Business Environment And Strategic Management Of Starbucks Organizatio

Question: Discuss about the Business Environment And Strategic Management Of Starbucks. Answer: Starbucks is a global organization that deals with the retailing of coffee in the business environment since the year 1972. The organization has positioned itself as a major seller of high quality coffee products (Starbucks.in. 2018). Since the last two decades, Starbucks has expanded its presence and market position to a great extent. In the recent times, the company serves coffee at more than 64 countries and has also known to become the largest coffee house in the world. Besides having a positive market outlook, the company is currently facing underestimated challenges. Starbucks is unable to operate the new segments like its competitors McDonald. Customers are now more price oriented and as the switching cost is low therefore this makes them easily to move to more competing brands. Starbucks primarily operates and competes in the retail coffee and snacks industry. The industry faced a major slowdown in the economy due to crisis and changing tastes of consumer which manage the revenue of US decline from 6.6% to $25.9 billion. The consumer therefore spent less on luxuries and expensive items. The consumer now prefers to cheaper items rather than coffee and beverages with increased price. The Starbucks industry is growing at a low annualized growth rate at an average of 0.9% till the year 2013 (Cavusgil and Knight 2015). The country has revenues currently of $29 US billion that is forecasted to grow over the next five years at an annualized rate of 3.9%. Being the largest coffee organization both in terms of market shares and sales has made Starbucks successful. Due to its high quality coffee products has attracted various customers throughout the world. In the recent year Starbucks has managed to expand and consolidate its market position. Despite the undisputed market position in the business environment and high growth Starbucks faces severe challenges that is difficult to overcome both in short-term and long-term. Starbucks direct competitors such as McDonalds and Dunkin Brands aims to attract and gain customers by their low price strategy globally. In addition to this Starbucks is also unsure about the consequences of its growth strategy in its emerging market that will affect its corporate performance. Starbucks went public in the year 1992 so that financial position of the company can be efficiently tackled and further expand in the overseas market. The organization facilitates personalized beverages according to the need of the customers. The beverages portfolio consists of Torrefazoine Italia Coffee and Seattles Best Coffee (Starbucks.in. 2018). As per the company vision statements and policies, the employees and partners are treated with high dignity and respect. Being the worlds leading company of coffee, Starbucks is still striving to defend and expand its market position against its competitors. Starbucks needs to undertake various strategic actions to survive in the long-run (Chen et al. 2014). The competition is very tough and the major competitors like Dunkin Donut and McDonalds are going to great extent so that Starbucks can be dethroned. The top management of Starbucks needs to take adequate action and measures to provide cheaper price to its customers to gain competitive advantages. Starbucks Coffee has variety of challenges in its current market environment that can be analyzed through the Porters five forces. The bargaining powers of the customer or buyers are very strong and affect the Starbucks Coffee business in a very significant manner. The switching cost for the customer to the substitute products is very low (Trigeorgis and Reuer 2017). The customer easily shifts from the Starbucks to other brands as they are competitively highly affordable. Customers also get instant beverages and drinks just like Starbucks from restaurant at lower prices. Starbucks should reduce its price due to high availability of the substitutes product. Starbucks customers do not have to spend extra money to shift to the substitutes product due to the low switching cost. This affects the target customers of Starbucks due to its high and increased cost for the products. If the firms patron considers the deal with the company highly expensive or low profitability, they can easily shift to its substitute brands (Beske, Land and Seuring 2014). The cost of switching brands or coffee shop is minimal as the Starbucks products are highly expensive. The products are priced at premium in comparison to its competitors. This has led the coffee business to shift from the developed market to developing market. The organizationtop managements need to implement better strategies to gain competitive advantage and achieve success in the long run. Starbucks economies of scale should be efficiently utilized so that the cost could be reduced. The organizational performance in the business environment should be quarterly evaluated to avoid any kind of accumulative losses (Thomas and Ambrosini 2015). Corrective actions and measures should be taken to overcome the loss in the long run. Due to the economic downturn in the year 2009, the customers does not want to spend such high prices o beverages and coffee products. Besides coffee and beverages, Starbucks can venture into product diversification to increase profitability. Extending into horizontal business line would further help Starbucks to increase its growth in the long-term. Starbucks top management should ensure proper and effective measures to gain competitive advantage by prioritizing competitive rivalry and customers bargaining power. One of the top management concerns is the increase in competition as the organization faces various competitors with different specialties and strategies. Therefore, it can be concluded that Starbucks should reduce its products cost at some extent to gain competitive advantage. Starbucks is in its mature stage of the product life cycle so it faces a fierce competition from its rival companies. This includes Costa Coffee, McDonalds and Dunkin Brand. In addition to this it is important for the management to expand its offering and product mix through a smart acquisition strategy. References: Beske, P., Land, A. and Seuring, S., 2014. Sustainable supply chain management practices and dynamic capabilities in the food industry: A critical analysis of the literature.International Journal of Production Economics,152, pp.131-143. Breton?Miller, L. and Miller, D., 2015. 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