Sample Management Paper on Starbucks Case Study

Starbucks Case Study

The diversification strategy used at Starbucks can result in greater profitability if used effectively. Through differentiation, it is possible for the company to apply the VRIN principle in value addition to enhance revenue generation through many products. The main concern of companies aiming at product differentiation is that some maintaining rarity across different product brands is a challenge. Moreover, specific product markets also undergo maturity at a faster rate in the contemporary times than before. This implies that it takes shorter time for products to generate revenue for a company, and maintaining that revenue over extended periods can be a challenge.  However, with strong marketing skills, Starbucks can maintain its profitability as well as its market positions. The new products created open up opportunities for revenue generation in spite of the existing competition across brands.

            Quelch (2007) provides various strategies that can be used for creation of value, rarity and imperfect inimitability in any commoditized business. Strategies such as innovation, market segmentation and bundling can be essential in the context of Starbucks to ensure that the company operates sustainably. Through the introduction of new products into the market, Starbucks has developed a strategy for sustaining profitability in spite of the declining coffee market. The brewing and preparation techniques also offer a unique product that aligns to the changing customer needs at all times. In terms of bundling, the availability of products such as pastries gives the company an opportunity to maintain their customers by offering a variety and also needed products. On the other hand, segmentation through marketing different products to different people is also another strategy through which Starbucks can maintain value in their products. Such is exemplified through their marketing campaigns that offer products to new ‘converts.’

            With its current competency, Starbucks will be able to create differentiated products in the commoditized market. Starbucks’ business model has always focused on differentiation as a way of getting more customers to the company. This model can be pursued with even greater efficiency based on the fact that the products offered by the company are associated with global demands and cultures. Wessel (2012) the most important practice would be for the company to put in place strategies to adapt to product commoditization. Getting together innovative practices and strategies for standing above the competitors is the starting point for efficient differentiation. Starbucks currently has enough competencies for addressing this concern through the use of its resources.

Quelch (2007) further asserts that maintaining strong customer relationships can be instrumental in accomplishing differentiation in a commoditized market. Starbucks has the capacity to develop such strong ties through practices such as the customer loyalty cards and bonuses provided to the customers. Quelch recommends establishment of an effective customer management system through which the organizational customers can be evaluated and documented in terms of their product ranges, consumption practices and revenue contributions. Considering the present practices at Starbucks, this is not beyond the organizational competency and the company can go a step further to enhance marketing practices. The main objective of expanding the practices would be to portray the customer centric outlook to potential as well as existing customers. In spite of these competencies, Starbucks still has to be on a path of constant innovation, where their objective is to be the most creative in the face of product commoditization. Acquiring competitors can be used in this process, resulting in higher profitability and less competition.

Competition can be a significant challenge in a commoditized product market. However, the difference between effective performance and failure is the inability to change with the times. New technologies have emerged resulting in demand for changed product qualities. In the case of Starbucks, competitors are increasingly changing their production strategies, such as the shift from brewed to instant coffee. In terms of juice production, the changes are from pasteurization to the use of freezing as a strategy for sterilization. In each of these aspects, it has been determined that there are advantages and limitations of the process. The focus of Starbucks should therefore be in ensuring that their innovations come before others or are in line with the customer needs. The company can be able to stand against the competitive threat through timely decision making. If the changes result in high quality, then the threat will only exist as long as the company is not willing to change with the technological advancements.

Based on the current status of the Starbucks, the company has the opportunity to continue growing based on management decision making. The competition notwithstanding, the company has the core competence to overcome the competitive challenges. With the available resources, competencies and market shares, the growth of Starbucks is inevitable. Coupled with the efficiency of the management, any decline in the Starbucks’ share price is automatically revamped. Alex Poole should therefore retain his grandma’s portfolio as it has the probability of gaining greater profits in future. Hirt and Willmort (2014) opine that digitization, is a strategy that can help organizations go through the challenge of competition. As long as the company is willing to digitize, as it obviously will based on the market demands, the shares are bound to rise.


Hirt, M. and Willmort, P. (2014). Strategic principles for competing in the digital age. McKinsey Quarterly. Retrieved from

Quelch, J. (2007). How to avoid the commodity trap. Harvard Business Review. Retrieved from www.

Wessel, M. (2012). How to avoid the commodity trap. Harvard Business Review. Retrieved from