Starbucks Business and Supply Chain Strategies

Starbucks Business Strategies

Core Competencies

As a significant business, a company requires the convenience of core competencies that set them aside from other companies. Research by Barney (425) conceptualizes core competencies as a situation where a company strategically is considered successful by perfecting a few critical skills or knowledge areas without a structural competitive advantage. Subsequently, the concept refers to a company’s competitive advantage in offering products and services due to distinctive capabilities possessed by particular individuals. Moreover, Barney (425) considers that successful leader needs to identify their core competencies and invest in the advantages of success.

In this regard, Starbucks’ core competencies have been identified to have built upon its organizational competencies. According to Geereddy, the company competencies include their high-quality coffee and products, the accessibility of the store in communities at affordable prices. Further, the store offers the community a unique coffee drinking experience and a variety of choices (Geereddy). Subsequently, Geereddy argues that Starbucks incorporates Porter’s Generic Competitive strategy to enhance its comparative advantage against competitors focusing on its core competence to provide quality coffee.

The company implements product differentiation by employing a diversity of suppliers. Subsequently, research by Dimitrakaki Starbucks variates its coffee products by sourcing beans from Asia-Pacific, Africa, and Latin America. Additionally, the company employs differentiation to develop a new instant coffee product that is low-cost. The initiative functions as a counter to the challenge of affordability of their high-priced products. The product is conveniently priced as a substitute to the regular Starbucks Coffee; however, the instant coffee is unique from other products offered in the global market. The technology in Starbucks stores is essential for differentiation to create gifts and products that are unique only to Starbucks stores. In addition, Geereddy demonstrates that the company introduced a new bistro-style, blue ocean original coffee choice to its esteemed customer.

Human resource management is a core competence in a management function. According to research by Geereddy, the quality of human resource values in Starbucks is relatively good. The company has invested in maintaining a good relationship both internally and externally. Starbucks’ management of internal affairs involves the proper interaction between its employees, the subordinates and superiors, employees against each other, and even between supervisors. The company prides itself in balancing the human resource team to ensure a serene working environment at all qualifications and job descriptions (Geereddy). The result of this is a company that works as a team. Most importantly, the company values the relations with its suppliers, maintaining a long-term alliance and partnership with major suppliers for production. The management of external and internal relationships with suppliers is a significant core competence for the multinational company.

Competitive advantages

Competitive advantages provide a business the upper hand in the market environment. According to Goh, Starbucks is among successful corporations that owe their success to good organizational culture, anticipated to result in a strong brand. Starbucks’ corporate cultures are built on the interaction with its employees and relaying the company values to its employees. Consequently, Goh argues that the company emphasizes its human resource activities to maintain its employees’ culture and relationships. Resultantly, the company affords to employ more than 180,000 people.

Starbucks’ competitive advantages are built on the uniqueness of its product. Further, the report identifies that the company enjoys global marketing and recognition for high-quality products. Starbuck marketing, in this regard, focuses on the portrayal of the company as a valued product; hence they afford to set prices for the demand of the quality experience. Further, Geereddy emphasizes the strategic location of Starbucks stores and their aesthetic value. The strategy target premium, high-visibility, high-traffic areas such as office buildings, retail centers, and university campuses.

According to Robby (2011), the company has been impacted globally by its flexibility in adjusting its products to national needs. The argument builds on the company’s recognition of cultures in packaging service delivery and modifying the aesthetic values of the stores. The concentration of customer feedback provides the company a comparative advantage in spreading the coffee experience in unique ways. The company aligns itself with market cultures and meets the demand from its clients.

Starbucks Supply Chain Strategies Assessment

Key components of the supply chain strategy

Starbucks Coffee Company’s key components of its supply chain strategy are its diversified services and products and store’s location and structure. The supply chain approach counters market patterns, focusing on intervention factors like product differentiation Geereddy. The concept of product differentiation builds on the need to develop unique products offered in Starbucks. The resultant effect offers a wide variety of distinctively quality products such as cappuccino, lattes, and even a new option of instant coffee.

The differentiation strategy supports the supply chain strategy in Starbucks. As aforementioned, the company gets coffee beans from supplies across the world. The supply chain design strives to ensure the provision of a unique product line, sharing an experience of global coffee qualities. Therefore, the company doesn’t rely on a singular coffee beans supply and sources from Asia-Pacific, Africa, and Latin America.

Forces driving Starbucks supply chain strategy

High product pricing is a challenge that affects the supply chain strategy. Fluctuation of coffee prices globally influences the high pricing of the product lines. Considering the differentiation strategy that requires the best quality in the market increases the pricing influence. Therefore, Geereddy argues that the constraints affect the global chain, particularly in regions that have low-income groups. Consequently, the company is driven by this factor to ensure they share the experience with all interested clients globally. As a strategy to counter this, the company attempts to focus on developing affordable products. According to Haskova (2016), this influenced the company’s supply strategy of introducing a new line of instant coffee to mitigate the challenge of expensive products. The chain is of lower quality than the regular products supplied by the company; however, it maintains a unique taste and experience for its clients.

