Starbucks Tradeoffs Essay

479 words - 2 pages

Andrew Juliano (Starbucks)
Starbucks has always been recognized as the top company in the premium coffee market. However, over the last 5 years, the company has experienced less sustainable growth. I believe that one of the most influential factors of this recent decline have been their identity crisis and their direct competition.
Starbucks has always been associated with an experience. Due to their global success, there have been constant additions of new locations. This permeation has consequently caused a ripple effect in customer perception. The things that made this coffee shop to appealing are being eroded by the lack of exclusivity. Although they still have their strong position and maintain a differentiating strategy, it does ...view middle of the document...

The competitor pressure has forced Starbucks to implement some things that may push them into being “stuck in the middle.” We are seeing locations opening drive thrus, and offering breakfast sandwiches. These things are all factors in the dilution of the brand image and will ultimately prove as a poor strategy for the company.
Environmental factors are also pressuring Starbucks. Perhaps the most influential factor would be their rapid expansion. This type of large scale expansion is something that the company had no experienced to date, and was the reason for them losing focus on their strategy. Customers behavior has changed because even though Starbucks introduced premium coffee to the market, its customers started to look for even better quality products. Furthermore, they began to analyze and compare prices to value.
Amidst corporate confusion is a great time to reevaluate the value system. Value systems allow you to look at all the workings of the company and look for possible areas to secure more profits. Assuming that their largest material cost is coffee beans, the brand could focus more on its distributors. They have already part taken in Vertical integration by partnering with airlines. It allows them another distribution channel and also works as a unique activity for the airline. The two main strengths of the brand is their completeness and predictability, both of which have been used to create value. The wide array of foods and drinks on their menus, as well as their other distribution channels for their coffee increase their revenue. Their focus on atmosphere is also a reason why the charge such a premium for their products and services.

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