International Business: Starbucks vs. Dunkin Donuts
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Excellent strategic thinking creates a competitive edge for a business in form of created and added value. The current business and market environment is volatile and has a consumer base that is very knowledgeable in terms of their needs. This is further complicated by globalization and high level of communication through the recent technological advancement especially the internet. This requires a company to employ effective thinking in order to achieve and surpass its targets in productivity or sales. A preferred strategic method should thoroughly employ SWOT analysis which entails scrutiny of its strengths, weaknesses, opportunities and threats within its scope of operation. Starbucks mainly aim at the Support of its suppliers to sustain the future production, expansion into emerging market destination, developing and maintaining its competitive advantage which revolves around Branding; Creativity and innovativeness is the stronghold of any strong and well organized company and multicultural diversity and affirmative action.
Starbucks is an international coffee company that focus on continued expansion into various world regions. The beverage company has given its focus on major issues that the company is facing in its entire course. The beverage industry has many competitors across the world. The major competitors of Starbucks are the Dunkin Donuts who are our major focus in the paper. Dunkin Donuts in the support of its suppliers to protect and sustain future production, it actively and diligently participates in its coffee supply chain. This has endeared it to its various suppliers and contributed to it being among the best coffee chains worldwide. Dunkin donuts has set up collection hubs closer to its raw material suppliers like coffee farmers in Brazil compared to the Starbucks. This makes it possible for its quality assurance department to have representatives on the ground to ensure the right produce is used from initial production stages to the final product in their restaurants. These activities ensure that the costs of production and transport of suppliers are cut down and some of the monitoring aspects are not entirely left to the farmers. This has resulted into farmers having more time to focus more on production of high quality coffee.
It has also developed its chain in order to monitor the standards of all items that go with coffee taking by final consumers including the sugar and utensils used. A typical strategy is when it decided to have its coffee roasting done in-house from the previous sub contracting that it was used to. This has ensured uniformity and set high standards that make it outstanding in service and quality delivery. Consistency has endeared and attracted lifetime consumers who know that they will always get what they want from the company.
In the mid 1990s, Starbucks and Dunkin Donuts underwent market saturation affect the international operation that was their major success period. The American economy was no more suitable for the growth. For more growth and maintenance for gaining of more revenue, there was need of venturing into foreign market. Starbucks is currently operating in over 25 countries with its three model scheme of Joint venture, licensing and wholly owned. There is an immediate pressure from the mother company to its subsidiaries on the calls for training new personnel, supervising, management assistance and technology transfer among the levels of the companies. This has had an impact on its inability in the global strategic coordination in its service to its customers. Diversification of the company’s services is a current application that Starbucks have initiated in setting up its base across the organizational market. The formation of alliances in 1995 by Starbucks was an initiative aimed at maximizing on its sales. The alliances include Canadian Airlines, United Air Lines, Starwood Hotels and Barnes & Noble, Inc., to serve Starbucks coffee to its passengers while on transit.
Over time, the companies have undergone remarkable changes in management process which has overseen the comeback of the company in the beverage industry as a force to reckon with. Corporate culture is one of the most influential components of the management success at the Starbucks industry and one the factors that determine market share and consumer satisfaction.
Strategic Decisions Making
The international business in the organization should give many considerations on ways of reducing the prices of the coffee to its consumers. This will open up other new markets thus more profit will be realized in the long run. Formation of new alliances with other beverage companies across the globe will minimize the overall costs giving them the opportunity on concentrating more on the domestic market.
Product differentiation and customer intimacy are some of the strategies that the company through the quality management needs to focus. There is also a call for more focus on the customer niche and positioning that will in turn embrace cultural diversity as a marketing strategy. More innovation and creativity should be put in place by the management in order to construct a mutual link between the producers and the company that will in turn facilitate accessibility to raw materials.
The companies have put in place measures that are customer friendly with priority being service to its loyal customers across the globe. They provide a favourable working environment that all the personnel and clients are given respect and dignity. Diversity is embraced as a major component while conducting its transactions.
Starbuck has proper strategies and policies the monitor and preside over the promotional process for its services. It applies excellent purchasing methods that are aimed at minimizing the input and maximizing on the realization. The provision of roasting and fresh delivery of coffee is an initiative method that was set at luring more customers to consume the Starbuck coffee. Development of enthusiastic is also a way put in place for customer satisfaction in all its operations. Starbucks introduced the use of Starbuck card for improvement of its base towards its customers. This is one of the technological advancement that firms are applying in order to meet the increasing technological changes. These is mainly aimed at reducing the time spend by customers while waiting for services at various entries of the companies. It creates efficiency and convenience on accessibility among the clients of the company. The installation of WI-FI by Starbucks is a good example that has aided in meeting the consumer needs.
Expansion of the quality assurance department through contractual programmes on the staffs and consistence training of the existing employees from communities across the globe in all the coffee growing areas that give rise to proper maintenance and coordination of the company’s activities.
Use of SWOT Tool Operations Strategy Framework
New Markets with low investments- New markets provide an opportunity for star bucks to explore and invest in since they require minimal capital to start. Bearing in mind that Starbucks has other branches and is looking for ways to expand its business, this is a perfect opportunity.
Coffee Market Growing Worldwide- Coffee is a product that is being consumed worldwide. This provides Starbucks with an opportunity of investing in all parts of the world thus making Starbucks a household name if they manage to penetrate such markets.
Product range diversification to more food and non-food item- Another opportunity that presents itself to Starbucks is the diversification to other types of foods and non food items. By diversifying their products, they are in a better position to explore other markets that are yet to be explored.
New distribution channels- New distribution channels provide Star bucks with an opportunity to attract customers through low costs. It also provides them with an opportunity to expand their market hence indirect marketing.
Financial Crises and Recession- Financial crises and recession is a major threat to Starbucks. This is because without finance, there is nothing that can go on in the business. During the recession period, prices of products go up making production costs to soar high. In addition, the value of the currency becomes less.
Increase in Domestic competition- Competitions from other companies also pose a major threat to Starbucks. This is because they provide the same products as star bucks thus making them loss market.
US market saturation- Whenever the market is saturated, it poses a threat to star bucks as a company as it becomes difficult to find the raw materials to produce its products.
Boycotting for Political reasons (Middle East and Arab) - Some politicians are up to no good and thus are a threat to Star bucks as a company. Some of them end up blackmailing the company hence reducing its overall sales. Political instability is another threat as in case of the occurrence of political instability in a Starbuck base market affects its sales greatly.
Changing External Conditions
As a company Starbucks should continue with their existing market strategies for promotion and advertising. This is because; whatever they are doing is working out for them as the sales are good. In addition, Starbucks should make come up with a strategy of making their prices to be pocket friendly. In order to penetrate new markets and retain their already existing market and customers, Starbucks has to reduce their prices.
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