SG7003: Business Simulation with Professional Development

Subject SG7003: Business Simulation with Professional Development

TASK: You are required to prepare a 5-year strategy review to Shareholders for evaluating the business simulation activity of a listed (registered) company of your choice.

INTRODUCTION  

Tigkiropoulos, 2009, described business simulation as a tool used to guide business decisions.  Normally, a simulation encompasses using digital tools to run mock operations to evaluate current or planned segments of operations. It allows stakeholders to get an idea of how efficient they are, see what changes are necessary, and evaluate how they are doing within the industry.

This paper will focus on a strategy analysis of Starbucks; it will look at its core operations, its mission, vision, values and management strategies. In addition, through competitive analysis, it will give a snap shot of the industry in which it operates. All operations must evaluate their strategy regularly and match themselves up against competition so that stakeholders are kept informed.  This paper will evaluate the internal and external forces that affect decisions. The Porters Five Forces, according to Anastasiu, 2020, identifies and evaluates external forces that affect the industry.  You will see a summary of Starbucks market position, what share of the market is held by Starbucks and the strength of its holdings. A review of the operations marketing environment will be done using the SWOT analysis. According to Kotler et al, 2015, the SWOT analysis identifies a company’s Strengths, Weakness, Opportunities and Threats. Lastly, this paper will evaluate operational results and make a few recommendations for its future operations and strategy.

COMPANY PROFILE    

Starbucks, the household name in the coffee business throughout the world, it was established in 1971 by three educators in Seattle Washington that loved coffee. Starbucks is an American company and the largest coffeehouse chain in the world (Statista.com). The name Starbucks was a spin off a character’s name from the story of Moby Dick and got their inspiration from a Dutch entrepreneur Alfred Peet for their business model.  In 1980, when they had just four successful stores in Seattle, one of the original three founders left to pursue other things. The following year a sales person, Howard Schultz, who had been watching the business because he saw the great potential they had, visited and quickly pursued a career with the company, and he within the next few years, became the visionary that is responsible for taking the company from the average successful neighborhood coffee shop to the world’s largest and most successful coffeehouse chain to date (Starbucks.com). Today Starbucks offers uniquely crafted beverages available also in grocery stores, many coffee blends, non-dairy beverages, coffee beans, ground coffee, deli style food items, merchandise, a rewards program and more. With representation in possibly every continent, they can also boast about their own brands such as Ethos, Seattle’s Best Coffee, Teavana and others.  According to Forbes.com, 2022, Starbucks has an inter-brand revenue of  over $13b.

VISION

To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow” (Starbucks.com). This statement embodies the vision of Howard Schultz the visionary behind the company’s growth.  The growth component has certainly materialized as was as their uncompromising principles, and the desire to be the premier purveyor of the world’s finest coffee, while still proving to be very difficult, it is right up there, however, their specialty coffees keep them a few notches ahead of the rest.

 

MISSION

“To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks.com). The company says a lot in this statement that speaks directly to its strategy of reaching people and making them all family.

They have placed the human element as the major focus of their business by building their store culture around its people, whether they are customers or staff. Schutlz, the CEO, in a farewell statement said that “to accelerate delivery of modernized and elevated experiences for our green apron partners and our customers” is the renewed focus of the business (Starbucks.com).

The design of the stores, aim to make people feel at home, communicating on a first name basis solidifies that special touch.

VALUES

As stated on their website the company again focuses on people, each line of their values draws your attention to their mission and vision whose aim is to maintain a family of stores, employees and customers.

  • “With our partners, our coffee and our customers at our core, we live these values:”
  • “Creating a culture of warmth and belonging, where everyone is welcome.”
  • “Acting with courage, challenging the status quo and finding new ways to grow our company and each other.”
  • “Being present, connecting with transparency, dignity and respect.”
  • “Delivering our very best in all we do, holding ourselves accountable for results.”
  • “We are performance driven, through the lens of humanity.”

(starbucks.com)

STRATEGY

The strategy of Starbucks in principle has not changed since it was bought by Howard Schultz in 1987.  They focus on unmatched innovation, high quality and unique products, consistent growth and an undeniable unique people experience. Their core strategies are:

  • Diversification
  • Differentiation
  • Acquisitions and Expansion.

These core areas are the key to their success, and give them the huge competitive advantage in the industry. We see the evidence of these strategies in their product offering, their store design, their entrance into key emerging markets and their purchase of premium brands like Teavana, Bay Breads, Evolution Fresh and more (Forbes.com 2020).