Corporate Strategy Report 2 Sample

Corporate Strategy Report 2

Assignment Details

Format

1. Title Page.

2. Introduction.

3. Background of chosen firm (one firm from the list of six firms in the Assessment 1 PDF file).

4. Core Competencies (of chosen firm).

5. Resource Capabilities (of chosen firm).

6. Outcomes (of chosen firm).

7. Rival firm (briefly discuss the background, core competencies, resource capabilities, outcomes of rival firm under this heading).

8. Comparison of chosen firm with rival firm (to determine which of the two firms is more successful and why).

9. Conclusion.

10. Bibliography.

Choose ONE business from the companies listed below. All are clear leaders in their industries, although all have strong rivals.

Starbucks

Analyse the business that you have selected, identifying the company’s core competencies, resource capabilities and outcomes. Evaluate those characteristics against of ONE of its competitors.

NOTE: Students will need to demonstrate an in-depth knowledge and practical application of at least two key business theories, concepts and models addressed during this course.

NOTE: This assessment must be in an essay format and 2,000 words (approx.) in length.

Solution

Introduction

Corporate strategies are concerned with the long-term plan which sets the vision and mission of an organization. It manages resources, risk and takes care of returns across organizations (Prodius et al. 2020). On the other hand, business level strategies are concerned with focusing on innovation and uniqueness, where organizations can provide innovative product and service to customers. Hence, such strategies help organization to gain competitive advantage over other competitors in market (Wadstrom 2019). This assessment will select Starbucks for showing its core competencies, resources and capabilities along with its associated outcome. Apart from that, the assessment will also compare these elements of Starbucks with its rival company Dunkin’ Donuts.

Background of Starbucks

Starbucks corporations is an American multinational company of coffee and roastery reserves. The organization has been considered as the largest coffeehouse chain in the world having it’s heading in Washington. It was established in the year 1971 and now is having total 35711 stores across 80 countries (Starbucks 2023). The organization offers whole-bean coffee, espresso, hot and cold drinks, instant coffee, caffe latte, juices, Frappuccino beverages, full and loose-leaf teas, snacks and pastries. Total revenue of this organization is US$32.25 billion as per data of 2022 fiscal year. After USA, China is the largest global market for this organization leading to huge sales (Statista 2023). Moreover, as per data from 2022, the organization has accounted for 75% of its sales on cold coffee. The average sales of this organization show 600 cups of coffee a day from each store, which indicates the popularity of the coffee among the customers.
Core Competencies of Starbucks

Cost Leadership

Cost leaderships indicates setting low-cost strategies to increase sales and gain competitive advantage over other competitors. In case of Starbucks, the organization use competitive pricing strategies. The price of the coffee is higher than fast food companies but lower than other coffee suppliers. The organization focuses on reducing overall cost of production by source coffee beans from low-cost countries like Brazil, Tanzania, Mexico, Tanzania, Columbia and Kenya (Musonera 2021). Moreover, central storage facilities at all the stores also reduces the cost of manufacturing. Hence, such facilities help the organization to maintain a competition price in market.

Differentiation

Differentiation strategy focuses on gaining competitive advantage through offering unique products and services as compared with other competitors in market. In case of Starbucks, the organization gains competitive advantage most through the quality and flavour of their coffee. The coffee beans supplied by the suppliers are 99% ethical verified and it provides an authentic taste to the customers (Chuang 2019) MBA Assignment expert Moreover, the instant service at the stores attracts customers towards these stores overall other coffee chains. The organization do not keep customers sitting over 30 minutes. Apart from that, the organization provides 87,000 different drink combinations, which offers a wide variety of options to the customers over other coffee chains (Gao, Zhao and Chen 2021).

Focus

Focus strategic suggests to narrow down the focus on a niche market to better serve then with customized offers. In case of Starbucks, the organization focuses on Professionals, students as well as employees. In focus strategy, the organization focuses on differentiation focus, where offers authentic taste of coffee along with wide variety of combinations of drinks (Gao, Zhao and Chen 2021). Such quality along with instant services provided at each store keeps the customers happy and add value to them. Hence, differentiation focus helps the organization to gain competitive advantage over other competitor coffee chains.

Figure 1: Core Competency Starbucks
(Source: Created by Author)

 
Resource and Capabilities of Starbucks

VRIO framework provides the best way of assessing the unique resources and capabilities, which can help organizations to gain competitive advantage have economic preferences (Buzatu et al. 2019). Below table shows VRIO framework of Starbucks.

