Introduction on Future Sustainability of Starbucks
Present proposal deals with the examination of future sustainability of business in an organization within the context of emerging competitive environment. According to 2010 Accenture global survey which was conducted on more than 700 CEO’s it was found that most of them view sustainability as very important for future success of their organization. But many of the new as well as established firms find it difficult to include the concept of sustainability in its day to day operations (Starbucks' Juice Gamble and 3 Deals That Changed Everything, 2011).
The present report is focused on understanding the importance of diversification for future sustainability of this well established coffee chain so that it can gain an edge over its competitors as it is very important for any firm to diversify itself from prevailing operations for its future success.
Background of proposal
The given proposal deals with America’s well known coffee chain retailer Starbucks which offers varied flavors of coffee as well as teas, fine pastries and other treats to please once taste buds. The company has a vision of serving best coffee to its customers by maintaining standards of quality in its operations.
The research proposal tries to find out a suitable answer for Starbucks which is an American coffee company and has Italian style coffee chains. The firm is a major retailer of coffee and wishes to enter in other food areas like juices and bakery. Today, the company has 15,000 stores in more than 50 countries. It is recognized as premier roster and retailer of coffee all over the world.
The topic for proposal is present and future diversification strategies to be adopted by Starbucks to gain a competitive edge over others. Starbucks chain posed a threat due to increase in competition in coffee business (Gertner, n.d). The company has decided to expand itself into diverse business areas by leveraging on its parent brand of coffee.
Research aims and objectives
The overall research aim of following research proposal would be examination of the future sustainability of Starbucks within the context of an emerging competitive environment that it is likely to face in near term future. In this context, diversification strategy has been chosen to help it deal with current scenario. The objectives of research proposal have been discussed below;
- To critically evaluate the growth strategies adopted by Starbucks for its future sustainability.
- To analyze the diversification strategies that can be used by firm to gain competitive edge.
- To identify the major challenges Starbucks faces and how consumer trend insights could help.
- To recommend strategies Starbucks could use for its long term success.
Reason for choosing this subject
For any business, sustainability is all about ensuring long term success for fruitful working of an organization. It is very important for managers to understand the prevailing opportunities and risks faced by them for better implication of strategies. This helps to make companies more sustainable and competitive. For a company to be sustainable in prevailing business scenario, it is very important to focus on strategies that can help in its long term success (Product diversification, 2012). A number of strategies can be adopted by firms like expansion, diversification etc. The present company can diversify itself in various areas of food segment like baking, juice and sandwich shops.
Limitations of research
Any research proposal carried out on a given topic is subject to certain limitations. In the present case secondary approach was used to study diversifications by Starbucks and following limitations were observed by the researcher.
- There was limited time to carry out a proper and in-depth analysis of given research proposal .
- Research was also limited to cost constraints.
- The online website of company may not produce reputable and reliable data.
- The research includes viewpoints of various authors which can be contradictory in nature .
The term research can be defined as a procedure adopted by a researcher which is done systematically in order to enhance knowledge, verify facts and findings, confirm results of previous works, finding probable solutions to entirely new problems and supporting as well as forming new viewpoints in relation to a particular topic (Merriam, 2009).
For the purpose of study, both secondary research and primary research methodology was used. Primary data was collected by interview of consumers in outlets of UK. For this, sampling of 50 respondents was done. The target population included consumers and staff members of outlets present in UK.
Qualitative and quantitative methods of research
Two general approaches to research are widely used by any researcher which includes quantitative research and qualitative research.
Qualitative research – Qualitative research includes study of all available information in their natural settings. The study is based upon a process of inquiry that fulfills the objective of understanding a social or human problem after taking in consideration the multiple viewpoints given by various authors. This method starts by constructing an initial perspective from the research and is not dependent on statistics or mathematical models.
Quantitative research – This method is focussed on inquiry into a definite problem in hand which is based on testing of a theory as well as measuring and counting things. Using mathematical models is one of the most important parts of this research methodology (Gibaldi, 2010). It also makes use of a range of theories to solve a given situation in hand as well as identifies the relationship between dependent and independent variables in the given set of sample.
