Strategic Management in Starbucks and Sony - Assignment Example

? Strategic Management and Leadership Answer Starbucks Measures of Success The strategic success of Starbucks in the global market for coffee counts on the enhancement and development of experience build up by the concern relating to its large consumer base. Starbucks tend to operate as the market leader in the business category of Gourmet Coffee in terms of striving to create and sustain business excellence in the production and servicing of quality coffee products through its different outlets. The company tends to operate on a business model working to device a product mix of beverages and food products and also of pure coffee food products. Product mix of the company is essentially constituted of a larger percentage of beverage products followed by food items and also other exclusive coffee products. The company also exclusively works to sell equipments and accessories relating to the production of coffee thereby diversifying on its product mix. Moreover the company management works to administer the operation of the stores on their own rather than depending on franchisees. Success for Starbucks can also be measured by its market size and growth rate as the coffee brands has developed itself and become a global brands. Starbuck presently holds 30% of market share second to Costa Coffee in the UK market and market share of 74330.7% (Neate, 2012). Sales of Starbucks coffee generated 26.5million in 2012 and continued to introduce variants of different type and thus earn profits and increase market share (Restaurants Brands, 2012, p. 8) Starbucks also focuses on enhancement of market share and penetration of larger markets through focusing on conducting sales through other co-branded outlets. Similarly the company also focused on reaching to target consumer bases like youths and children in the form of conducting sales through use of kiosks. The company also centres kiosks in socialising centres like airports and universities and also focuses on the creation of promotional offers to attract the interests of middle and low income population groups (Nykiel, 2007, p.212-213). Starbucks tends to market its products and services to the larger target market taking resort to a differentiated marketing strategy than that taken by other competing firms in the same industry. The marketing strategy of the firm greatly depends on activities like referrals in the form of word-of-mouth and also through the gaining in of support by other partnership companies and alliances in the industry. The company markets its message to the customers through the use of electronic mails rendered in by the people in their visits to the different stores. Further the company also works through the formation of strategic business and promotional alliances with other firms to gain on in distribution and marketing efforts (Larson, 2009, p.3-6). Another secret for the success of Starbucks in the global market for specialised coffee products counts on its enhanced social media marketing efforts. The social media networking activities of the company helps in gaining a large number of followers both in Facebook and Twitter where these people tend to post a large number of messages about their experiences on Starbucks’ products and services. The company through the use of social networking sites focuses on gaining a large number of potential feedbacks and recommendations. Through the use of such open communication networks the company tends to enhance its relationship with the consumers while operating in the global market. Similarly the company also encourages sharing videos and experiences on the web thereby focusing on to develop an emotional relationship with its target consumer base. Moreover the company through the use of different social networking sites focuses on empowering the consumers to render potential decisions about business, service and product development categories. These ideas being incorporated in its operational and service dimensions thereby create a sense of belongingness among the consumers relating to the company’s services and operations. Through the above strategies Starbucks tends to increasingly share and develop a potential position in the global industry for gourmet coffee products (Noff, 2010). Starbucks case of success in international expansion can also be viewed from the dimensions of varying international cultures. The company while tending to expand its operations in Japan had strongly focused on the formation of joint ventures with other existing forms operating in the region. However the same firm when focusing over to conduct expansion operations in a European territory like United Kingdom focused on the strategy of countering acquisitions of other small firms operating in the region. Again the case of expansion of Starbucks to another European region like France reflects how the company tends to understand the change in flavours and tastes of the young French population in comparison to the elder masses. The case reflects that Starbucks came to observe that the young people in France tend to gain an interest in the Western or American culture of savouring coffee than the traditional tastes pertaining to the French region. Starbucks international expansion programs in the light of market saturation in its host country can be thus evaluated in terms of its strategies to form joint ventures thereby tending to gain support of the existing business in the new culture set. Through joint venture or partnership gained with existing businesses in the new region, Starbucks tends to gain the support to increasingly market its products in the new cultural setting. The company keeping in focus the different cultural dimensions in which it tends to set up its business also works in aptly standardising or changing the product mix to match the cultures and tastes of the particular region. This process was practiced by the company relating to the French region where the concern was found to formulate snacks and other food products focusing on meeting French tastes along with other recipes meeting the flavours of the American people. This product mix of the company further assisted Starbucks in gaining the right potential to operate like a market leader in the category of specialised and gourmet coffee products (Thomson and Baden-Fuller, 2010, p.338-339). Value Chain Analysis of Starbucks The value chain network analysis of a company focuses on evaluating the factors relating to both the internal and external environment contributing to the generation of the effective product or service. The total set of activities of the organisation are divided into Primary and Support type where support functions pertaining to the alignment of human resources, technology and