10170394_Dinh Tien Dat_A1.

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Table of Contents
I. Introduction........................................................................................................................... 3

II. Discussion............................................................................................................................ 3

1. Overview of selected company.........................................................................................3

1.1: Brief description about its services and markets............................................................3

1.2: Explain and evaluate the mission, vision, goals and objectives of Starbucks Vietnam...3

2. Assess an organisation’s internal environment and capabilities........................................6

2.1: Analyse the internal environment and capabilities of the company using appropriate
frameworks........................................................................................................................... 6

2.2: Criticism assesses Starbucks internal environment to assess its internal strengths and
weaknesses, framework and capabilities............................................................................11

3. Analyse the impact and influence which the macro environment has on the company and
its business strategies............................................................................................................ 13

3.1: Apply suitable frameworks to analyze the impact, influence and strategies of the macro
environment........................................................................................................................ 13

3.2: Assess the impact of changing models on the business strategy of Starbucks............16

4.1: Analyze and evaluate the composition of the market by applying Porter's theory........17

4.2: Provide approriate strategies in order to improve competition postion and market
position of the company......................................................................................................20

5. Apply frameworks, hypotheses and principles that help Starbucks capture and view
strategic directions................................................................................................................. 21

III. Conclusion...................................................................................................................... 24

References................................................................................................................................ 25

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 I. Introduction

Every business has a unique business strategy. It is the orientation and framework for
organizations to establish long-term strategies that help businesses achieve market goals. In
this article, Starbucks in Vietnam will be selected to analyze the impact of the macro and micro
environment through a series of specialized theories and models.

II. Discussion
1. Overview of selected company

1.1: Brief description about its services and markets

Starbucks first appeared in America from 1971. This is a company specializing in providing
coffee products leading the world with chain stores throughout 75 countries. In addition to its
Starbucks Coffee brand, Starbucks also sells goods and services under names like Seattle’s
Best Coffee, Teavana, Evolution Fresh, Ethos Water and Torrefazione Italia Coffee. (Starbucks,
2020).

Based on a research of the organizational development in Viet Nam, Starbucks mainly operates
in the areas of purchasing, processing, distributing coffee and business coffee shops. Some of
Starbucks' competitors in Vietnam are Highlands and Trung Nguyen coffee. However, the
policies and working strategies of the companies are different, in Starbucks is focusing on
developing staff, diversifying products and doing business with environment. (Dang Hoa, 2018).

1.2: Explain and evaluate the mission, vision, goals and objectives of Starbucks Vietnam
a. Vision

Starbucks vision is to make the company become the finest coffee brand in the world as well as
a national company with values and principles that employees could be proud of. (Starbucks,
2020). This is a simple, clear, and encouraging message, particularly in the achievement and
retaining of the leading role in the coffee and coffee industry. (Koehn, 2002). The focus on
leadership is an motivation for managers and other staff of the company. In comparison,
Starbucks Corporation's strategic philosophy is clear with its applicability to potential market
scenarios. However, new market processes and innovations are not mentioned in the
declaration of the company's opinion. As in the marketing combination of Starbucks or 4P, for
example, tea and pastries, they often form part of the commodity combination. These goods
have not yet been mentioned in the declaration of the company's dream. With these extra bits of

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knowledge about the different items a decision will enhance Starbucks' view of the brand and
allow the image more effective when describing the business. (Koehn, 2002).

b. Mission

Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one
cup and one neighborhood at a time.” (Starbucks, 2020). In the past, present and future,
Starbucks always pays attention to the quality of its products as the number one resolute
condition. The term "human" here includes customers, employees, neighborhood and
shareholders. For customers, the company always wants to give customers the best product by
meticulous with its stages from selection, planting to processing. Moreover, they also want to
increase the connection between people, so Starbucks focus on their employees instead of just
their customers. One evidence which can be seen that in every store, employees are often
referred to by the intimate name of "partners”. Overall, Starbucks mission is to improve the
closeness and human connection. (Howard Schultz, 2012).