Table 1: VRIO of Starbucks
(Source: Created by Author)

From the above VRIO framework, it can be seen that product quality is a special feature of the organization, which can help organization in gaining contemporary competitive advantage. Starbucks is known for its speciality coffee with wide variety of combinations in drinks. A strong global presence over 80 countries also helps organizations to increase its target customers and sales leading to competitive advantage. Among the resources and capabilities, customer service, technology and suppliers of the organization help the organization to gain sustainable competitive advantage. The suppliers of the organization have to meet the standard set the organization to provide authentic 99% verified coffee beans (Yu et al. 2021). Hence, such a unique source of suppliers facilitates the organization to provide authentic taste in their coffee leading to sustainable competitive advantage over other coffee chains. Moreover, instant customer service and cosy environment at the stores of Starbucks add values to the quality time of the customers. Hence, such capabilities also help organization to gain sustainable competitive advantage. Use of advanced technology like AI and Machine learnings help the organization to provide personalized offerings to the customers on the mobile app based on their previous orders and preferences (Nair et al. 2021). Hence, this capability attracts the customers to purchase such preferred products offered to them.

Outcome of Starbucks

With strong brand image, Starbucks have become able to reach across 80 countries successfully, while talking about the global revenue, the organization has reached 26.58 billion U.S. dollars in 2022, which shows an increase in revenue as compared to last year. With huge sales and profit with wide variety of coffee and speciality coffee, the organization has reported a net income of 3.28 billion U.S. dollars during the fiscal year of 2022 (Statista 2022). As of 2022, the organization has been ranked as 120th on Fortune 500. As per the statistics of 2022, the organization dominates the industry in USA with 37% market share (Statista 2022).

Figure 2: Global Revenue of Starbucks
Source: (Statista 2022)

Rival Firm (Dunkin’ Donuts)

Background of Dunkin’ Donuts

Dunkin’ Donuts was established in the year 1950, and at present it serves across 42 countries with more than 13000 employees. The company is also considered as the leader in Quick Service Restaurants (QSRs) franchisors (Dunkin Donuts 2023). The main products are Donuts, Sandwiches, hot and cold beverages. According to Brown (2019), Dunkin’ Donuts was successful in opening more than 300 stores in the United States, thereby maintaining 26% market share in competition to Starbucks. While considering the fact presented by Statista (2022), it can be found that Dunkin’ Donuts is the 2nd highest leader in the United States in terms of market share.

Figure 3: Market Share of Dunkin’ Donuts
(Source: Statista 2022)

Core Competencies of Dunkin’ Donuts

Dunkin’ Donuts is extremely focused in customer loyalty as it always identifies customer behaviour through marketing cloud. Moreover, it uses behaviour analysis mapping in order to identify purchase pattern of geographically differentiated consumers (Kerti, Bintarti and Wahyuningsih 2023). Furthermore, technologically Dunkin’ Donuts tries to accumulate customer data through “mobile drives-thru lane”. Also, it uses the NextGen and OTG platforms in ordering and delivering products. Smooth and user-friendly ordering system has also helped Dunkin’ Donuts to create a unique satisfaction among consumers. Finally, marketing strategy, brand management, customer service, food preparation, product innovation and product distribution are also some core competence factors, helping Dunkin’ Donuts to stay ahead in market competition (Yakin and Hutauruk 2023).

Considering the pricing pattern of Dunkin’ Donuts, it can be said that it offers the lowest price among its competitors (Vachon 2022).

Figure 4: Dunkin’ Donuts Price of Products
(Source: Vachon 2022)
 

Figure 5: Core Competency Dunkin’ Donuts
(Source: Created by Author)
 

Resource and Capabilities of Dunkin’ Donuts

According to Buzatu et al. (2019), VRIO framework is the best suitable for analysing a company’s existing capabilities and resources. It helps in segregating the resources in six categories.

Table 2: VRIO Framework of Dunkin’ Donuts
(Source: Created by Author)

Considering the above VRIO matrix, it can be identified that Dunkin’ Donuts is actively enforcing all its resources in a single driving line, which is towards long term sustainability. The organization has able to maintain its price lower than its competitors, yet through the use of intuitive technology platform and data analytics, it has able to retain most of its consumers and even differentiate product categories (Yakin and Hutauruk 2023).

Outcome of Dunkin’ Donuts

Reports derived from Smith (2023) indicate that Dunkin’ Donuts annual revenue had a steady growth from year 2007 to 2018. In the year 2021, it achieved the “brand of the year” title in Harris Poll, before which it already sold more than 2 billion coffee cups in globally, which accounts to 60 count of cups in 1 second (Gunter 2022).

Figure 6: Dunkin Donuts Revenue Growth Graph
(Source: Smith 2023)

Comparison of Starbucks with Dunkin’ Donuts

Table 3: Comparison of Starbucks and Dunkin Donuts
(Source: Created by Author)

While comparing Starbucks and Dunkin Donuts as per the above table, it can be seen that Starbucks has been established as a more premium brand than Dunkin Donuts. Starbucks has a more global reach with 80 countries as compared to Dunkin Donuts. Dunkin Donuts offers its products in a much low price as compared to Starbuck, but the later company offers more customer and speciality coffee that the previous one. The market share of Starbucks is also quite high with 37% in USA market as compared with market of Dunkin Donuts.