sourcing functions helps the concern in its production, service providing and also in its marketing and distribution functions (Johnson, Scholes and Whittington, 2008, p.10-11). The diagram for a general value chain network of an organisation can be reflected as follows. Figure 1 (Johnson, Scholes and Whittington, 2008, p.10) The value chain analysis of Starbucks to be conducted would tend to reflect both the internal and external parameters of the company in how it tends to add value to the quality of products and the different service offerings rendered to its target customer groups based along different regions. The company is found to operate in a vertically integrated fashion such that the different operational parameters relating to sourcing, purchasing, blending and preparation and finally servicing and providing the customers with the best quality of coffee products is countered in a highly integrated fashion. Sourcing team of Starbucks tends to source whole coffee beans from high quality coffee plantations spread around the world. After sourcing and purchasing the coffee beans the operational team at Starbuck focuses on roasting the same in different temperatures to help form the different types of coffee blends as would be required by the company to formulate the different types of coffee products. The value creation process is practiced by Starbucks in a centralised or integrated fashion in each of the different facets of its operational conducts right from sourcing the right coffee bean from its suppliers to distributing the same in an innovated and effective fashion to the customers. Value addition is rendered in terms of packaging the coffee products in the right manner and also in terms of serving the coffee drinks along with other beverage and food products to its consumers from the different outlets. Furthermore the company also focuses on product diversification and development programs to help render an innovative touch to the course of offerings rendered to the customers. Thus internally the company through centralised decision making functions and creating internal policies aimed at expansion of store outlets focuses on addressing the needs of its consumer bases. Moreover the company also works in designing policies to help render the coffee products to the consumers at highly affordable rates thereby consciously penetrating larger sections of the global market sphere (Pahl, 2009, p.18-20). The management of Starbucks also focuses on the creation and enhancement of value pertaining to the external environment such that it works in the development and sustainment of relationship with its supply chain outlets and other stakeholders. Starbucks continuously works to look after the welfare of the people working in its different supply chain units thereby creating long-term relationships of trust and emotions with its supply chain networks. Similarly the company also works in protecting the rights and interests of the farmers working in the different plantations producing the right quality of coffee beans. Again the company also actively differentiates while tending to service the customer base through not only providing the right quality of coffee and service but also in endeavouring to enrich the experiences. The company tends to create the different store outlets to help the customers gain the needed warmth and thereby enjoy the socialisation activities while consuming the different drinks and foods served. Continuously adding value to each of the different parameters outlined above contributes in generation of success for Starbucks in the international market for coffee products (Lamb et al, 2006, p.11). The diagrammatic representation of the value chain analysis of Starbucks as discussed above is rendered in the following part. Figure 2 (Grimm, Lee and Smith, 2005, p.218) The diagram rendered reflects how the value chain activities of Starbucks tends to gain a competitive edge of one its nearest competitors, Second Cup in the international coffee products market. Innovation at Starbucks The strategy related to innovation practiced by the organisations relates either to the parameter of product or process. Innovation related to product counts on the developmental strategies taken to make the same apt for the current market while innovation related to process focuses on designing or modifying the service curve to reduce costs pertaining to distribution and generate larger market acceptance. Innovation strategy related to products or processes can be reflected as under. Figure 3 (Johnson, Scholes and Whittington, 2008, p.329) In addition to the parameter of value addition the case of Starbucks also reflects a significant case of innovation such that the company tends to operate to produce and render a large diversified base of different products to help entice the customers pertaining to various regions. The product development strategy countered by Starbucks has helped the company to emerge out as only a brand in the coffee products industry to that encompassing a large number of drinks and food products. This strategy contributes in attracting and sustaining a large pool of consumers to its different stores (Davila, Epstein and Shelton, 2012; Chell, 2001, p.244-245). The parameter of innovation at Starbucks can also be observed from the point that the company operates to generate an extra edge than only providing the customers with a refreshing drink of coffee. The management of the company focuses on to create the store outlets as a place for large scale socialisation activities in terms of providing internet support and other musical programs for helping the customers to relax upon (Ferrell and Hartline, 2010, p.2; Kumar and Phrommathed, 2005, p.12). Moreover the endeavour of the company to create differentiated product and service offerings by diversifying on its product portfolio depending on different culture sets is also found to be an approach of subtle innovation on the part of the company (Holt and Cameron, 2010, p.111-112; Daft and Willmott, 2010, p.49). Starbucks renders innovation to the process parameters of rendering services to thereby differentiate its offerings from its close competitors in the market for coffee products in the world. Answer 2 Dominant Leadership and Failure of Organisations Business organisations are governed and directed by business leaders that tend to posses varying degrees and qualities of leadership such as charismatic, empathetic and even can be of a dominant type. Dominancy in leadership relates to activities such as threatening, abusing or reflecting short tempered attitudes to the subordinates and staffs in the concern. Such type of attitudes portrayed in by the leaders tend to affect the performances, attitudes and interests of the people in the