Starbucks Coffee Company’s Generic Strategy
Based on Michael Porte’s model, Starbucks Coffee Company’s generic strategy is responsible for its emphasis on specialty coffee products. However, Starbucks uses a combination of intensive growth strategies for grown and expansion. Based on Porter’s model, Starbucks Coffee’s generic strategy, allows the company to compete based on specialty products. Even though Starbucks focus is on market penetration, it also uses its intensive growth strategies in order to support expansion. Starbucks’ Generic Strategy In generic strategy the, the main goal is to differentiate the company from other competitors. Starbucks emphasis is on coffee that can easily differentiates their coffee from any other company. In order for Starbucks to differentiate its products from competitors, the company uses its responsible and sustainable sourcing policy. In the company’s culture the generic strategy is manifested. Competitors like McDonald’s and Dunkin’ Donuts emphasize on low cost, Starbucks emphasize on a warm friendly environment that their customers will enjoy. To ensure differentiation in the long-term the company must continue innovating.
When competitors find ways to stand out, Starbuck’s generic strategy could lose its strength. To address the issue, the company keeps innovating its product mix and supply chain. To satisfy its generic strategy the company innovates its supply chain through a research for the most sustainable and finest ingredients. Based on the generic strategy, Starbucks’ “strategic objective is to innovate products and its supply chain.” Intensive Growth Strategies Market Penetration. Starbucks intensive growth strategy is market penetration. This “strategy supports the firm’s growth by maximizing revenues from existing markets.” As a way to maximize revenues and growth in the company current markets, they apply this strategy “by opening more company-owned stores.” The strategy is also apply for growth “through licensing for merchandise and franchising in some countries.” Market Development.
According to Thompson, “the company uses market development as its secondary intensive growth strategy.” This strategy helps the company’s growth by creating revenues in new markets or even in market segments. In this strategy, Starbucks by expanding its global reach. Product Development. As market development, product development is also use as a secondary intensive growth strategy. This strategy is involve in creating new products to increase revenues. By creating new products, the company continues to grow. Strategic Analysis and Recommendation Applying the genetic strategy is a challenge because Starbucks always has to be innovating. Based on this genetic strategy, if the company wants to continue its growth ahead of their competitors, they must keep improving and innovating. Starbucks lacks significant present in a few regions, the company can use its growth strategy of market development to grow those regions. Also, “growth strategy of product development can be used to offer” the company’s products.