1.
VALUE CHAIN :
Value chain analysis allows the
firms to understand the parts of its operations that create value and those
that do not. Understanding these issues is important because the firm earns
above-average returns only when the value it creates is greater than the costs
incurred to create the value.
As it is seen from the figure above
in value-chain analysis the business activities are divided into two
categories: primary activities and support activities. The primary activities
directly deal with the creation of products or services, whereas, support
activities can be used to obtain or increase competitive edge in the
marketplace.
COMPETTTIVE FORCE :
The nature of the relationships
among these forces is best presented in the following figure.
Source: Downturn Strategist (online)
Rivalry among existing competitors is high within the industry
Starbucks operates in with major competitors like Costa, McDonald’s, Caribou Coffee,
and Dunkin Donuts and thousands of small local coffee shops and cafes.
Starbucks customers possess large
amount of bargaining power because there is no and minimal switching cost
for customers, and there is an abundance of offers available for them.
The threat of substitute products
and services for Starbucks is substantial. Specifically, substitutes for
Starbucks Coffee include tea, juices, soft drinks, water and energy drinks,
whereas pubs and bars can be highlighted as substitute places for customers to
meet someone and spend their times outside of home and work environments.
Starbucks suppliers have high
bargaining power due to the fact that the demand for coffee is high in
global level and coffee beans can be produced only in certain geographical
areas. Moreover, the issues associated with African coffee producers being
treated unfairly by multinational companies are being resolved with the efforts
of various non-government organisations, and this is contributing to the
increasing bargaining power of suppliers.
However, the threat of new
entrants to the industry to compete with Starbucks is low, because
the market is highly saturated and substantial amount of financial resources
associated with buildings and properties are required in order to enter into
the industry.
2.
What is starbucks business strategy?
Assess the role played by technology in this business strategy.
Starbucks
business strategy was to revamped its in store technology and sought to
integrate its business processes with wireless technology ang the mobile
digital platform such as implementing a technology that allows customers to pay
using a smartphone app which is integrated with the starbucks card system which
allows regular customers to pay with a pre-paid and rechargeable card at any
starbucks branch. Next, rather than copying the practices of competitors,
starbucks continue serving high end specialty coffee and improve the customer
service, so that consumers didn’t feel like they were visiting a local fast
food chain. Other than that, starbucks also focused on becoming “lean”,
like many of its competitors, eliminating inefficiency wherever possible. Starbucks
also launched its “starbucks digital network”, a portal designed specifically
for mobile devices as opposed to traditional web browser.
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