concern to act in a proactive fashion to handle emerging issues relating to operations, marketing or pertaining to any other macro or micro environmental sectors. This fact thereby leads the business organisation start countering losses or facing considerable difficulties to significantly gain over its competitors eventually culminating to a total failure (Woods and West, 2010, p.498). Leaders tending to be dominant in their approach in focusing on to meet business objectives fail to generate the right type of vision and motivation required for the people to actively perform in helping in achieving the objectives highlighted. Creating a sense of fear in the minds of the people through coercive practices taken by the dominant leader tends to disturb the fabric of trust and thereby desalinates the people from their goals or pursuits in fulfilling organisational objectives. Thus observed eventually such practices in the organisational context makes the people and the organisation stand on two different platforms creating a rift of interests thereby culminating to failure (Myatt, 2012). Again it is found that leadership styles pertaining to an autocratic or authoritative style tend to keep the control and decision making functions in one’s hand and thereby increasingly tend to dominate over the actions of the subordinate staffs. These people are also characterised as such that tend to reflect lower amount of expertise and skills and thereby endeavour to fulfil the objectives through incorporating threats or coercion. Thus in the absence of the business leader the people are found to loosen up their productivity and work in the concern thereby amounting to business losses (Hardman, 2009, p.156). The authoritarian or dominant type of business leader tends to thwart up the communication process in the organisational setting such that the people are made to feel a lack of being effectively empowered in assisting in the decision making activities. Owing to the above practice the people tend to reflect considerable amount of belongingness for the organisation and thus take less interest in accomplishing the business objectives taken leading to organisational failure (Rodriques, 1992, p.183). Case of Research in Motion The case of Research in Motion reflects an event of faltering leadership style relating to the dominant or authoritarian leadership approaches of two joint Chief Executive Officer’s of the company like Mike Lazaridis and his partner Jim Balsillie. These two Chief Executive Officers’ of the company are held to be the sole responsible for destroying the effective brand image of its Blackberry phone in the cellular market. The two people owing to their lack of visionary approach and faulty attitudes in endeavouring to conceal their mistakes made the company fell prey to the growing market share of iPhones and iTabs. The faulty leadership styles of these two business leaders led to a huge and drastic fall in the market shares for the company. Further on the faulty leadership style of the two leaders also contributed to the loss of a significant amount of market value for the concern in about $70 billion (Tobak, 2012). It is further observed that their lack of visionary approach felt short in competing with the launch of iTabs in the digital market through the production and late marketing efforts of the PlayBook Tablet. The product was firstly found to lack essential features relating to sending of emails and messenger services to thereby compete with Apple’s iTabs. Thus stocks of the company were found to be pushed down by 60 percent in a span of 6 months time. Eventually the dominant leadership approach gained further evidence in the fact that the two leaders retrenched around 2000 people owing to such crash in the company’s market position. The two leaders reflected a dominating leadership approach in their functioning such that they did not feel like communicating with the people relating to such emerging problems or decisions they ought to take pertaining to retrenchment to reduce business costs (Tobak, 2011). Case of Sony The case of Sony reflects another example of a dominant leadership style where again the Chief Executive Officer of the company, Sir Howard Stringer is found to be solely responsible for the drastic loss in market shares in the global market. Under the leadership style of Stringer the company fell prey to the deceitful actions of hackers such that a large amount of consumer data were stolen from the company’s Play Station department leading to a huge fall in its global market shares. The Chief Executive Officer fell short of notice of such misconducts leading to loss in consumer and investor trust. Further visionary shortcomings of the dominant business leader of Sony was also evident relating to the business of high definition television platforms and mobile products where other companies had not only taken lead but also had cornered Sony drastically. This decline in the market shares of Sony’s technology products owing to the lack of visionary approach of its Chief Executive Officer and lack of internal communication thereby led to a huge decline in the profit and revenue structure of the company. Thus the once profiting company plummeted down to face considerable revenue and market share losses (Reisinger, 2012; The Economist, 2011). Potential Suggestions Companies to effectively counter the rise of dominant leadership styles need to change in the vision and mission guidelines such that the same tends to render considerable importance to the parameters of ethics, transparency in business communication and also in empowering individuals to become a part in the decision making process. Moreover the strategy to move towards designing a flatter organisation would also tend to encourage the growth of collaboration and team work in the concern such that the same contributes in jointly developing individual skills and expertise in meeting goals (Koestenbaum, 2002, p.182). Business leaders like the ones identified above fall in the second category of the Vroom-Yeton model such that focus on taking management and business decisions relating to changes in the external market needs to be taken through involvement of people or subordinates. This strategy taken would thereby assist the dominant leaders to counter the aftermath of the decisions pursued and thereby also help to sustain the trust and faith required. These suggestions put in place would help create a better and safer organisation for dominant and autocratic leadership styles to effectively exist (Aamodt, 2012, p.519-520; Thomas, Peters, Howell & Robbins, 2012, p.88). References Aamodt, M. (2012). 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The Psychology of Work & Organizations. United Kingdom: Cengage Learning EMEA. Read More