On the other hand, just like with customers and employees, Starbucks believes that community
and shareholders also play a very important role in their mission. However, apart from the
human relation, the company needs to satisfy its neighbors and shareholders in order to expand
and affirm its position in their business. (Howard Schultz, 2012).

Based on information of vision and mission of Starbucks, there are having some common
factors such as:

 Target people: customers, employees, neighborhood and shareholders.

 Products and services: coffee and friendly environment.
 Human resource policy: focus on the employees instead of only customers and profits
 Basic goal of organisation: creating brand value based on the connection between products
and people, become a leading coffee company in the world with remarkable policies.
 Image in the public: intimate coffee maker, has good quality products.

In general, Starbucks' vision and mission have a very close relationship to each other.

c. Core values

There are 4 main values in Starbucks:

 Creating a warm and familiar culture, where everyone is welcome.

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 Acting with courage, challenging the status quo, and finding new ways to grow the company
and each other.
 Being present, connecting with transparency, dignity, and respect.
 Delivering the very best in all people do, take responsibility for results. (Starbucks, 2020).

Following to Koehn (2002), Starbucks focuses on three core things: product quality, people and
the direction of business development. Accordingly, culture is a very important part of a
company's business. Many companies have established a culture of cooperation and
empowerment of their employees, the purpose of which is to improve the motivation and
productivity of each individual in the organization. At Starbucks, they have also established an
environment where people feel respected and welcomed. In addition, another important thing is
the innovation of the business. Transparency, dignity and respect, all three are related to ethics
and responsibility, which is a central area of Starbucks. Being responsible and providing
services with confidence will create success in product quality. (Koehn, 2002).

d. Goals and objectives

 Goals: With the mission of inspiring and nurturing the human spirit, Starbucks aims to create
an environment where everyone can feel at home, but also suitable for work. (Howard
Schultz, 2012). In Vietnam, according to an interview of Mrs. Patricia Marques, the CEO of
Starbucks in Vietnam: To build an image that is close to the locals in the country, Starbucks
will combine the organization's culture with its national identity. Evidence that the company's
products are inspired by Vietnamese coffee, especially filter coffee, Starbucks will redesign
from the traditional filter with new innovations in design and performance. (Thy Hang, 2020).
Moreover, the company also wants to build an environment-friendly workplace, which helps
customers feel comfortable while using Starbucks products, as well as creates a culture for
employees to have the responsible to the community and environment. (Howard Schultz,
2012).
 Objectives:
According to Mrs.Patricia, the CEO of Starbucks in Vietnam (2018), because the traditional
culture of Vietnamese people is using filter coffee, Starbucks has focused most on Robusta
products since starting to penetrate the Vietnamese market. This affects the increase in
scale for Starbucks stores in Vietnam. As a result, by the end 2018, Starbucks had opened
100 stores in Ho Chi Minh City, Hanoi, Hai Phong and Da Nang. In the future, Starbucks will
try to continue focusing on combining products with a strong Vietnamese identity such as
milk coffee and bread, but still with the typical Starbucks style. (Dang Hoa, 2018).

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 On the other hand, one of the Starbucks' goal is generally for environmentally responsible
businesses. For a critical example, according to Forbes Vietnam, from 2020 to 2030,
Starbucks will announce the removal of plastic straws from more than 28,000 stores
worldwide, they will replace the cups with lids designed for drinking. To accomplish the
strategy, Starbucks is willing to spend about 10 million dollars for this. (Bich Dang, 2020).
In this case, Starbucks’ goals and objectives can be analysed through the SMART tool:

SMART criteria Contents

Specific (1) Create a friendly environment for employees and
natural and
(2) Expanding the brand size in Vietnam by
combining Western and Vietnamese culture.
Measurable (1) Minimize plastic straws for more than 28,000
Starbucks’ stores in over the world from 2020,
including Vietnam. Meliorating working policies for
290 thousand employees in the global among that
time.
(2) Reach 100 stores in Vietnam.
Achievable In order to reach these goals and objectives,
Starbucks needs to have enough knowledge,
manpower and skills. In this case, it is a high
probability.
Relevant Already completed the goal of expansion in Vietnam
(100 stores in 2018).
Time-related Deadline is to 2030

