Formulating business strategy – case study| Starbucks

For entities to succeed in an increasingly competitive business environment, they need a well-formulated strategy that enables the realization of projected goals. According to Porter (2000), strategy entails “the creation of a unique and valuable position, involving different set of activities” (p. 60). Such activities embody the plan that management employs to achieve aspects such as attracting customers, establishing a specific market position, competing effectively and realizing various targeted objectives. This paper evaluates the strategy formulation, strategic planning, strategy evaluation and selection, and strategy implementation aspects of business strategy. These are explained with examples derived from Starbucks.

Definition of Terminologies

To understand the aspects of business strategy, various terminologies employed in the subject are discussed below. The first of these is the mission statement, which refers to a statement that offers a brief description of an entity’s core purpose. The statement provides information about the current business and activities of the entity explaining what the company is and what it does. It could include information on the entity’s services and products, customer needs it addresses and the capabilities (e.g. technological and business) that help the entity meet such needs. Starbucks mission statement, in this respect, is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks Corporation 2010). The mission comprises various principles that the company strive to meet in its everyday activities. Such includes providing quality coffee, showing respect and care to its employees (partners), offering the best possible service to the customers and providing a good return for its shareholders (Starbucks Corporation 2010).

A second terminology is the vision statement. Vision statement informs of an entity’s desired future with indication on how to achieve such a future. It includes aspects such as markets to enter into, the technology and customer focus the entity is desirous of possessing and the management the company is trying to create. Although Starbucks does not expressly state its vision statement, such is derived from its mission statement that expresses the entity’s desire to abide in its outlined principles about its coffee, its employees, its customers, its stores, its neighborhood, its shareholders and the environment (Starbucks Corporation 2010).

Business strategy also involves identification of an entity’s core competencies. Core competencies of an entity are the “collective learning in an organization” especially in coordinating a wide range of production skills and integrating multiple facets of technologies (Prahalad & Hamel 1990, p. 4). Such competencies provide an entity with potential to access various markets; make substantial contribution to customer value; and are adequately unique preventing competitors from imitating them easily (Prahalad & Hamel 1990). In such a way, such competencies become a competitive advantage for the company. In this respect, Starbucks’ main core competency is the quality of their coffee. By having high quality coffee, the company can sell it at premium prices and get customer patronage irrespective of competitors with lowly priced coffee. To support this core competency, Starbucks other core competencies include its committed human resources who are regarded as partners, that help create a unique customer experience in the entity’s stores. Go to part 2 here.

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