Starbucks Corporate Strategy_2
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Starbucks Corporate Strategy Corporate Strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business.[1] In the case of Starbucks the corporate strategy they have implemented is unique to their industry which has allowed them to differentiate from their competitors and is summarized best by Howard Schultz CEO of Starbucks, “We’re in the people business serving coffee,[2]” high quality specialty coffee and related products in a European café environment. It is clear Starbucks is in a growth strategy utilizing three key techniques that support its Mission, “to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time”[3]. Vertical Integration Tying in with Starbucks’ Mission, the companies vertical integration with its supply chain from roasting its own coffee in one of two of its plants to its involvement with developing and fostering strategic partnerships with local coffee farmers may be the most important growth strategy the company focuses on. Quality and corporate social responsibility are the pillars of Starbucks; vertical integration is the key component to insuring both of these fundamental characteristics of Starbucks are managed. Starbucks Starbucks is best known as a chain of coffee shops. As such, it has various suppliers and inputs -- it buys coffee beans to make coffee as well as customized mugs and products to sell in its stores. It backward vertically integrated when it bought a coffee farm in China, because normally it would have to buy coffee beans from a coffee bean supplier.
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starbucks corporate strategy
Transcript of Starbucks Corporate Strategy_2
Starbucks Corporate Strategy
Corporate Strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business.[1] In the case of Starbucks the corporate strategy they have implemented is unique to their industry which has allowed them to differentiate from their competitors and is summarized best by Howard Schultz CEO of Starbucks, “We’re in the people business serving coffee,[2]” high quality specialty coffee and related products in a European café environment. It is clear Starbucks is in a growth strategy utilizing three key techniques that support its Mission, “to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time”[3].
Vertical Integration
Tying in with Starbucks’ Mission, the companies vertical integration with its supply chain from roasting its own coffee in one of two of its plants to its involvement with developing and fostering strategic partnerships with local coffee farmers may be the most important growth strategy the company focuses on. Quality and corporate social responsibility are the pillars of Starbucks; vertical integration is the key component to insuring both of these fundamental characteristics of Starbucks are managed.
StarbucksStarbucks is best known as a chain of coffee shops. As such, it has various
suppliers and inputs -- it buys coffee beans to make coffee as well as customized
mugs and products to sell in its stores. It backward vertically integrated when it
bought a coffee farm in China, because normally it would have to buy coffee
beans from a coffee bean supplier.
Backward Vertical Integration as Strategy for StarbucksStarbucks chose to buy a coffee farm in China, an area that showed tremendous
growth in the number of coffee drinkers. At the same time, there was increased
competition among companies selling coffee, such as McDonald's and other
chains such as Costa Coffee. Adding so many new coffee drinkers to the market
creates competition for high-quality beans, with every coffee shop needing to
buy them. Competition for high-quality beans means that some competitors will
not receive them at all and that those who do will pay a high price driven up by
competition. By backward vertically integrating by buying a coffee farm,
Starbucks ensures that it will have a bean supply and that it will receive it at a
reasonable price.
Diversification
Starbucks has created related diversification into wholesale distribution by developing coffee based branded products with Pepsi-Cola and Dreyer’s Inc. that can be sold in grocery stores. The company is also expanding into non-related industries by creating an entertainment division focusing on the music and movie industry. As Starbucks expands diversification will become as important as its vertical integration as it moves through the product lifecycle in the coffee industry. (See Appendix A)