2. Assess an organisation’s internal environment and capabilities

2.1: Analyse the internal environment and capabilities of the company using appropriate
frameworks
a. Starbucks Generic Value Chain

According to Michael Porter (1985) and Starbucks annual report (2013), the value chain model
of the company can be understood as follows:

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 Primary activities
 Inbound logistics: Importing coffee from various suppliers in American, Africa and Asian.
The roasting of beans and input material are exclusive at Starbucks. Typically, raw materials
are distributed to regional branches of the Starbucks system, which means the company
supplies its own materials. This makes Starbucks able to ensure the quality of its products
from the first steps. Moreover, the business also has an efficient supply chain management
program to support this activity.

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 Operations: Working in more than 70 countries with stores modeled by sustainable
development model and corporate social responsibility (CSR - Corporate Social
Responsibility) in different regions. In Vietnam, ranked among the top 3 largest coffee
suppliers with over 100 stores which are located in 4 big cities in Vietnam, with beautiful
views and densely populated places. Every Starbucks store also has unique and
comfortable space which suitable for both customers and employees experience work and
study.
 Outbound logistics: Starbucks has very few (or no) retail middlemen, most of Starbucks
products are only sold in its stores. However, some activities such as storing and distributing
payments still need retail locations.
 Marketing and Sales: Starbucks does not use traditional methods to market its brand.
Instead, they engage customers by improving their services and product quality. Customers
who come to each store can experience the company's products for themselves and then
spread it to other people. In Vietnam, Starbucks still somewhat applies this marketing
strategy. But because coffee consumption habits of Vietnamese people are diverse, plus

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 domestic coffee companies are very competitive, Starbucks have to improve more about
their online marketing.
 Service: Starbucks is known for providing its consumers with the highest level of services.
The company has also been targeted at distributors with a special Starbucks Experience to
gain consumers loyalty. Here, they have some of services are: Starbucks Awards or
Starbucks Card.
 Support activities
 Firm Infrastructure: Starbucks stores are usually located in big cities and are densely
populated places with attractive and environmental friendliness designs, aesthetic shops,
suitable for work and study. In each region separately, they have an effective financial,
accounting and legal system to support management of the company's operations and
infrastructure. For employees, Starbucks stores are also considered a third home, a
combination of work and home.
 Human Resource Management: They have an effective governance system through
centralizing benefits and empowering employees. This also contributes to build a unique
culture of Starbucks that employees are treated as "partners". People in Starbucks can have
many advantages about pensions, stock options, etc.
 Technology development: There is investment in free wifi, smartphone applications,
software 4.0 and trendy technology products.
 Procurement: Starbucks has a wide range of suppliers for its products and fixed contracts
with some of the suppliers. The company also has a good image in society with its
environmental protection activities and effective strategies.
 Linkingage within the value chain

At Starbucks, the most obvious link in the business is through Procurment, Operations,
Technology and Services.

Here, because procurement is responsible for the quality of the purchased input, it can affect
production costs (operation), testing costs (operations) and even product quality. In addition, an
automated phone menu that works well for customers (technology development) will allow
customers to access the appropriate support assistant faster (service). Thus, clear
communication between and coordination between value chain activities is just as important as
the operations themselves. Therefore, a company also needs to optimize these links to gain a
competitive advantage.

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b. VRIO in Starbucks

Starbucks' core resources and competencies are adopted:

 Primary activities: Operations, Inbound logistics and Services

 Supportive activities: Technology and Procurement

Resources and Capabilities of Valuable Rare Costly to Exploited by Competitive

Starbucks Corporation imitate organization Implication
Organizational Operations Yes Yes Yes Yes Sustainable
 Operating in more than 70 Competitive
countries and being the world's Advantage
largest supplier of coffee
products. In Vietnam, Starbucks
is also in the top 3 of the most
famous coffee brands
nationwide.
 Having sustainable development
model and corporate social
responsibility (CSR - Corporate
Social Responsibility).
 Having comfortable and unique
space which suitable for both
customers and emplyees.
Inbound Logistics Yes Yes Yes Yes Sustainable
 Exclusive material Competitive
 Many places offer worldwide Advantage

 Having an efficient supply chain

management program to support
the activity.
Services Yes Yes Yes Yes Sustainable
 There are special programs for Competitive
customers like Starbucks Advantage
Awards and Starbucks Card that
promote loyalty when buying
products.

