Starbucks

This document defines specific concepts relating to corporate and competitive strategies. It then identifies, compares, and contrasts Van Houtte’s and Starbucks’ core competencies, as well as their corporate and competitive strategies. It also evaluates specific markets that Starbucks may be vulnerable from Van Houtte’s competition. The paper also suggests specific strategies which could prove to be useful for Van Houtte to weaken Starbucks’ competitive advantages in the marketplace.

This paragraph defines and explains different aspects of a core competency. A firm’s core competency as stated by Prahalad and Hamel, is “the collective learning in the organization, especially how to coordinate diverse productions skills and integrate multiple streams of technology” (CGE notes). There are three basic tests to identify a firm’s core competencies. First, does the firm’s core competency provide potential access to a variety of markets? Second, does the firm’s core competency make a significant contribution to the perceived customer benefits of the end product? Third, does the firm’s core competency remain difficult for competitors to imitate in the long-term? After a firm has identified its core competencies, then it identifies its corporate strategy.

A corporate strategy identifies what the firms strengths are, based on its core competencies and what contributes to the business achieving its goals. By doing so, the firm is identifying product and geographic markets in which it should operate. Firm’s can focus their corporate strategy through diversification of the company and products. There are three types of diversification. First, there is horizontal diversification, a firm breaking into related products and geographic markets. Second, there is Vertical diversification consisting of either forward movement towards the customer, or backward movement, where a firm moves away from the customer. And finally, the third type of diversification is unrelated to the...