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Starbucks
QUESTION
Discuss the management of Starbucks as compared to Competitor Dunking Donuts and whatever coffee company you decide for the second one.
| Subject | Business | Pages | 6 | Style | APA |
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Answer
Playing Field, Competition, and Our Organization
Introduction and Playing Field Description
Starbucks has managed to expand its operations in various markets in the world. However, there is need to capture more promising markets to increase market dominance and increase its revenue. Therefore, there is need for analysis of the target market before establishing operations. It is important to analyze the playing field, competitors, and the improvement needed to compete with similar products in the same market. Jack Welch’s logical five-slide approach to strategy is essential in providing information needed to make the investment decision concerning introducing Starbucks in Italy.
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a. Company Name and Organization within the company |
Starbucks |
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Coffee Division |
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b. Industry |
Coffee industry |
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c. Market Size |
The industry is projected to experience compound annual growth rate of 2.8% by 2025. Foreign companies hold less than 10% of the Italian coffee market. it is dominated by local companies. Coffee segment amounts to US$11,518m in 202. |
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d. Playing Field
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Starbucks is a coffeehouse and a roastery company that operates in more than 175 countries globally (Alhaskeer, Saturnino, Gharibi & Shumba, 2020). However, the company has not significantly established its presence in Italy, which is one of the countries with a history of coffee consumption. The coffee market in Italy is very competitive and has major players such as caffè fiorio, gran caffè renzelli, anddunking donuts among others. However, dunking donuts does not offer physical shop in the country yet. Most orders are direct deliveries in some cities in Italy. The companies offer products that are unique to the Italian market. They do not have much market dominance since most of them operate only in the major cities. The opportunity that Starbucks has is that it will bring a new product that is not Italian. Besides, it has the capacity to move the consumption of coffee from the major cities to various market places in the region, which are currently less attended. Companies such as Nestle have also established their presence in the country. |
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e. Rationale for Selection |
Starbucks is not big in the Italian market. It made its first appearance in Milan in 2018, and has not made significant impact. Thus, there is need to take advantage of the extensive coffee market in the region to increase revenue for Starbucks by establishing strategies that are relevant for the market. |
- Competitive Analysis
Competitor 1: Nestle
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a. Size |
The market is very competitive with the presence of key players in the industry. Nestle sustains competitive advantage through differentiation is very high. Nestle is increasingly introducing new products to keep up with the dynamic demands of the local market. |
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b. Most Significant Strength andWeakness |
The most significant strength of Nestle is its brand, which is recognized globally. |
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Increased competition in the Italian market is also a growing challenge. The company has to compete for market with established players. |
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c. Competitive Impact of Strength and Weakness. |
The brand name, which is the main strength of the company, makes the firm to be recognized easily by the customers. competition reduces revenue stream and market shares |
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d. Recent Performance |
The company is making progress in selling local coffee in the market. However, its prices are relatively expensive compared to other players and this has slowed its performance. Italy it is a difficult market and the company has only been there for three years. Therefore, it has not brought any game changer in the market. However, the future looks bright.
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e. Major Developments |
The company announced the increased capacity for production for frozen pizzas. Besides, it started bringing products for target different customers to enhance product differentiation. |
Competitor 2: StraussGroup
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a. Size |
StraussGroup is one of the largest food groups in Italy. It competes favorably with other established firms such as nestle for the Italian coffee market. It has a significant market share and its brand is equally known in the market. |
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b. Most Significant Strength and Weakness |
The main strength of the company is the ability to produce variety of snacks. Thus, it satisfies various customer needs in the market. The strength enables the firm to have a wider market share. |
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The main weakness of the firm is stiff competition in the market, and this affects its revenue stream. It makes the firm to spend more money in advertisement to popularize its range of products. |
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c. Competitive Impact of Strength and Weakness. |
Range of products enables the firm to have wider market options making it more competitive. Presence of establish players in the market reduces its competitive ability. |
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d. Recent Performance |
The company is recently working together with other local coffee firms to realize increased presence in the market and to enhance its area of operations. |
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e. Major Developments |
It signed an agreement with Don Cafà and PepsiCo to enhance is performance in the Italian market. |
- Organizational Assessment
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a. Size |
Starbucks is not big in the Italian market. It established its first brunch in Milan in 2018. It has been trying to make market impact since then and has introduced ten more brunches in various cities. |
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b. Most Significant Strength and Weakness |
The most significant strength of Starbucks is its brand, which is recognized globally |
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The main weakness of the company in Italian market is the product recall. The company recalled various breakfast products such as nuts in 2015, and this affected its market reputation(Voigt, Buliga& Michl, 2017) |
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c. Competitive Impact of Strength and Weakness. |
The brand enables the products to penetrate easily in the market since most people are familiar with it. However, the recalling of some of its breakfast products has resulted to negative market impact and inability of the products to do break the market. |
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d. Recent Performance |
The recent performance of the company has not been good since it was first introduced in the country in 2018. It has only managed to establish 11 brunches and its products have not impacted on the population. |
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e. Major Developments |
There has not been a major development in the market apart from opening more brunches across the cities. |
- Key Conclusions
Italy is an important coffee market for Starbuck to expand its operation. The country has been difficult to crack but the future is looking great. The culture of coffee consumption is an advantage in the coffee market. Starbucks is an established brand, and this is likely to make its market penetration easier. However, the company has been huddled by product recall that has slowed its expansion. Besides, strong competition from established brands such as Nestle has also made it difficult to obtain a significant market share.
References
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Alhaskeer, R., Saturnino, E., Gharibi, I., & Shumba, T. (2020). Starbucks and Italy: A Misery Romance. Gorgoglione, M., Petruzzelli, A. M., & Panniello, U. (2018). Innovation through tradition in the Italian coffee industry: an analysis of customers’ perceptions. Review of Managerial Science, 12(3), 661-682. Voigt, K. I., Buliga, O., & Michl, K. (2017). Globalizing Coffee Culture: The Case of Starbucks. In Business Model Pioneers (pp. 41-53). Springer, Cham.
Appendix
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