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  Special Starbucks Experience
 High quality of products
Technological System Yes Yes No Yes Temporary
 Free wifi at all shops Competitive
 Continuous technological Advantage
innovation includes trending
software in operational
management and 4.0 sofware,
especially for smartphone.
Procurement Yes Yes No Yes Temporary
 Wide economic scale through Competitive
superior distribution channels Advantage
and supplier relationships.
 Good relationship with coffee
supplier with fixed contracts.

2.2: Criticism assesses Starbucks internal environment to assess its internal strengths
and weaknesses, framework and capabilities
The evaluation of Starbucks strengths and weaknesses will be analyzed based on the
comparison of the company with the two strongest competitors: Trung Nguyen Coffe and
Highlands Coffee.

 Strengths
 Operations
 Good and reasonable business location to attract customers: Starbucks stores are located in
4 big cities in Vietnam that those have unique and remarkable design for study and work.
However, in Trung Nguyen and Highlands, this is the same.
 Strong competitive position and famous global brand: Currently, Starbucks is after
Highlands and Trung Nguyen about position in Vietnam, but they still in the top 3 biggest
coffee brand in nationwide.
 Environmentally friendly image: Starbucks follows the corporate social responsibility (CSR)
strategy, so their products and stores follow the concept of being environmentally friendly.
This is also a diffentiation strategy to build a different image of Starbucks compared to the
other two competitors.

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 Inbound Logistics
 Exclusive Material: Starbucks has an exclusive source of coffee production all over the
world, which helps businesses to ensure the quality of each cup of coffee. This is a
difference between Starbucks and the remaining competitors.
 Good Supply Chain System: Starbucks has a resonable supply chain system to support the
inbound activities. In Vietnam, Starbucks still maintains this system when distributing
products to their customers. However, Starbucks' supply chain system is quite similar to
Highlands and Trung Nguyen, so there is not much competition in this regard.
 Extensive relationship with suppliers: Like proprietary materials, Starbucks has relationships
with suppliers of machinery and workers around the world. Whereas Trung Nguyen has only
supply in Vietnam and Highlands is only available in some Southeast Asian countries.
 Services
 Well-being quality of services and products: Because Starbucks always focuses on the
quality of services and products, Starbucks drinks are mostly appreciated by customers,
same as Trung Nguyen and Highlands.
 Special promotions to improve customer loyalty: Having programs to increase customer
loyalty such as Starbucks Awards or Starbucks Card. However, every company has a
different strategy to improve their loyal customers.
 Starbucks Experience: Starbucks' unique experience is made possible by its
environmentally friendly products and services, the atmosphere in each store and the
company's working culture. This is what distinguishes Starbucks from the 2 biggest
competitors in Vietnam.
 Technological System
 Advanced technology development strategy: One of the strengths of Starbucks is always
trying to develop their information technology. This makes them never obsolete. In Vietnam,
Starbucks is the leading coffee company in technology, surpassing both Highlands and
Trung Nguyen.
 Procurement
 Good relationship with suppliers: In order to maintain its exclusive supply chain of raw
materials, Starbucks must have a close relationship with suppliers through their fixed
contracts. In this case, it is not much different from the other two competitors.
 Weaknesses
 High cost of products: In Vietnam, for other competitors, Starbucks has a relatively high
product price (from 70 to 100 thousand VND per cup), whereas in Trung Nguyen is just

