Starbucks Implementation, Strategic Controls
Running Head: Implementation, Strategic Controls, and Contingency Plans Implementation, Strategic Controls, and Contingency Plans STR/581 Version 4 Strategic Planning & Implementation Kenneth Kobus July 12, 2011 Starbucks is the worlds leading specialty coffee retailer. The company produces a wide range of beverages as well as various confections and pastries. With over 17,000 stores world wide one would have to wonder why a successful company like this would need to form a strategic plan. In this world there are no guarantees of success for businesses.
A company may have a great product, but if it fails to identify a specific market, or to use a proper marketing plan, it will not be able to successfully reach the consumers. Over the years Starbucks has been successfully able to take simple activity carried out at home to the pinnacle of commercial success. By expertly executing their marketing strategy Starbucks has taking coffee service to an art form. The firm has been able to convince consumers that its stores provide more than just coffee. Starbucks aims to provide a rich experience for customers to indulge in on a recurring basis.The company has turned this consumer experience in to a highly profitable business. The most effective way to implement a successful plan is to use short term objectives.
It’s impossible to see into the future so it is better to strive for goals that can be measured and achieved. John Thompson of Symantec Corporation once quoted, “I am a little old-fashioned—I don’t believe you can manage what you can’t measure,” Thompson has said. “The importance of objectives becomes more important as the company grows in size and scale. Objectives also serve as an indication for the ‘team’ about what you are paying attention to.If employees know you are measuring market growth and customer satisfaction, they will pay attention to those considerations and act based on indicators that you, as leader, emphasize within the company. Objectives help teams and focus on what’s important for the company to succeed” (The Key to Success? Go Figure,” BusinessWeek, July 21, 2003. ) Starbucks has a very innovative research and development program for their new products.
The company is always looking for new ways to make the Starbuck experience more pleasurable for its customers.On November of 2001 the company introduced its new product called the Starbuck’s card. The Starbuck card is like a gift card that provides store value for its customers. The goal of this new card implantation is to reduce the time spent paying for drinks. Since it introduction the Starbucks Card has been very popular with its customers as it provides a better way to enhance customer experience. “Another implementation was to save on the amount of time it took to make drinks in the ice scoops. Engineers at Starbucks notice that baristas had to take two scoops of ice when making venti-size cold rinks.
They then went back and redesigned the ice scoop. When the stores started using the new scoops, it “shaved” off about 14 seconds from the preparation time of the drink” (Arola, Manning 2007). This new implementation was part of the company’s goal of getting the drink to its customers in three minutes or less. Starbucks is always looking for new ways to improve their products and services to their customers. If a customer has a problem or a comment they can turn it into the forum page off of the company’s website.By doing this the company is able to get customer feedback to all of its new ideas and products. Starbucks is competing in an industry where marketing principles has to follow the differentiator strategy or they will lose market share.
The company goal is to create high value for its customers, or the customers will simply find another place to spend their money. Starbucks marketing principles are the basis of the company’s competitive advantage within the coffee industry. Starbucks products are associated with high quality, and the company dedicates itself to producing high quality products.Because of this association with high quality, Starbucks has been able to charge a higher price or premium for its products. As long as the company can protect its reputation for high quality and strong values, it will be able to maintain its premium prices. Functional tactics According to the reading “Functional tactics are the key, routine activities that must be undertaken in each functional area—marketing, finance, production/operations, R;D, and human resource management—to provide the business’s products and services.In a sense, functional tactics translate thought (grand strategy) into action designed to accomplish specific short-term objectives.
Every value chain activity in a company executes functional tactics that support the business’s strategy and help accomplish strategic objectives. ” (Pearce, and Robinson 2011) Starbucks must maintain its high quality strategy. In areas of employment that company must improve its benefits package so as to improve the moral of its employees. The company must not be lured away from McDonalds low price approach to coffee. Starbucks has been facing heavy competition most ecently. Companies like McDonalds are producing coffee on a much cheaper scale than Starbucks. In the past there were few companies in the gourmet coffee business but that is now changing.
In the beginning Starbucks was able to use its marketing prowess to create a favorable image of premium gourmet coffee shop experience. This marketing strategy was what gave Starbucks its major advantage over its competitors. The company also used this marketing strategy to place over 17,000 outlets worldwide and to have each outlet meld into their communities. Action ItemsIn management, an action item is a documented event, task, activity, or action that needs to take place. Action items are discrete units that can be handled by a single person. Action items are very important to Starbucks Strategy. An action item is a documented task that must take place in order to help a company achieve its short-term goals.
Action Items can usually be done by one person. One action Item that has been implemented by Starbucks is the 5 second labor rule. “According to the action item, Baristas are no longer required to pull shots into shot glasses where the quality of the shot can be seen.We are now allowed to pull the directly into the cup. If the timing of the shot is correct, then the customer gets what they get. If the timing of the shot is NOT correct, the cup and the syrups and any other pre-prepped items go into the trash. (Starbucks Forums website) This may seem trivial but if one was to multiply the 5 seconds by the number of shots and stores, it would add to millions of dollars in potential savings for the company.
Another important action items that employees can use is the prioritizing of user experience.Customers do not like waiting in line for long so workers must use the company’s technology and their own training to expedite customer services. Milestones and a deadline The help keep the company on track it is important to have milestones and deadlines. This helps everyone to have a sense of urgency about what needs to be done. Planning for deadlines must not be too time-consuming. If the planning phase is to long, the company will miss it deadlines. Starbucks made a partnership with Green Mountain Coffee in March of 2011.
The company rushed to do this lucrative deal because McDonalds, (one if its main rivals) were also in talks with the Green Mountain. Risk Management. All companies need to have some form of risk management plan in order to mitigate their potential losses. One of the major problems that affected Starbucks was its over expansion. The company was in danger of commoditizing coffee and losing its high quality experience. Starbucks must implement a plan for long term financing especially as it expands into international markets. It must also have a back up plan for its logistics and coffee supply.