Introduction to Strategic Management
Strategic Management includes the formulation and execution of majour goals and objective taken by the company's top level of management. Where the company analyse its external and internal environment and their effect on organisation and its performance. Strategic Management provide direction to the managers to create management objective, policies and plans to achieve long term goal. Some tools are created to analyse the performace of entity are SWOT and PESTLE analysis. Starbucks is UK based company which have thier coffee-house in all over the world. The company produce premium class products which target young people. Objective of company is to provide ethical environment in outlet and excellence in consumer satisfaction.
1.1 Mission, vision and objectives of Starbucks
The mission and Vision statement communicate the organisation reason for their establishment and how they serve to their stakeholders that are customers, employees and investors. Mission statement are often longer than vision, they conclude the firm's values. Starbucks mission and vision statement states that the company emphasis on leadership in the coffee-house industry (Islam and Mamun, 2017). The mission statement of Starbucks are “ To Inspire And Nurture The Human Spirit- One Person, One Cup And One Neighbourhood at a time”. This provide that:
- To provide ethical environment the work premiss and treat every individual with respect and dignity
- Application of the standard of excellence while purchasing, roasting and delivering of coffee.
- Develop enthusiasm in employee’s and deliver coffee to customer which satisfy them.
- Contribute positively to communities and environment.
- Profitability is essential element for the future success (Starbucks, 2008).
The company maintains maintain a small organisation culture, where they cares about the customer's experience (Islam and Mamun, 2017). It also means that the venture plans the continuously and gradually grow the businesses, one place or neighbourhood at a time.
The vision statement of Starbucks is “ To create the company as the powerful respected and recognized brand in all over the world and becoming the natural organisation with the ethics, values and norms by guiding employee’s to make it happen”. The statement states that the firm uses to measure their decision, actions and ideas. Every customer and employees are important for the company, they provide the best consumer service with the help of employee’s empowerment. The company has created harmonious work environment where every worker can give their best that is free from discrimination.
Objective of the company is to maintain its standard to become worlds most recognized and respected brand. The plan to achieve these objective is to respect the customer and employee’s of the entity. Their goal is to be leading retailer brand for coffee maker for each of their target market by selling the best quality coffee and related products and delivering the each client a unique Starbucks experience. Their objective is to expand their business globally to capture large market share and gain brand awareness. Their marketing strategy market expansion and product expansion, where the sell same product to new customer and new products to old market. They provide superior quality goods and customer service with well maintained company oriented store that reflects the personality of community in which they operate. They build high level of customer loyalty (Jahangiri, 2016). Their tactics is to create new and innovative products for maintaining loyal consumer.
1.2 Stakeholder power/interest matrix of Starbucks
The company contribute to improve its corporate social responsibility to address the concern of different stakeholder. The following are the main:
Employees: In Starbucks, employee’s demand the good working condition, higher wages, job security. The organisation's culture focus on employee’s first attitude. In 2014, the company boost their corporate social responsibilities by providing scholarship to the employee’s based on partnership with Arizona State University. In this company paid 56% of tuition fees for them. They hire baristas who only serve coffee and beverage, they train them to provide best experience to customer.
Customer: The company consider them main stakeholder, they provide high quality od goods and personalised services to them such as beverages and coffee (Islam and Mamun, 2017). It is the world famous speciality chain coffee-house. They provide environment of cafe according to customer culture. They provide a coffee glass where names of customer and quotes are written. They provide warm and friendly relation environment of outlet where baristas interact with them.
Environment; the company organise cafe programs that has leads to great biodiversity and shape quality of beans in certified cafe farms. The company take 90% of inventory from that farms only which maintain the quality of coffee beans.
Investors: They are having interest in financial performance of the company. As company is expanding globally which has enhanced the finance performance of them (Islam and Mamun, 2017). They are dominating their competitor which increase their profitability and helps them to attract large number of investors.
Government: The company is following the rules and regulation made by government. The company use network of location in different countries to exploit tax benefits, they are paying very low tax in UK.
1.3 PESTLE analysis of Starbucks
It measures the company market and its potential for the external environment, which are as follows:
Political factors: It includes rules and regulation made by government and other legal issues which include formal and informal rules which is to be followed by the company. When the company enter into the new market, lots of challenges he has to face such as pricing regulation, taxation rules and policies, environmental laws, property protection laws, wages law, employment laws, political instability, trade restriction and limitation. Government attitude towards the organisation is also political factor that effect the company. It was declared that the company was not paying corporation tax in UK from 15 years. Accounts committee of UK government investigate and ask question in the parliament which damage the company image. These external political factor are not in the control of company (Islam and Mamun, 2017).