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 about 30-50 thousand VND and Highlands has a price approximately 60 thousand VND.
This can make it difficult for them to expand their business. However, this is partly due to the
peculiarities of the company's strategy.
 Take time to integrate into the market: Because Vietnam is a country with a long tradition of
drinking coffee (and is an Asian country), so getting used to the culture, as well as
understanding the behavior of customers makes Starbucks take a lot of first time. Unlike
Trung Nguyen or Highlands, they are originally a coffee company in Vietnam so their
company save a lot of time in the beginning.
 Big logistics costs: Starbucks has its proprietary materials, but most of its manufacturing
plants are located in Europe and America, not nearly like Trung Nguyen or Highlands (right
in Vietnam), so the shipping cost is very huge.
3. Analyse the impact and influence which the macro environment has on the company
and its business strategies.

3.1: Apply suitable frameworks to analyze the impact, influence and strategies of the
macro environment
 Political (P): According to the Vietnamese government, Vietnam is a socialist, one-party
state model. According to Article 4 of the 2013 constitution, the leadership of the Communist
Party of Vietnam in politics and society directly affects the outline of government
reorganization and strengthening market reforms in the economy. On the other hand,
although Vietnam is a one-party state, following the Party's official ideology still focuses on
economic development and national security. (Vietnamese Government, 2020).
According to the research of experts, Vietnam's political factor is not only a good condition
for coffee production, but also appeals to coffee trading investors because of its stability in
import and export. In addition, the Ministry of Industry and Trade in Vietnam has also
actively signed free trade agreements with major foreign countries to create favorable
conditions for coffee companies to do business in Vietnam. (Le Truc Thanh, 2019).
Based on the above ideas, the development trend of businesses like Starbucks in Vietnam
is very potential. Because of a one-party factor, social development will follow a stable trend.
Therefore, not only will Starbucks have the opportunity to reach out to Vietnamese people,
but they can also build their own culture in this country.
 Economic (E): In 2019, the Gross Domestic Product (GDP) obtained excellent
performance, according to the General Statistical Office in Vietnam. Economic development
hit 7.02 percent in 2019, which was beyond the National Parliament goal of 6.6 to 6 percent.

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 The Vietnamese economy has risen over 7 percent since 2011 for the second straight year.
While below the 7.08% rise in 2018, the growth trend in this year is still better than in 2011-
2017. Furthermore, statistics also reveal that inflation was under track over the last three
years for macroeconomic stability over 2019. Overall, the domestic economy is very stable
and developing. (Gia Thanh, 2019).
For another point, also according to data from the General Statistics Office from 2010 2018,
each year Vietnam exports more than 1,500 thousand tons of coffee on average, the
average export value falls over 3 billion USD and become the third largest coffee exporting
country in the world. However, the output value increased unevenly. To maintain stability,
experts recommend investing in areas of roasted or instant coffee such as Trung Nguyen or
Nestle. (Nguyen Thi Lai, Do Thi My Hien, 2019).
For Starbucks Vietnam, increasing domestic economic index and improving export volume
also have a significant impact on their business. Economic development helps the average
living standards of Vietnamese people to develop. Gradually, people will change consumer
demand more. Based on this, it could help Starbucks predict the trend of Vietnamese
customers behaviour in the future. For example, more roasting and dissolving coffee
products will be provided.
 Social (S): As of April 2019, Vietnam's population reached approximately 96 million people.
(Ministry of Labor, War Invalids and Social Affairs, 2019). For the coffee industry, there are
two types of coffee which are the most popular in Vietnam: Arabica and Robusta (Dinh The
Lich, 2019).
Moreover, according to the study of Applied Marketing Institute (or IAM) on the habit of
using coffee in Vietnamese, coffee market is divided into 2 clear segments: roasted ground
coffee (filter coffee), which is for most of all consumed, and the rest are instant coffee. In
here, about 60 percent of male Vietnamese coffee consumers drink coffee more than 5
times a week is male, while female just take 21 percent. For consumers use instant coffee,
the number in female is higher which is 52 percent. (Dinh The Lich, 2019).
As the data above, combined with relevant information of economic factor, products of
ground coffee and instant coffee will most likely be the trend in the future. Starbucks should
focus on this.
 Technological (T): According to a report by the Ministry of Information and
Communications of Vietnam, the technology industry has contributed the most in the total
revenue of all jobs in the first 6 months of 2019. By 2020, information technology will still
develop strongly that it will follows to the trend of advanced software development in the

