Starbucks Strategic Issues

900 Words4 Pages
As previously mentioned, Starbucks has various strategic issues including the overreliance on the US market for its revenues, lack of control over its brand image in foreign markets, and competition from other players including fast food retailers, specialty coffee providers, grocery stores, specialty retailers, and convenience stores. Therefore, Starbucks has to respond to these strategic issues by amending its strategy to improve its performance in the highly competitive market. First, Starbucks needs to amend its transnational strategy to increase the performance of its international markets to reduce vulnerabilities associated with overdependence on the US market. The firm needs to recognize that tastes differ by region and the products…show more content…
While competitors are claiming to provide high-quality coffee at reduced prices, Starbucks should not engage in price wars. Engaging in a price war with its competitors would be unfavorable for Starbucks as the firm 's coffee is expected to reflect a luxury commodity that consumers are willing to purchase at a premium price. Moreover, a price war with its competitors might result in further reduction in price to a point where it becomes unprofitable not only for Starbucks but also for its competitors. Rather, Starbucks must focus on differentiating its product by investing in intensive research and development initiatives aimed at developing new blends or flavors of its products. In this regard, novelty will become a good tool for promoting Starbucks. In the introduction of the revolutionary and novel product developed by Starbucks, the firm should beginning by offering free product samples for a restricted period. Based on the consumers ' response to the new product, the firm should then introduce it into its stores. By introducing innovative tea and coffee products, Starbucks will be able to provide these products at the same premium prices based on the perceptions of the high quality of the firm’s products. Through…show more content…
Finally, Starbucks should amend its transnational strategy to respond to the challenge related to the lack of control over its brand image in foreign markets by selecting strategic partners in international markets and engaging in promotion campaigns. In its international operations, Starbucks relies on joint ventures, licensees, and franchisees and the selection of reliable and appropriate partners will contribute to the preservation of its brand image. In the selection process, Starbucks should carry out intensive research on potential partners to ensure that it enters into business partnerships with firms that are able to deliver on the firm’s promise of delivering high product quality and consistently positive customer experiences in all the markets, complying with regulations and laws where it operates and acting in ethical ways. Regarding this, Starbucks should require its business partners to implement performance measurement mechanisms as they will reflect the firm’s intentions in relation to its brand image (Busco, Giovannoni, & Schapens, 2008). The performance measurement mechanisms will provide the different partners with common standards and definitions of measurement to ensure that they meet Starbucks performance levels in relation to activities that influence the brand image (Mahlendorf et al., 2012). Similarly, the agreements established between Starbucks and business partners should ensure that expatriates from Starbucks work in franchisees and joint
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