In terms of the contemporary business development, it is impossible to find a company, which does not pay attention to its business-level and corporate-level strategies. These strategies form a significant part in strategic planning, which should bring companies to success. Starbucks is an absolute leader in the field of the coffee house; it walked through many difficulties on its way to success. The diversity of stores all over the world proves that Starbucks continues to increase its revenue and expand boundaries of its performance. The following passages reveal the company’s business-level strategies, that help it to support its competitiveness and uniqueness. Corporate-level strategies explain the company’s characteristics regarding the regulation of quality of products and other sources. By the end of the paper, it will be easy to understand the initial aim of the discussion in order to analyze the company’s ability to win loyalty of millions of customers all over the world.
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Business-Level Strategies of Starbucks
First, it is important to claim that there are two factors, which help to identify the strategy used by the company – target market and competitive advantage. Business-level strategies aim at reaching the target audience by offering the customers outstanding products and services. Starbucks is a respectable company, which has a reputation of the reliable employer. It is an aspect, which defines the company’s competitive advantages and emphasizes its position in the market. Starbucks has a myriad of business-level strategies, which unite in a single strategy – broad differentiation (Spiegel, Linke, Stauder, & Buchholz, 2015). It is obvious that every company has its own strategy depending on the market where it operates. Starbucks focuses on a broad target audience meaning that it considers a wide range of tastes. The main goal of the company is delivering high-quality products and services to all groups of customers.
It is essential to mention that business-level strategies of Starbucks vary depending on the pace of the company’s development and extension of its territory of performance. Starbucks is one of those companies, which use combined strategies and optimize them according to the terms of the external environment. For example, Starbucks may turn to cost leadership strategy in order to support its prevailing strategy of broad differentiation. Cost leadership strategy helps the company to reduce costs in order to increase its competitiveness. Starbucks is involved in the market with high penetration of competitors willing to win loyalty of customers and perform at the same level as the corporation. However, a combination of different strategies helps Starbucks to avoid threats from the external environment, which create tension and stress.
The outlining peculiarity of the company’s broad differentiation strategy is that Starbucks is capable of creating a product, which will be valuable for its customers. Additionally, the company creates a demand for products with the most affordable prices that customers are ready to pay for their purchase. Starbucks values customer’s tastes and respects the customer’s choice. It, in its turn, has a reflection in the company’s strategy. It aims at fulfilling the company’s strategic goals and meeting customer’s requirements at the same time. In general, Starbucks has an effective business-level strategy, which has a beneficial influence on its ability to keep leadership in the field of the coffee house.
Corporate-Level Strategies of Starbucks
Starbucks is the company, which also has a unique approach towards corporate-level strategies. In general, corporate-level strategies aim at benefiting the entire organization through the lenses of mergers and acquisitions, human resource management, and allocation of resources. In case of Starbucks, one may outline three main corporate-level strategies, which include diversification, integration, and acquisition. Diversification means that the company aims at developing itself in an active way in order to allow its entering new markets by offering new products to its customers. Starbucks successfully implements this strategy by offering its customers coffee-flavored ice-cream, coffee beverages based on milk, food items, coffee beans, equipment, and even music CDs. In general, it is obvious that Starbucks is willing to expand the boundaries of its performance by adding new products to its line and impressing customers by offering unique products with outstanding quality. As a result, the company managed to enhance its revenue, gained a myriad of competitive advantages, reduced risk related to the entrance of new competitors in the market, developed strong brand management, and managed to reach wide geographical coverage. In general, all these activities of the diversification strategy helped the company to win loyalty of its customers and increase its reputation in the eyes of its partners and competitors (Braun, 2015).
In the aspect of integration, both backward vertical integration and horizontal integration may be observed. By means of backward vertical integration, Starbucks purchased a farm in Costa Rica in order to produce coffee (Haskova, 2015). Moreover, the company also managed to use new types of coffee trees, which can increase uniqueness of its products and services. With the help of horizontal integration, Starbucks acquired Tazo LLC and managed to enter tea market (Haskova, 2015). It supports the company’s strategy in reaching the target audience of new markets. Tea market is as broad as coffee market, which means that Starbucks is capable of obtaining a highly competitive position in new segment of its performance.