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 world such as Artificial Intelligence or Machine Learning models, etc. (Industry and Trade
newspaper, 2019).
At Starbucks, because it is a multinational company, the technological factors in the
business are also highly concerned. Until now, the technology at Starbucks has also been
very developed, they have a Starbucks Digital Network system to provide paid publications
from famous companies such as New York Times, Wall Street Journal, The Economist, etc.
or the Power Mattes Alliance, is a wireless charging product for phones that come to
Starbucks stores; or create a system to check the status of reward points when buying
products. (Ngoc My, 2017). Overall, the trend of technology development at Starbucks is
deeply linked to their mission, which is to care about people.
 Environmental (E): Vietnam is a monsoon country, which suitable for growing coffee,
especially robusta seed. However, because of the constantly changing climate, coffee
beans are easily damaged and difficult to preserve. (Ministry of Agriculture and Rural
Development of Vietnam, 2014). Therefore, Starbucks should consider this. On the other
hand, infrastructure system in Vietnam is also an issue when it is difficult to find resonable
business premises for Starbucks when they want to scale up.
 Legal (L): The Prime Minister of Vietnam has issued a number of policies to assist the
agriculture and forestry sector (Ministry of Agriculture and Rural Development of Vietnam,
2014), such as:
 Project on development of agricultural, forestry, livestock and aquatic breeds till 2020
(Decision No. 2194 / QD-TTg of December 25, 2009)
 Support policies to reduce agricultural losses (Decision No. 68/2013 / QD-TTg dated
14/11/2013)
 Policies to encourage cooperation, linking production with consumption of agricultural
products, building a large sample field (Decision No. 62/2013 / QD-TTg dated October
25, 2013)
 Policies supporting the application of Good Agricultural Production Practices in
agriculture, forestry and fisheries (Decision No. 01/2012 / QD-TTg dated January 9,
2012)
 Policies to encourage enterprises to invest in agriculture and rural areas (Decree No.
210/2013 / ND-CP of December 19, 2013)

According to the infomation in the PESTEL table, the trends in Vietnam in general are
developing and changing specifically, particularly in the coffee industry. For Starbucks, there are

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3 most important factors affecting the future of the business, which are Political, Economic and
Environment:

 PESTEL with quality of Starbucks

 Political: Due to the analysis, the political system in Vietnam is stable at present and so is
the possibility of the future. So that, foreign businesses like Starbucks do not have to worry
too much about the safety level when doing business in Vietnam. In the future, this also
helps the import and export of goods (including coffee) become more secure and develop.
For example, the enactment of a government law supporting the coffee industry (Decision
2194 and Decision No. 62/2013, etc.) will help coffee producing companies have more
opportunities to develop. In Starbucks, it will make it easier for the company to set up its
manufacturing plants in Vietnam. Moreover, those laws also support the transportation of
raw materials from overseas into Starbucks stores.
 Economic: Following to the above data, the overall economic situation of Vietnam is
developing. In addition, the status of coffee exports also exceeded the average rating.
Therefore, this is a good signal for the coffee industry in general and other businesses in
particular. In the future, Vietnam's economy will continue to grow strongly, which will lead to
improvements in socio-culture. Besides, because of the stability of domestic politics,
companies can focus on better business, then contribute to economic development.
According to this development, the living standard of Vietnamese people will be improved,
so the cost gap of Starbucks products and customers' pockets will be narrowed. This gives
the company the ability to continue developing more quality coffee, rather than having to
balance price competition.
 Environment: Because of the specific climate, coffee suppliers will have to focus more on
their preservation in the future. In addition, Vietnam's transportation system is quite
complex. This directly affects the quality of Starbucks coffee.

