Starbcis

1. What functional strategies at Starbucks’ help the company to achieve superior financial performances?

The following strategies have helped Starbucks achieve superior financial performances:

* The company continues to focus on its original product bundle which includes good coffee, quality service and a nice environment to hang around.

* Overall Cost Leadership

* This implies the pursuit of cost reduction in all areas of a firm through tightly controlling, avoiding marginal, less profitable consumers and sacrificing research and development, customer service, advertising and other areas not pertinent to direct manufacturing of the product.

Differentiation

* This implies creation of something unique. This can take on many different forms including but not limited to brand image, technology, features, dealer networks and customer service.

* Starbucks would fit into this strategy of differentiation. The company founder Howard Schultz continues to come up with innovative products to expand the company portfolio.

* Starbucks has established a strong capability in research and development with subjective as well as quantitative goals. Starbucks has conducted research through trial and error within the company stores since they didn’t exactly have a well-established research and development department within the company.

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Market Segmentation

* This implies targeting a particular group, geographic market or segment of a given product line. Starbucks has stayed with the upper-scale of the coffee market, competing on comfort rather than convenience.

* Starbucks has always conducted a detailed demographic research to identify the target market and locations.

* Also, Starbucks has always been successful in adapting to changing demographics of their consumers.

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The strategic alliance they have had with conservation international has allowed them to create a sustainable supply chain of high quality coffee.

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