LEARNING JOURNAL (Session 5,6,7,8)

STRATEGIC LEADERSHIP

Submitted by:
C K ANAND
Roll No. 010
PGDM-EM
Dated -07.10.2019

Starbucks (2nd Day Discussion)

Hambrick Article
1. Arena -- (Corporate Strategy-as it cuts across all the departments)
• -Product
• -Market
• Attractiveness- Analyze the porters 5 forces (It will tell whether the industry is
attractive or not)
• Capabilities- (Todays or Tomorrow )
E.g. What are the threats or opportunity for new product in the market?? like flavored
Coffee
High Income Asian country , Nordic Country (Demand and Supply is already very high in
Nordic Countries so Starbucks might face a huge entry barrier),
• -Customer (Its very important that what type of customer we want to serve through
our product)
Are we attracting right customers??
E.g. Attracting Children through serving specific snacks can work against our strategy of
providing 3rd place experience)

2. Substantial Differentiator – (Also called business strategy)

It should be according to customers wants not according to what company thinks
Starbucks wanted to do 3 things-
• Production (should see if it is the sustainable differentiator)
The moment you standardize it , it can be easily copied by other players)
• Hospitality
Infra – (easily copiable) ,
Host –(Sensitive, Enthusiastic Baristas) = Baristas (key differentiator) so we need to
rethink about this
• Education – Done by Baristas

3. Vehicle (Entry Strategy) (Have to invest 126 million cash & cash equivalents)
like JV, franchisee, Acquisition , On your own (through green field)
 4. Economic Logic (decision based on finances, numbers)
Calculate ROCE (what’s going to be your new overall ROCE after adding the new
products and see how will it affect overall business)
Also see 5-6 years Balance sheet and PnL projections
5. Staging
o Activities
o Sequence of activities
o Actor/Capabilities and responsivities
o Speed/Milestone for each activity
o Resource
o Coordinator

•High Entry A •High Entry

& Low Exit &High Exit
Barrier Barrier

C. Profit (high)
B. Profit (high)
Volatility
Volatility (low)
(high)

D. Profit
A. Profit (moderate-
(moderate) low)
Volatility (low) Volatility
(high)
•Low Entry & •Low Entry &
Low Exit High Exit
Barrier Barrier

E.g. C – (power plants, shipping industry)

D – ( Microgrid , Education)

Richer Sounds (1st Day Discussion)

• Is there any requirement for customer relationship?

If we see the bigger picture , customer buys one or two hi-fi products for long term so
there is no need for this.
• Simply margin indicates nothing – what matters is how much time you take to make
that margin and You always have to see number of rotations.
• So in this case, his maximum money is going into inventory, so inventory turnover will
tell us about the efficiency (how long it takes to rotate 1 stock of inventory).
• Business Model
1. Value added to customers
Value Proposition –
Quality of product (Branded Product)
o He sold branded product as it as not his own product so responsibility was not his (if
he see everything under his own brand then quality of one product might affect the
other types of products as well)
 Value for money
o Managerial Challenges- if you want to give more to customers, your own operating
cast must be low
-Employee cost – (Doers & Watcher)
o Doers – measured through yard stitch…output (sales) / inputs (salary)
Finding ways to enhance productivity
o Watchers -- no. of doers he can watch without compromising on doers output
Its cost id no. of does / no. of watchers
Reduce the operating cost by sincere doers…Company ensures its doers productivity
therefore reducing watchers costs.

Product cost – End of the life product – much cheaper therefore people with high
aspirations but couldn’t afford can buy and also location of store is convenient.

infra cost – Decreased by cheap locations, small shops

Implications – low rentals , low electricity charges, availability of shop is easy
Genuity of product is still a question mark.
In this case… Entry barrier is low, very less risk , competition can be high (copiable
model) , competition right there
Requirement- Sustainable differentiator

Customer service
Post Sales
-24 hr toll free no. –(directors see that no call is left un attended)
-Credibility of shop by fulfilling the promise (requirement – positive credibility)

Pre Sales (Roles)

-Help customer to buy
-Educate, understand, observe the customer
-Spend time
These are all work of a doer i.e sales person i.e role of a front line people
Characteristics required-
Fun, Humor loving
Patient, Knowledgeable, Communication skill
Learning ability, mindful and full of energy

R3 ( Repair, Replace and Refund)

Since in branded product overall failure is very less i.e 0.1%
So we need to keep the provision for refund and it will not be very much and customer
will feel delighted.
Sales Person (two question matters to enhance the doers productivity)
--- Where to get these people (Finding these people)
--- How to retain them with high energy (rotation of these people)

2. Value added to yourself

(10% margin and 50% ROCE which is quite high)
• Performance comes from business model and that too from sustainable differentiator
which leads to doers role which basically depends upon competencies where you will get
that people ( your 50% HR is done here) then how will you retain them with energy