3.2: Assess the impact of changing models on the business strategy of Starbucks
 Opportunities: In general, macro factors take a significant role in helping Starbucks shape
its business strategy in Vietnam. It shows the consumption trend of customers in Vietnam,
as well as the culture and people’s life in here. Based on environmental and human
information, Starbucks can create products that are suitable for Vietnamese consumers.
(Thy Hang, 2020).
 Threats: The biggest issue for this business is the long-standing characteristics of
Vietnamese coffee drinking. Moreover, environmental factors also cause Starbucks to focus

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 on changing its product type (specifically, they must increase the products derived from
robusta coffee beans instead of arabica as in other markets). Another point which has a light
influence on Starbucks is the logistics problem in Vietnam. Currently, according to the CEO
of Starbucks Vietnam, logistics costs are a big obstacle when the company's materials have
to be imported from a far distance. (Thy Hang, 2020).
4. Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a
given market sector

4.1: Analyze and evaluate the composition of the market by applying Porter's theory
Starbucks is a big company in the coffee house/shop industry. In Vietnam, some competitors
with Starbucks in this industry are Highlands Coffee and Trung Nguyen Coffee. (Dang Hoa,
2018).

Radar Chart of Starbucks

Power of suppliers
5

Competitive Rivarly Power of customers

Barriers to entry Threat of replacement

(From 1 to 5: Highest to lowest)

 Power of suppliers (Weak to Weakest): According to Porter, strong providers can be

understood that they can request higher rates and rising their income to the company.
(Porter, 2008).
The size of each manufacturer is an external constraint that makes Starbucks compromise.
However, because of the variety of products, suppliers do not create too much pressure on
the business. For example, coffee beans, Starbucks has many different suppliers all over
the world, including in Vietnam. Also, finding quality suppliers is also very easy because

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 Vietnam is a country specializing in coffee farming. Besides, due to the CEO of Starbucks,
Starbucks has policies that address import issues for suppliers through the information in
PESTEL. Therefore, the negotiating effect of suppliers is a small competitive concern in
product management. In the future, this factor would increase but it might not be significant.
(Howard Schultz, 2012).
 Power of customers (Over medium to Highest): The strength of buyers is that they have
the right to request high or low prices for manufacturers when negotiating. This also means
that the price of the negotiation is directly proportional to the manufacturer's profit. (Porter,
2008).
In everywhere, customers mean a lot to the business. Customers are those who can change
from one brand to another without being constrained by anything, as long as the product of
the business meets both quality and reasonable cost. In Starbucks, because their mission
is to connect products and people, so customer factor is the top priority, both now and in the
future. In order to "negotiate" with consumers in a reasonable manner, Starbucks has made
significant investments in marketing and sales. (Howard Schultz, 2012).
 Threat of replacement (Medium to High): pressure from alternative sources (including
products and services) occurs when buyers can have opportunities to find replacement
products at better prices or quality, and when buyers are able to convert from
products/original service to a new product/service. (Porter, 2008).
Based on the theory, this component shows the strong potential of substitutes to adversely
affect Starbucks coffee. The high supply of alternatives encourages the buying of these
replacements by customers rather than Starbucks goods. Other items are sold at a variety
of places such as fast food and fine dining, vending devices, supermarkets and shopping
stands and small retail shops, such as juices ready for consumption, powders and purees
for instant drinks and snacks or beverages. The uptrend of this factor is very high in the
future. At Starbucks, they should pay more attention in this if they want to do the business in
the long-term.
 Barriers to entry (Medium to Low): or threats of new entrants, are difficulties when a
business enter a new market. If an industry is profitable and there are few barriers to entry,
competition will soon increase. As more organizations compete for the same market share,
profits begin to decline. (Porter, 2008).
According to an interview with the boss of Starbucks Vietnam, the company initially
encountered some difficulties such as Vietnamese coffee usage habit, climate,
transportation system, and competitors. However, after 7 years of operation, the difficulties

