Question No.3. Critique Starbucks overall corporate strategy.
Starbucks main strategy is to expand the store globally. And it is also maintaining some tactics to achieve the main target. But beside this Starbucks are incurring losses for mismatch between their corporate strategies and the customer’s expectations. Those are described below:
* Starbucks is trying to open stores in many states of United States but still eight states in the United States are with no Starbucks stores. Starbucks free cities are - Butte, Montana, and North Dakota. * They believe that the more the outlet the more the sale. Basing on this strategy they are increasing their outlets day by day in their domestic region as well as abroad. Without satisfying the customers need, by increasing the numbers they will not be able to succeed in their mission. * It makes less money on each overseas store because most of them are operated with local partners. * Starbucks’s target customers are the Baby boomers or older generation, it has no differential pricing for the Generation X or younger generation. * Though Starbucks fully control its business in the USA, but it has franchisee outside the USA. Depending on the franchisees’ undermines the strength of Starbucks outside the USA. * Starbucks is about to become a global company. But its spending does not match with its status. Starbucks only spends 1% of its revenue as advertisement; where other companies its size spend at least 10% revenue. Low spending on advertisement hampers Starbuck’s brand building outside the U.S.A. * By aggressive marketing strategy they have created entry barrier for the competitors through “predatory real-estate strategy”. * They have focused on the product concept which myopic attitude in making corporate strategy. * Starbucks pay does not come close to match the work load of their employees that created dissatisfaction among them affecting sterling service and even the...
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