1. How has Starbucksâ€™ mission and enterprise strategy contributed to the companyâ€™s success? Is its approach to social responsibility viable during tough economic times?
2. What are the greatest challenges in the broad environment that Starbucks is facing as the US market becomes saturated? Has the company cannibalized itself?
3. How can Starbucks prevent its product from being commoditized? Is it too late?
4. What strategies should Starbucks implement in light of new competitors such as McDonalds? Is McDonalds a real competitive threat?
5. Was the decision to fire CEO Jim Donald wise? What are the pros and cons of changing senior managers?
The Commoditization of Starbucks
Starbucks is one of the largest coffee brands in the world; it is an American based corporation situated in Seattle, Washington DC. The company ranks top among world leading coffeehouses followed by the fast growing Costa Coffee in the United Kingdom. The company was started in 1971, and since then, it has expanded rapidly to open its doors across the globe (Seaford, 2012). The company owes it success on obligation to meet its mission statement, vision statement, and its strategies (Enz, 2010). Recently, the company has been experiencing a weakening of its brand prices due to saturation in the coffee market and poor strategies. The paper intends to open a discourse on the commoditization of Starbucks and its effects on the company’s future.
Starbucks Coffee Corporation was built on a strong customer loyalty, employee satisfaction, and reputable social responsibility. The above mentioned strategies were the pillars that made the company reach the heights it has gained in the present market. According to Seaford literature, in 2012, Starbucks still dominated the world coffee market enjoying a value share of about 37%. The dominance is due to its main strategy, strong leadership skills, satisfied employees, customer-oriented methods, strong finance backup, and sanitation safety. The strategies have made Starbucks reliable, hence, its stability and rapid expansion since 1971 (Quicksey, 2012). However, the trend on the company’s progress has been changing rapidly as witnessed by commoditization and change in its management. The changing trend calls for proper strategies to enhance consistency and convenience to the consumers, employees, suppliers, and the society as a whole. Furthermore, Starbucks should employe effective social principles that enhance how it relates with people in its surroundings. The social principles to be employed should improve Starbucks’ working environment and how the corporation deals with its customers with dignity. Even though the founding strategies enabled the company to embrace the diversity that exists within its environs and improved its business position, there is need to re-strategize.
The rapid expansion of Starbucks has led to several challenges in the current corporation management. As the company expands, the previous strategies do not work. An example is the continuous establishment of coffee shops in the town center where other coffee shops are already instituted (Quicksey, 2012). Consequently, saturation has weakened demand for Starbucks coffee due to the number of Starbucks shops as compared to rivals in the same marketplace. Consequently, this makes competitors like McDonalds to improve and gain more than Starbucks in the same coffee market (Enz, 2010). Starbucks should, therefore, employ new strategies like spreading in the outskirts of towns where there is less competition as compared to town centers. The company should also increase its products range to improve consumer’s experience. Additionally, employing positive social relation will impart positive outcome from the surrounding communities and increase the company’s profitability.
Starbucks poor strategy has led to the weakening of its product market worth. However, it can still save itself from this situation. The first step that is critical and can be used to help Starbucks save itself from commoditization is change in management. That is why removal of former CEO Jim D. Wise was a significant step in Starbucks’ history (Enz, 2010). The significance of changing the top managers is that a new team will strive to redeem the situation unlike the old management that will tend to maintain status quo. How can be this true? Essentially, former CEO took over the company when it was expanding both in size and profitability. On the contrary, his reign saw the company fall from glory to commoditization; which is why it was necessary to change the its management (Enz, 2010). It is imperative to note that Starbucks is a great company that can only be salvaged from the current situation through proper strategy and effective management.
Sewdas et al.’s (2017) study employed, there are very little room for generalizing the study’s findings.
Enz, C. A. (2010). The Commoditization of Starbucks.
Quicksey, A. M. (2012). Coffee, Culture, and Capital in America: Starbucks and the Commoditization of Urban Space.
Seaford, B. C., Culp, R. C., & Brooks, B. W. (2012). Starbucks: maintaining a clear position. Journal of the International Academy for Case Studies, 18(3), 39.