughout the world. The organization started selling tea in countries like Japan and China which has helped the organization to grow in different parts of the world. Currently, the organization provides multiple fast food options and a large variety of beverages from coffee to a beer you can find it in Starbucks.

The organization has greatly thought about the positioning of the product. According to researchers, the organization showcases complementary products together, this helps the organization to enhance the sales of their respected product. All these strategic plans have helped the organization to gain a larger customer base and will surely help the organization to grow in the long run.

To identify how Starbucks can get a competitive edge in the market Ansoff matrix will be utilized:

PART B:

QUESTION 3:

The only effective way for an organization to gain a competitive advantage is either through cost leadership or differentiation – there are no other effective ways to strengthen the company's competitive position.

Argue for or against this proposition using specific and detailed applications of an appropriate strategic management model, concept or framework from the course and support your arguments by using illustrative examples of organizations that you know from your own experience or observation. 

As per the Porters generic Strategy model, three main components help an organization to gain a competitive edge over its competitors namely, differentiation, cost leadership, and focus.

However, it has been identified that Focus is a superficial element in porter's generic strategy model. If this particular model can be implemented effectively, it can help an organization to identify that cost leadership and differentiation are the main factors that can help an organization to get a competitive edge over its competitors.

Cost leadership can become very beneficial for any given organization as according to this particular strategy, the organization tries to cut down the cost as much as possible. This helps the buyers to purchase the product without affecting their savings. It has been identified that the main requirement for implementing this particular strategy is a technical capability of a given organization, of the organization is using obsolete technology, there are chances that the organization has to incur heavy prices from the time fo production to the time of consumption. If in this particular scenario the organization implements a cost leadership strategy it will suffer heavy losses. However, if the organization has state of the art technology, then there are chances that the organization will be successful in implementing this particular strategy. 

Whereas in the case of differentiation strategy the all the products portrayed by the organization provides a unique and clear positioning. The main aim of this particular strategy is to provide value to the customer. If the organization is successful in effectively creating value for the consumer than the organization can ask the consumers for a higher price

The main reason why these two strategies provide the organization to get an edge over its competitors is that, if the organization has provided a product at a lower cost than its competitors there are chances that it can attract more customers to but its product. However, this particular strategy will not work in a luxury product. If the organization can create value for the consumers, then they will automatically buy the product without questioning the price for a particular product.

QUESTION 4:

The most successful strategy for competing for globally adopting a single global approach (online or offline).  Everything less than a global strategy is missing out on value creation.

Argue for or against this proposition using specific and detailed applications of an appropriate strategic management model, concept or framework from the course and support your arguments by using illustrative examples of organizations that you know from your own experience or observation.  

Ever since the introduction of globalization, a global marketing strategy has become necessary for many businesses. A business market on the global scale enables companies to increase their client base which in turn allows them to deliver value to an increased population and increase their sales. Tried to develop a strategy that can operate globally which will allow multiple businesses to improve their product and service effectiveness by working in new markets and produce enhance and new products and services in the market. As companies continue to offer better options they get to share their progress with a much larget target market. Moreover, the particular strategy helps the organization to easily get an edge over is competitors, as when organizations do not possess difficulty competing in the local environment; they can enhance their advantage and compete in the foreign market. Such strategies help them to adapt swiftly to the changing needs of the customers and market trends.

An integrated global strategy can facilitate worldwide cost reduction and increase the benefits to companies through economies of scale. This also facilitates the reduction of prices for customers which increases the value they derive from the product or service. Global strategy can also exploit flexibility, enhancing bargaining power, and exploiting low factor costs to reduce production cost. This is also the reason for the recent surge in offshore manufacturing in which companies set up manufacturing plants in nations with relatively low wage rates, such as Mexico, Taiwan, etc. Such a strategy also improves the quality of programs and products by focusing on a small number of products and programs. This focus on limited products, under the global strategy, has been the key driver behind the success of Japan in automobiles. Toyota, for instance, markets a far smaller number of modes then General Motors and concentrates more on improving its few models. Toyota Camry, which is a successor of long developmental efforts, is consistently rated as the best medium-sized car. This delivers better products to customers which also adds value to their purchase.

Furthermore, globalized serviceability, availability, and recognition can also improve customer with the help of reinforcement. Fast food companies and soft drink companies are the leading exponents of this strategy. Also, companies and customers both benefit from the usage of the internet in the global marketing approach. It not only helps to reduce the cost of a marketing campaign for companies but at the same time also customers to benefit from better awareness and lower cost of products.