Overall, Starbucks diversification strategy is the most beneficial corporate-level strategy, which helped the company to gain respect from the customers. Starbucks manages to be an optimal leader in everything it offers its customers. Diversification combined with high quality lead Starbucks to excellence, which contributes to the increase of revenue. In combination with other strategies, Starbucks is most likely to become an ultimate leader in the market of its performance by inspiring its customers to make sure that new products align with their requirements and tastes.
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The Competitive Environment
McDonald’s is the main competitor of Starbucks. It has a long history and follows similar corporate-level and business-level strategies. On the level of corporate strategies, McDonald’s also strives for entering new markets by offering its customers new products. However, the company continues to operate in a single industry of restaurants. McDonald’s has some differences from Starbucks, which help it to maintain balance in its development and success achievement. McDonald’s remains in the same industry and continues to expand its territory without acquisitions. It makes the company strong and stable in the light of its competitors. In other aspects of corporate-level strategies, McDonald’s has the same approach towards reaching its strategic goals by meeting customers’ needs.
Business-level strategies of McDonald’s have some differences from the ones of Starbucks. McDonald’s has a long history, and it has been using the same approach towards advertising and attracting attention of its customers over the years. However, the most recent changes in McDonald’s indicate that the company changed its approach towards the establishment of the competitive advantages. McDonald’s conducted a new research and developed its departments. Thus, it analyzes cultural peculiarities in every region of the company’s performance. McDonald’s found that ethnic and cultural background plays a significant role in influencing the customers’ attitude to the positioning of the company. The department became an essential part in the company’s business-level strategies, which lie in winning customer loyalty and increasing the number of restaurants. However, McDonald’s also uses broad differentiation strategy. Such strategy helps it to gain respect from its customers by offering them the diversity of products.
In general, it is obvious that Starbucks and McDonald’s are two competitors. They both creates difficulties for each other in winning customer loyalty. The companies have similar strategies aiming at reaching the success and becoming single leaders in the same field. However, Starbucks’ rapid growth and outstanding quality make it a reliable distributor of coffee. Moreover, Starbucks is an appropriate place for relaxation not only for coffee lovers. A myriad of choices helps Starbucks to offer its customers other products, which can satisfy their needs and tastes. It is most likely that Starbucks will increase its competitiveness and the ability to impress its competitors with new product lines.
Slow-Cycle and Fast-Cycle Markets
In both slow-cycle and fast-cycle markets, Starbucks is likely to hold the leading position. In terms of a slow-cycle market, Starbucks has a reliable background of the resources, which continue to rise. It means that Starbucks increases its ability to stand to the influence of its competitors willing to replace the company from its place. Starbucks managed not only to satisfy the needs of its customers, but also created products with unique attributes. In this way, the company keeps customers interested in unique products and outstanding quality, which is most likely to make it impossible to replace the company. It means that Starbucks is capable of further dominating in the market for many years. Long-term success depends on the ability of having stable background of resources and technological support. The latter can bring confidence to the company’s activity. In case of Starbucks, there is no need for doubt that it is capable of remaining an ultimate leader in the field of the coffee house for many years.
In terms of the fast-cycle markets, Starbucks is also most likely to succeed in the long run. It is most likely to happen because the company does not attempt to remain in a single set of competencies and resources. Starbucks continues to excel its opportunities and strives for opening new ways of meeting the customers’ requirements and satisfying their needs by designing new products. In addition to these, Starbucks is a global competitor, which has access to many sources of raw materials. It owns several farms producing coffee, which makes the company unique in its resources. In general, it is possible to claim that Starbucks needs to intensify its leadership in the selected field in order to continue impressing its customers. Moreover, competition does not allow reducing the pace of the development. Otherwise, Starbucks’ competitors will wait for the most appropriate moment to attack its positions and reduce its leadership.
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In conclusion, it is worth emphasizing that Starbucks managed to become a legendary corporation, which continues to operate in the international arena. It has many competitors, which strive for replacing it. However, a mix of the company’s corporate-level and business-level strategies helps it to be an ultimate leader in the market. Moreover, customers trust Starbucks and are willing to enjoy the diversity of its high-quality products. In the future, it is most likely to see the company even more successful than it is today. No matter what the future holds, Starbucks values high-quality resources, outstanding quality, and customer loyalty. In this way, it is possible to predict that Starbucks may create a monopoly in the field of the coffee house. However, there is no guarantee that other company will not be capable of impressing customers and providing them with absolutely new and unique products.