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Starbucks Corporate Strategy

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Starbucks Corporate Strategy

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  • July 10, 2011
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Starbucks Corporate Strategy

Corporate Strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business.[1] In the case of Starbucks the corporate strategy they have implemented is unique to their industry which has allowed them to differentiate from their competitors and is summarized best by Howard Schultz CEO of Starbucks, “We’re in the people business serving coffee,[2]” high quality specialty coffee and related products in a European café environment. It is clear Starbucks is in a growth strategy utilizing three key techniques that support its Mission, “to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time”[3].

Vertical Integration

Tying in with Starbucks’ Mission, the companies vertical integration with its supply chain from roasting its own coffee in one of two of its plants to its involvement with developing and fostering strategic partnerships with local coffee farmers may be the most important growth strategy the company focuses on. Quality and corporate social responsibility are the pillars of Starbucks; vertical integration is the key component to insuring both of these fundamental characteristics of Starbucks are managed.

Diversification

Starbucks has created related diversification into wholesale distribution by developing coffee based branded products with Pepsi-Cola and Dreyer’s Inc. that can be sold in grocery stores. The company is also expanding into non-related industries by creating an entertainment division focusing on the music and movie industry. As Starbucks expands diversification will become as important as its vertical integration as it moves through the product lifecycle in the coffee industry. (See Appendix A)

Horizontal Integration

Starbucks has expanded with horizontal integration by acquiring Seattle’s Best Coffee and Torreazione Italia Coffee. With the...