Conclusion

While concluding the study, it can be said that Starbuck is reputed for its premium branding and wide variety of drinks combinations. Unique suppliers are the great source of competitive advantage for this company, where they provide authentic and 99% verified coffee beans. On the hand, Dunkin Donuts is also famous for its healthy options of snacks and coffee. However, as compared to Starbucks, Dunkin Donuts is having less variety of speciality coffee with less market share.

Bibliography

Brown, N. 2019. Nearly Four of Every Five US Coffee Shops are Now Starbucks, Dunkin’ or JAB Brands. [online] Daily Coffee News by Roast Magazine. Available at: https://dailycoffeenews.com/2019/10/25/nearly-four-of-every-five-us-coffee-shops-are-now-starbucks-dunkin-or-jab-brands/#:~:text=Dunkin.

Buzatu, A.I., Pleșea, D.A., Iulian, C. and Valentin, W.P., 2019. Managing organizations for sustainable business development: Interaction between VRIO framework and Mckinsey 7s framework. New trends in sustainable business and consumption, pp.243-251.

Chuang, H.J., 2019. Starbucks in the World. HOLISTICA–Journal of Business and Public Administration, 10(3), pp.99-110.
Dunkin Donuts. 2023. Dunkin’® | America’s Favorite Coffee, Espresso and Donuts. [online] www.dunkindonuts.com. Available at: https://www.dunkindonuts.com/en.

Gao, J., Zhao, J. and Chen, J., 2021, June. Starbucks’ Customer Brand Strategy. In 2021 International Conference on Enterprise Management and Economic Development (ICEMED 2021) (pp. 231-238). Atlantis Press.

Gunter, M. 2022. 8 Dunkin’ Donuts Sales Statistics & Facts to Know in 2023! [online] Coffee Affection. Available at: https://coffeeaffection.com/dunkin-donuts-sales-statistics/.

Kerti, S.B., Bintarti, S. and Wahyuningsih, S., 2023. The moderation role of sales promotion on perspected value and price on repurchase intention by mediation of dunkin donat customer satisfaction. Journal of Management Science (JMAS), 6(3), pp.390-398.

Musonera, E., 2021. Strategic marketing case analysis: Starbucks. Journal of Business and Social Science Review, 2(11), pp.12-22.

Nair, R.K., Sinha, R., Crasto, S.G., Kian, K.W., Kee, D.M.H., Abdullah, S.A.B., Zaidi, S.N.N., En, T.S., Jain, A.K., Valecha, P.M. and Ganatra, V., 2021. The effect of Starbucks marketing campaigns on consumer buying behaviour. Asia Pacific Journal of Management and Education (APJME), 4(1), pp.72-81.

Prodius, O., Nechyporuk, L., Stoliar, O., Ilyina, A. and Stoyanov, P., 2020. International Corporate Strategies and Entrepreneurial Paradigms Within the Framework of Global Business Integration. Academy of Entrepreneurship Journal, 26(4), pp.1-6.

Smith, C. 2023. Dunkin Donuts Statistics and Facts (2023). [online] DMR. Available at: https://expandedramblings.com/index.php/dunkin-donuts-statistics/.
Starbucks. 2023. Our Company. [online] Starbucks Coffee Company. Available at: https://www.starbucks.com/about-us/.

Statista. 2022. Market share of major U.S. coffee chains | Statista. [online] Statista. Available at: https://www.statista.com/statistics/250166/market-share-of-major-us-coffee-shops/.

Statista. 2022. Net income of Starbucks from 2007 to 2022 | Statista. [online] Statista. Available at: https://www.statista.com/statistics/219502/starbucks-net-income/.

Statista. 2023. Topic: Starbucks. [online] www.statista.com. Available at: https://www.statista.com/topics/1246/starbucks/.
Vachon, P. 2022. Here’s How Much Starbucks Costs Versus Dunkin or Caribou Coffee. [online] CNET. Available at: https://www.cnet.com/home/kitchen-and-household/how-much-more-expensive-is-starbucks-than-dunkin/.

Wadström, P., 2019. Aligning corporate and business strategy: managing the balance. Journal of Business Strategy, 40(4), pp.44-52.

Yakin, R.A. and Hutauruk, B.M., 2023. The influence of brand image, location and price on purchasing decisions of Dunkin'Donuts products. Journal of Management Science (JMAS), 6(3), pp.457-461.

Yu, H., Li, S., Li, G. and Wang, D., 2021. How to Maximize Business Opportunities-Take Starbucks, for Example. Learning & Education, 10(2), pp.132-133.