Technology Helps Starbucks Find New Ways to Compete
Technology Helps Starbucks Find New Ways to Compete
1. Analyze Starbucks using the competitive forces and value chain models.
The environment in which the specialty coffee industry had to compete during the 2008 was made up of cheaper fast food chain and global economic downturn. Compare with McDonald’s and Dunkin’ Donuts, Starbucks offers a unique experience: high-end specialty coffees and beverages, friendly and knowledgeable servers, and customer-friendly coffee shops. However more and more customers complain that the Starbucks lost their hip and local feel. Under this circumstance, the new entrants are much more easy to enter the specialty coffee area, because Starbucks would generally lost their specialty in coffee industry, and coffee industry does not put a high premium on economies of scale. The primary substitute products posing a potential threat to specialty coffee were the caffeinated soft drinks produced by Pepsi and Coca-Cola. Competitors like Pepsi and Coca-Cola offered beverages, which had the caffeine inherent in specialty coffee, at significantly lower prices. (Quelch, 2006) Since the taste of the customers never discount, Starbuck need to refine their product and service quality. Moreover, with the development of the technology, Starbuck customers would require intelligent IT support during their consumption. Thus the suppliers of Starbucks has branched out to app suppliers and IT industry suppliers.
In order to deal with the profits plunge in 2008, Starbucks decide to overhaul its business using in store technology, aggressive product differentiation strategy and lean their management and working processions. By using the in store technology, Starbucks district managers can do most of their work sitting at a table in one of the stores they oversee. To enhance human resource, Starbucks created a 10-person “lean team” whose job is to travel the country visiting franchises and coaching them in lean techniques made famous by automaker
1. Analyze Starbucks using the competitive forces and value chain models.
The environment in which the specialty coffee industry had to compete during the 2008 was made up of cheaper fast food chain and global economic downturn. Compare with McDonald’s and Dunkin’ Donuts, Starbucks offers a unique experience: high-end specialty coffees and beverages, friendly and knowledgeable servers, and customer-friendly coffee shops. However more and more customers complain that the Starbucks lost their hip and local feel. Under this circumstance, the new entrants are much more easy to enter the specialty coffee area, because Starbucks would generally lost their specialty in coffee industry, and coffee industry does not put a high premium on economies of scale. The primary substitute products posing a potential threat to specialty coffee were the caffeinated soft drinks produced by Pepsi and Coca-Cola. Competitors like Pepsi and Coca-Cola offered beverages, which had the caffeine inherent in specialty coffee, at significantly lower prices. (Quelch, 2006) Since the taste of the customers never discount, Starbuck need to refine their product and service quality. Moreover, with the development of the technology, Starbuck customers would require intelligent IT support during their consumption. Thus the suppliers of Starbucks has branched out to app suppliers and IT industry suppliers.
In order to deal with the profits plunge in 2008, Starbucks decide to overhaul its business using in store technology, aggressive product differentiation strategy and lean their management and working processions. By using the in store technology, Starbucks district managers can do most of their work sitting at a table in one of the stores they oversee. To enhance human resource, Starbucks created a 10-person “lean team” whose job is to travel the country visiting franchises and coaching them in lean techniques made famous by automaker