Starbucks Business Strategy and Competitive Advantage

Starbucks business strategy Starbucks competitive advantageStarbucks business strategy is based on the following four pillars:

1. Offering ‘third-place’ experience. Starbucks stores are effectively positioned as a ‘third place’ away from home and work, where people can spend time in a relaxed and comfortable environment with their friends or alone. Customers are even welcome to get their work done in a Starbucks store. All company-owned stores in the US and most company-owned stores abroad offer free wi-fi. “Starbucks stores are meticulously designed to make customers stay longer, buy more, and return for another visit.”[1]

2. Selling coffee of the highest quality. Starbucks business strategy can be classified as product differentiation. Accordingly, the coffee chain giant focuses on the quality of its products and customers pay premium prices for high quality. Excellent customer services as one of the solid sources of Starbucks competitive advantage further increases the attractiveness of the coffee retailer.

3. International market expansion with the focus on emerging economies is one of the key elements of Starbucks business strategy on long-term perspective. The share of company’s revenues from China/Asia Pacific (CAP) global market segment increased to 14% in 2016 from 7% in the previous year.[2] In total, 2719 new Starbucks stores opened during the last two years.

4. Integrating technology into various business processes. “Starbucks is adamant when it says that the purpose of new technology is not just to improve its website or to process payments quicker for people who are waiting in line”[3] The coffee chain achieves technology-related value addition via integrating technology into a wide range of business processes and procedures such as new product development, communication of the marketing message, completing sales and monitoring the level of customer satisfaction. The most notable examples for value creation via technological integration by Starbucks include the launch of Mobile Order & Pay feature, which allows customers to buy without getting in line, the launch of voice ordering app and “sending text message notifications to customers in the Seattle area when their mobile orders are ready”[4]

Starbucks Corporation Report contains a full analysis of Starbucks business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Starbucks. Moreover, the report contains analyses of Starbucks leadership, organizational structure and organizational culture. The report also comprises discussions of Starbucks marketing strategy and addresses issues of corporate social responsibility.

Starbucks Corporation Report

[1] Peterson, H. (2015) “5 ways Starbucks entices you to spend more money” Business Insider, Available at: http://www.businessinsider.com/how-starbucks-entices-you-to-spend-more-2015-2

[2] Fiscal 2016 Annual Report (2017) Starbucks Corporation

[3] McNamara, T. & Moore-Mangin, A. (2015) E-Content, Available at: http://www.econtentmag.com/Articles/Editorial/Commentary/Starbucks-and-Social-Media-Its-About-More-than-Just-Coffee-103823.htm

[4] Peterson, H. (2017) “Starbucks is testing a new technology to solve its crisis of long lines and delays” Business Insider, Available at: http://www.businessinsider.com/starbucks-sends-text-messages-to-fix-long-lines-in-stores-2017-3