Assignment 1: Strategic Management and Strategic Competitiveness
Course title: BUS 499 (Business Admin and Capstone)
When we talk about the largest coffeehouse company, the first thing that comes to your mind is Starbucks. Starbucks Corporation was launched in 1971, it corporation is based in Seattle, Washington and has more than 16,000 outlets all over the world. Starbucks always believe that serving the best coffee is there aim, there coffee beans are grown under highest quality standards and sourced using ethical practices. Starbucks s not only limited to selling coffee but also sells verity of products, viz. coffee (more ...view middle of the document...
Innovation and technology has also helped Starbucks gain more popularity with it operations. With the introduction of free Wi-Fi to its customers, it has brought more customers to its door. Starbucks was the first coffee restaurants to offer free wi-fi to its customers. Because of its latest upgrade in technology it has elevated its status to a premium coffee brand over its competitors. Not only the market factors force the company to upgrade, in fact, up gradation helps the company to increase the efficiency of its operations.
Globalization and technology has brought both positive and negative changes that have impacted the company greatly. The number of competitors has increased along with the intellectual property issues. Many companies tries to imitate the business practices of the company and even its name and logo, to protect itself from such the company has to put a trademark on its name which disqualify infringement of any kind. With the wider market operations, cultural conflicts have also increased widely. As the company spread its wings globally, it has to adapt to these territorial retail practices and laws. Keeping in mind that with different countries, there are different laws of operations. Some countries have sourcing norms, which puts a pressure on the company to source the raw material locally. This creates another issue for the company as it gets difficult to maintain the quality standards. So, globalization and technology change puts higher pressure on the company, both strategically and financially; along with giving the benefits of wider markets and increased efficiency (Hart, 2011)
Industrial Organization model and Resource based model
Above average returns in the industrial organization model are determined by external factors and not internal characteristics of the firm. When the coffee industry is analyzed, there is a big opportunity identified for the company. American population is big on coffee, about 77% of young adult over the age 18 and over consumes coffee on a daily or occasional basis. Just 1 in 100 cups of coffee served today is Starbucks. So there is large scope for the company. Then there are many countries which are either not at all catered to by the company or are not penetrated. So there is huge scope for the company to serve in those markets, increase its market share and in turn increase its returns (Barney B. 1991).
Resource based model seeks to identify the resources or the capabilities of the firm that provides it competitive advantage. To build core competencies the resource based model has to have four criteria to sustain a competitive advantage over its competitors, in order to achieve these they have to be rare, valuable, costly to imitate, and non-substitutable. There are many coffee companies out there but for Starbucks, it differentiates itself by having a full staffed shop that is committed to serve a customers need between 2-3 minutes regardless of what they want. The whole experience...