Descriptive research design is used to study the following proposal about Starbucks with respect to future sustainability. In present case this design would help to determine the proportion of population that prefers Starbucks over other coffee chains. It would define questions prior to conducting and analyzing data collection.
Data collection is one of the most significant parts of any research proposal. Proper collection of data helps in accurate analysis and gives reliable information about the given topic. In any proposal two methods of data collection can be used which are primary as well as secondary data. Read more about Starbucks contrasting sustainability.
As data was collected by secondary method which helped to provide adequate information for the purpose of discussion and for getting an in depth understanding towards future sustainability of operations in case of Starbucks. For this purpose thematic data analysis has been used by researcher. Data was researched for presence of any recurrent patterns by identifying a number of themes that reflected the textual data collected. Various kinds of views were generated regarding present operations of Starbucks from different authors. The resulting data was used to produce information with respect to possible future success of Starbucks in terms of diversification. The time frame chosen for the report was 45 days to help in achieving the desired goals and objectives.
The following ethical factors were taken into consideration.
- Permission was taken before carrying out the research (Babbie, 2010).
- Proper words were chosen while asking sensitive or difficult questions during interview.
- No personal biasness was done and fair consideration was given to both sides.
- The responses were not taken out of context.
Summary of the proposal
The present report dealt with examining future sustainability of business in a firm within the context of emerging competitive environment. The company chosen for this purpose was Starbucks. The firm Starbucks Coffee Company was started in 1971 by opening its first store in Pike Place Market of Seattle. At present the company is the world's leading retailer of specialty coffee and is on a verge of becoming one of the most respectable brands across the world. In last few years the firm has diversified itself in other areas of food segment like sandwiches and pastries. Products such as CDs, mugs, tumblers, Oprah Book Club selections etc. were all introduced to consumers.
The present report deals with importance of diversification for future sustainability of its operations. Starbucks operates in a competitive business environment which requires excellent brand and reputation to create trust with its present and future consumers. It has built a good reputation over the years but maintenance of the same is a tough task. The report concludes that even though the company has got an outstanding brand identity in the coffee segment, it needs to be aware of factors in both micro as well as macroeconomic environment.
Literature review is one of the most important aspects of any research proposal as it provides useful information about precise surveys to be conducted by researcher. It also pays attention on studying and evaluating the articles written by different authors on given topic of interest. According to Hart, it is usually the first step that is carried out in a research proposal and presents an overall scenario of the study through varied sources of literature which includes journal articles, books and newspaper articles (Hart, 1999).
In this research proposal focus has been given to analyze the future sustainability of Starbucks and how it can manage the existing risks and move towards growth trajectory. For this purpose the present company can adopt many strategies like expansion and diversification. The proposal focuses on the present diversification strategies adopted by Starbucks and changes that can be made for a better future base .
According to Philip Kotler marketing is the art and science of identifying, creating and delivering goods and services in order to satisfy requirements of end market by making profit simultaneously. It analyzes measures and quantifies the needs of target market as well as its prospective of good future profits and also pinpoints which segments of market can be best served by the firm and accordingly moves on to design products and services .
Meaning of marketing strategies
The word strategy is derived from Greek language which means office of the general or command. One of the most important concepts of marketing is proper analysis of strategies that can be fruitful in grabbing market (Porter, 1998). According to Stuart Clark Rogers, strategy is defined as a long term course of action taken by any firm in order to utilize the limited resources in such a manner that it results in delivering superior consumer experience and promotes interests of other stakeholders involved with the firm. Any strategy is considered to be good only when it is linked to the mission and vision of organization (Rogers, 2001).
Types of marketing strategies
Every business has its own set of problems and opportunities which makes it unique in every aspect. In this scenario, it is important to apply that strategy which provides maximum benefit to organization. The figure given below gives an outline to the list of marketing strategies that can be used by Starbucks for economic sustainability of its future business operations. The strategies are as follows;
Market Penetration Strategy – With the help of this strategy a firm seeks to raise the market share of its present set of products in the prevailing market environment by putting greater marketing efforts. This is done by increasing employees and existing outlets, advertisement, offering promotional items in form of free gifts or increasing media hype (Smith, 2012). For example, Kellogg’s has been successful in developing a very strong brand equity i.e. the firm is the most apparent producer of Corn Flakes which is the result of successful emphasis on strong beliefs in traditional and family orientated products.