Covid 19 pandemic impact on Starbucks’ supply chain

As nations struggled with the global Covid pandemic, businesses such as Starbucks have faced substantial economic challenges. The pandemic resulted in precautionary mechanisms such as quarantine that restricted customers from accessing the stores (Shim et al., 1758). Moreover, Starbucks faced significant challenges as the pandemic forced the closure of some stores as per authority guidelines (Lombardi et al. 179). Further, Lombardi et al. (181) indicate that the remaining open stores were subjected to operation procedures as Starbucks Coffee instituted dine-in service restrictions and converted a substantial majority of its sales to alternative delivery options. In addition, the company reduced operational hours, affecting their brand awareness and customer service as a warm and welcoming store. Lombardi et al. (181) argue that the changes in services offered to affect customers as they lose the unique, well-rounded coffee house experience.

Starbucks response to Covid 19 impacts

The economic effects of the pandemic called for marketing response for companies to mitigate them. Starbucks strategically incorporated innovative measures and mechanisms to meet healthcare precautions and continue offering its services through technology and innovative ideas. The company instituted the drive-through systems to ensure a contactless service delivery Lombardi et al. (181). Further, Starbucks embraced technological advantages in a digital world and leveraged the use of the Starbucks app to facilitate delivery options. The approach required a partnership with Square intergrating with the app for mobile payment options.

Ways Starbucks’ supply chain strategy fits with its business strategy

The supply chain facilitates the components of the business strategy by enabling some interventions in the business strategy. The supply chain strategy facilitates the acquisition of quality beans to support the business recognition for quality coffee. The differentiation study fits into the business and supply chain strategy connecting the two components. Evidently, from the report, the company in business management relies on differentiation to ensure it meets its mission and aims to provide a unique experience to its customers globally. Consecutively, the strategy is predominantly a supply chain factor. The company value chain considers the supply of coffee beans as an essential stage that influences the company’s success. The supply of coffee beans from the different continents is deemed vital. Categorically, the report recognizes the supply chain efforts of developing a variety of product lines that adjust to national cultures. The company maintains its originality and provides a unique product that sets them aside from competitors.

Starbucks use technology to enhance its supply chain strategy

According to Geereddy, Starbucks strategically enhances its supply chain by leveraging the technology used in its strategy. The multinational company uses telecommunication as a tool through mobile applications. The company embraced the usage of digital platforms and social media to re-engage with its customers. Additionally, the company strategically installed Wi-Fi in its stores to motivate customer attraction and create a serene environment for working as the world transitions into a digital-technological era.

The company invests in a partnership with Square, a mobile app for efficient payment integrated with its Starbucks app. Additionally, Geereddy argues that the company invests in its machines to ensure the uniqueness of its products and services offered. The devices support production and ease for the employees to assure quality services to the clients. During the Covid pandemic, the company introduced drive-thru as a strategic mechanism to ensure the continued supply of its products to meet its mission of inspiring and nurturing the human spirit, one person, one cup, and one neighborhood at a time. The company facilitated the platform to ensure the communities continue to enjoy the Starbucks experience. Conclusively the organizational structure of Starbucks has supported its continued growth as a multinational franchise in the retail coffee industry. The company owes its success to the human resource efforts of managing employee relations. Further, the differentiation strategy of the supply chain strategy informs the unique and quality products of the company. The factors facilitate the branding of the company as a global franchise.

Works Cited

Dimitrakaki, Ioanna. “Strategic Growth Case Study: Starbucks.” Scitcentral, Journal of Economics, Business and Market Research, 2021.

Geereddy, Nithin. “Strategic Analysis Of Starbucks Corporation.” Scholars at Harvard, Havard University.

Goh, Sin Yan. “Organizational Culture at Starbucks | Goh | Journal of the Community Development in Asia(JCDA).” Ejournal, Journal of The Community Development in Asia, 2020. Web.

Haskova, Katerina. “Starbucks Marketing Analysis.” Semantic Scholar | AI-Powered Research Tool, 2016.

Hess, Edward. “Starbucks Corporation (a).” SSRN Electronic Journal, 2017. Crossref, doi:10.2139/ssrn.2975208.

Lombardi, Conner, et al. “Starbucks Coffee Corporation’s Marketing Response to the COVID-19 Pandemic.” Innovative Marketing, vol. 17, no. 2, 2021, pp. 177–88. Crossref, doi:10.21511/im.17(2).2021.16.

Shim, Jimin, et al. “Antecedents of Purchase Intention at Starbucks in the Context of Covid-19 Pandemic.” Sustainability, vol. 13, no. 4, 2021, p. 1758. Crossref, doi:10.3390/su13041758.

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