Some of the problems and strategic issues that are facing include:
• Competition from McDonalds McCafe, Krispy Kreme Doughnuts.
• Competition from local coffee chains and other various brands at supermarkets.
• The organization is dependent on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.
Starbucks has created a well respected global brand for providing customers with premium coffee. It has changed expectations of how coffee should taste and as a result has done a great job of raising its standards. However, it recent times, it has faced a few problems and strategic issues that have slowed down the company’s growth rate.
Starbucks faces stiff competition from well established rivals McDonalds and Krispy Kreme. Both companies provide premium coffees with McDonalds specifically having the advantage of serving customers at their 14,000 restaurants in U.S alone.
Starbucks on the other hand also faces stiff competition from local coffee chains and other various brands offered at supermarkets that retail at significantly lower prices. This provides customers with good substitutes for a tasty cup of coffee that they can enjoy at home and prepare at their own conveniences.
Finally, Starbucks as a company is extremely dependent on a main competitive advantage - the retail of coffee. This could make them slow to diversify into other sectors should the coffee market suddenly slump or prices sky rocket.
A few recommendations that I propose to solve and address at Starbucks include:
• Review its value chain to significantly cut down costs compared to major rivals.
• Provide incentives for customers to purchase Starbucks coffee instead of other local brands.
• Introduce new products that blend with the taste of coffee or appeal to the larger customer base.
In order to drive away customers from major rivals McDonalds and Krispy Kreme, I suggest Starbucks to have a look at its...