Strategic Manament Case

1. Describe Starbuck's business level strategy.

I think Starbuck's is using a cost leadership strategy. They are taking the stance that they will not cut corners or reduce the quality of their brand to save money. Instead Starbucks will concentrate on reducing waste to compensate for the loss of income. It would be detrimental if Starbucks were to reduce their quality or made a major change in their "Starbucks experience." When people are out and about and they need a break from the day or just need that extra boost they look for a Starbucks. They know it will be quality coffee and will pass by other coffee shops just to get to one. With that in mind cost leadership strategy is the best way for Starbucks to maintain that level of quality without hurting their image.

2. How is Starbucks managing its relationship with customers?

Starbucks is still giving the customers the "Starbucks experience." They are not changing anything involving how customers view or relate to their brand. They have loyal customers and many will pay extra for that Starbucks brand coffee. Starbucks admits that they grew to fast and were not ready for the economic down fall. Instead of increasing prices what would only drive sales down and turn away loyal customers they are instead looking to how they can cut costs from within the organization itself.

3. How would you describe the market segment(s) that Starbucks services?

Starbucks services 3 major target groups, teenagers, middle aged to senior citizens, and young urban adults. The Teenagers do not really have the money to spend on a cup of coffee in a nice environment. Also they are not really what Starbucks is trying to reach. They don't fit into the image that Starbucks has created. The Middle aged to senior citizens is also not the best segment for Starbucks. They are more traditional coffee users and do not drink what Starbucks offers. The last segment is young urban adults and this is what Starbucks usually concentrates on. They would be considered their core customers. They are in their late thirties to early forties, educated and earning an average income. They have varying tastes and Starbucks focuses on capitalizing on this by offering a large base of products to cater to them.

4. Is the differentiation strategy appropriate for Starbucks, now or in the future? Why or why not?

The differentiation strategy is appropriate for Starbucks now. They take actions to provide customers with a variety of products that they deem as important. This diversity in products is what makes Starbucks, Starbucks. Their customers what something different other than just an ordinary coffee shop and Starbucks capitalizes on that.

5. Using the five forces model of competition, how Starbucks plan