Product Development Strategy – This refers to developing new products or making changes in the existing ones so that they are perceived as new by consumers. The new product formed can have features like innovation, improved product quality, enhancement in value and some new up-dates.
Market Development Strategy - It is taken into thought when a company needs to sell its existing range of products and services to entirely new consumers and markets. This also includes expansion in overseas markets. For example, many of the big companies of global economy like McDonalds, Wal-Mart and Nokia have exported their operations to other countries. On a smaller scale, many microbreweries have started new locations in various metro cities and airports in the United States as a way to increase their geographical reach.
Diversification Strategy – According to Klier, diversification as a method is the set of actions taken by a company to make successful new product and market combination. It is basically a risk reduction strategy which involves addition or deletion of products, services, location, customers and markets to the company’s portfolio. It can also refer to offering dissimilar products to present clients or doing something which is outside the firms’ existing business. Diversification is usually profitable but can be unsafe if company lacks the requisite resources to apply the strategy.
Present and future challenges for Starbucks
- Ensuring profitability of its coffee chains outside United States by lowering costs to suit middle class consumers in India.
- Adjusting its products to suit coffee tastes of consumers in Australia where it failed badly by introducing an overtly charged American offering than the European style which is preferred in Australia.
- More dependence on traditional methods of advertisements like reputation and word of mouth.
Future strategies for Starbucks
The present stores of Starbucks are available in high traffic and visibility locations which reflect the care taken by Starbucks to choose its store locations. In United States, average Starbucks location draws on a population of 200,000. The other strategies that can be adopted by company are as follows;
Product differentiation – Starbucks should focus on extensive research and development to introduce new flavors, blends and fusions in its coffee segment. On introducing new varieties free sample sachets can be distributed to daily customers.
Effective expansions – Considering financial performance of Starbucks as well as economic environment of US, it will be beneficial to stop opening more stores and focusing on existing customer base (Starbucks' Juice Gamble and 3 Deals That Changed Everything.
Mobile payments arena – Starbucks is trying to create an application that allows consumers to pay from phone without any complexity. It wishes to take a multi channel approach wherein the customers would be allowed to pay through square or passbook.
Premium coffee at lower price – The other firms in coffee business are providing premium coffee to its consumers but at lower rates. Starbucks can work on its pricing segment to get diversified consumers from middle class segments as well.
From the above research report about future sustainability of Starbucks business it can be concluded that the firm is working in an increasingly competitive environment with a lot of options of consumers in coffee business. In order to remain sustainable economically and for having an edge over its competitors it is required to devise strategies to sustain its present customer base and garner more in coming future .
McDonald's new service of Mc-Cafe is a superb example of diversification. By opening Mc-Cafe, McDonald's is presenting new products that were not available in established McDonald's chains. The new service specializes in serving coffee which attracts customers that usually don't come to McDonald's to eat fast food. This has played a very important role for the fast food chain to attract new market segments, probably those customers that go to café for taking a sip of coffee and wish to chat in a relaxed environment .
Starbucks is in that sector of economy in which it has to face stiff competition from competitors and customers have a large number of options. Although it has brought many diversification strategies for attracting consumers. In 2011, Starbucks had bought Evolution juice and started its own chain of standalone juice and sandwich shops.
Books and Journal articles
- Babbie, R. E., 2010. The practice of social research. 12th ed. Cengage Learning.
- Belz, F. M. and Riediger, B. S., 2009. Marketing strategies in the age of sustainable development: Evidence from the food industry.
- Brown, 2005. New Product Development. Tata McGraw-Hill Education.
- Gibaldi, J., 2010. Handbook of Writers of Research Papers. 7th ed. Modern Language Association of India.
- Gertner, J., n.d. For infusing a steady stream of new ideas to revive its business. Fast Company.
- Lukies, K., 2010. Developing Organizational Objectives and Formulating Strategies. Diversification Strategy. [blog]. 28th September. Available through.
- Market development. 2012. The Product. [Online]. Available through.