Economical: Many economic factors affect the purchasing power of the customer and cost of capital for company. The company launches new coffee-house in UK, they are affected by economic growth, currency exchange rates, interest rates and inflation rate. There are four stage in economic like cycle that is expansion, inflation, deflation and recovery. All the stages have different interest rate, market rate and accordingly customer have their purchasing power. Such as inflation rate effect the cost of capital, exchange rate effect the cost of import and export of goods, distribution of products and price of imported material. The company import coffee beans from America. The company should consider some factors that are type of economic system, interest rate, effectiveness of the financial market, economic growth rate, discriminatory income, exchange rate, currency rate of host country and government involvement in different activities (Jahangiri, 2016).
Social factor: It plays a very important role while launching the company products in new market. When the organisation enter into UK they targeted young people keeping the culture and trends of market. Starbucks consider some factor that help to select their target market such as health consciousness of people, age discrimination, attitude, population growth rate, demographics, class structure, education, age discrimination and culture. Some factors are threats and some are opportunity for them like growing coffee culture and increase in middle class people is opportunity for when whereas age discrimination are threat for them (Islam and Mamun, 2017).
Technological: These are the factors which help in reducing the barriers for entering into new market. The company is using innovative technology and equipment in different outlet. By using technology, they are increasing production for coffee products. Some reason that influence the organisation and its products are research and development activity, automation of the system, data base management, impact on cost culture, rate of technology up-gradation and technology incentives (Islam and Mamun, 2017). Starbucks have opportunity to increase their mobile apps and linked services to generate more revenues by the way of mobile purchase, they can improve their supply chain efficiency by the use of technology. The venture have threat that home made coffee machine are coming, where people make coffee at home and will not visit outlets.
Environmental: Factors that effect the company are environmental rules and regulation, disaster like floods, landslide happen where coffee beans are produced and global warming. The company uses recyclable package which reduce their cost and will not harm to environment. They use environmentally friendly products which helps them to enhance corporate social responsibilities.
Legal factors: The company ensure that they do not run businesses in such way that breach legal laws and regulations. The organisation has opportunities to build their performance by satisfying product safety regulation as well as rules on ingredients GMO.
1.4 SWOT analysis of Starbucks
Starbucks is well known wide spread coffee shop of UK whose positive and negative tools can understand through SWOT analysis as below:-
- Starbucks establishes good relationship with its customers.
- It is wide spread also has near about 40 branches in different countries all over the world.
- Organization's product services are as brand.
- Starbucks has strong financial position to adopt innovations in quality services of entity.
- Starbucks sets very high price of coffee and services in comparison to other entities like Costa, Cafe etc.
- Number of competitors are increased therefore facing competition is quite difficult.
- High expenses for establishing new branches outside country.
- By adopting innovative technologies, Starbucks can enhance varieties in coffee.
- Through advertising products in more fascinating ways.
- Starbucks can also create co-branding with food and drink services.
- Competitive fear.
- Changes in external environmental factors like political and cultural issues affect demand for Starbucks' product services.
- New competitors' different policies for better coffee products and services.
Strength:- Financial position of Starbucks is very strong therefore it can easily adopt new technologies and can create innovations in business operations. However, it establishes good relationship with customers including creditors, suppliers and different entities across country as well internationally. Including this, Starbucks has different branches all over the world that facilitate a million customers belong to various nations (Jahangiri, 2016).
Weaknesses:- As per critical evaluation on performance of Starbucks, it is evaluated that there is high level cut throat competition obtained that is difficult to face out. In this regard, number of competitors are increasing at large scale that also provide varieties of coffee and services in comparison to Starbucks. Moreover, prices on coffee and services provided by organization is very high therefore all customers are not affordable to taking advantage of organization's services.
Opportunities:- For reducing weaknesses of Starbucks, different opportunities can be grabbed such as adopting innovative techniques for better quality services. Likewise, advertising brand products in more fascinating manner will be effective for organization to maintain their attraction. For advertising in better way, packaging goods attractively will be beneficial to attract its consumers at high level for long time periodicity.
Threats:- There are different threats obtained for Starbucks to make place in market for long time period. Due to changes in environmental factors like political and cultural factors affect organization's financial position (Islam and Mamun, 2017). Besides this, there is fear to face high level of competition because of varieties in coffee and services by other competitive entities. Thus, these threats are required to be reduced by preparing plans and following on them effectively.
It can be conclude that Starbucks has a stable internal and external environment. Their main aim is to create the company as the powerful respected and recognized brand in all over the world and becoming the natural organisation with the ethics, values and norms by guiding employee’s to make it happen. The entity consider all the stakeholder while taking the decision. Customer is key stakeholder for them, where they produce quality product ans services for them. They train and encourage their employee’s to maintain ethical environment in outlet. They have generate large number of revenue by expanding their outlet globally.
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