Starbucks coffe industry Case Study Example | Topics and Well Written Essays - 1750 words

Starbucks coffe industry - Case Study Example The organization selected for the study is Starbucks which is a major coffee retail chain based in USA and has operations across numerous areas of the globe. The study would include a theoretical analysis highlighting the advantages and disadvantages of each of the strategies mentioned above. In addition the study would also take into account the similarities and dissimilarities between the chosen set of business strategies. Furthermore the study would analyze the external environmental aspects that govern the coffee industry. This would be followed with an analysis for the trends of the coffee industry that would include an industry analysis of the entire industry. Finally a set of strategies would be proposed for Starbucks from among the chosen set of four generic strategies that would help the firm gain and consolidate its market share in the market and to help generate sustainable competitive advantage in the long run. Introduction In the age of increased market competition it ha s become inevitable for business organizations to purse strategies that differentiate their product offering from the others in the market. Porter proposed a set of three strategies namely focus strategy, differentiation and cost leadership that can be followed by firms to gain market advantage. Firms like Wal-Mart incorporate a single strategy like cost while there are others that use a combination of these strategies to create a hybrid strategy to generate advantage for them in the market. The choice of strategy largely depends upon the nature of the business and the target market segment considering the fact that each set of strategy has its own set of advantages as well as disadvantages (Griffin, 2008, p.207). Firms should therefore analyze their internal as well as external aspects before undertaking and implementing a business strategy. This would help them take the best advantage of the market conditions and would also help them channelize their internal resources and capacit ies to create favorable positioning and brand image of their brands and organization in the minds of the target market audience. Theoretical Background Depending upon the internal and external aspects influencing an organization it is necessary to adopt any of the four strategies namely differentiation, low-cost leadership, best cost and focus strategy. The matrix below lists out the similarities and dissimilarities of these strategies. Strategy Type Advantages Disadvantages Focus Focus Strategies help generate efficiency and promote greater learning and innovation. It helps firms to concentrate to a single segment and analyze their needs more effectively (Moore, 2008, p.84-85). Concentration on a single segment can be disastrous if the key differentiators are imitated by another market player. Narrowing down of difference within the target segments can lead to business risk (Longenecker et.al, 2005, p.66) Differentiation Helps beat the market competition. Generate new products acro ss different segments and reduces the business risks and uncertainties (Parnell, 2003, p.91) Loss of cost based advantage Imitation of key features by competitors (Wit & Meyer, 2010, p.343) Low Cost Leadership Ability to take greater advantage of demand and supply factors. Reduction of market risk (John & Harrison, n.d., p.82). Too much focus on cost can lead to deviation from the market and customers. Product aspects like quality and safety may be compromised