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 have gradually improved, the appearance of new barriers is very little. However, it will take a
lot of time to develop the future scale in Vietnam. In general, this is not an important element
for Starbucks to focus on. In the future, it is also likely to decrease. (Dang Hoa, 2018).
 Competitive Rivarly (Medium to High): is the rate of competition among existing
companies. Compact competition contributes to reduced productivity for companies in the
same market, while fierce competition will lose sales opportunities for businesses in the
same field. (Porter, 2008).
In Vietnam, Starbucks has some competitors are: Highland, Trung Nguyen Coffee or
Dunkin’ Donuts, ect. (Le Truc Thanh, 2019). However, apart from Trung Nguyen, there is no
second domestic brand large enough to be widely recognized. The reason is because there
are more and more foreign stores penetrating into Vietnam market, so the current
competitive trend is favoring foreign names such as Starbucks or Highland Coffee. (Dinh
The Lich, 2019). The common characteristic of big coffee companies when coming to
Vietnam is that they have a prime location and high-class image, but the market segment is
not the same, so the brand shaping strategy is not the same. For example, at Starbucks,
they target a luxurious environment for businessmen with products like American style
pastries and coffee, while in Highland, they aim for a more dynamic and friendly place with
milk iced coffee, filter coffee and Vietnamese bread. Overall, the biggest difference between
competitors will lie in emotional value, especially in how the brand communicates the
message to customers. At this point, Starbucks has a solo show on this high-end stage.
(Dinh The Lich, 2019).
However, the competition between major coffee companies in Vietnam will continue to
develop. Starbucks may to face more with changes in the business strategy of Highland or
Trung Nguyen in the future. Overall, this is really a big challenge for this business. (Dinh The
Lich, 2019).

Based on the information analyzed in the 5 forces of Porter, the Starbucks’ strategies in
Vietnam can be evaluated like below:

 Advantages:

In order to create an organizational community, Starbucks Coffee established and enforced the
marketing policy with detailed and systematic market development approaches, marketing
promotion and security policies. For instance, the creation of an company culture focused on the
concept of coffee goods from Starbucks is used flexibly in extending the sector. In a new sector,

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they have a deep awareness of indigenous people's social and business culture and thus strive
to develop a company culture that serves local consumers better.

Besides, despite many competitors, Starbucks retains its culture of employee priority and
customer intimacy. They always have policies to promote productivity and motivation for
employees. Starbucks consider each employee to be a "partner" and treat everyone fairly.

The last advantage of Starbucks is its strong degree of worldwide success. This company has
become one of the most successful and renowned foreign brands in the coffee industry,
particularly in Vietnam, by continually expanding its brand through product expansion and
particularly market development.

 Disadvantages:

In comparison, the Starbucks strategy's constraint is static throughout the development of new
markets. New consumer goods are no different from those in the United States. This refers to a
Starbucks Coffee which is hard to blend in with Vietnamese society and routines. While
Starbucks goods are conscious of Vietnamese coffee culture, it still doesn't alter so much so
that it takes them a lot of time to build a remarkable image.

4.2: Provide approriate strategies in order to improve competition postion and market
position of the company
Currently, Starbucks strategy is differentiation strategy. For more specific, it means focusing on
environmental protection products and service quality. Because of good services and well-
organized human resoures management, then through employee attitudes, customer
appreciation programs, etc. Starbucks has developed their corporate brand more widely. In the
future, in general, it is likely that Starbucks does not need to change to its strategy. However, in
order for a business to grow stronger, there are having some recommendations for this
company:

 High Competitive Rivarly: Coffee beans are an significant factor of the Starbucks supply
chain and retail prices of high-quality coffee beans have common variations. Through
adopting an efficient shielding tactic such as future contracts, Starbucks may reduce this
volatile market uncertainty and lock in its expected products at low fluctuating rates ,
meaning that changing in costs can be handled in a greater way.
 High Power of Customers: In Vietnam, Starbucks should uphold its customer-centric
strategy. For example, the company can create many new products such as water bottles,

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 promotions, customer loyalty programs, etc. or they can build a concept of on-the-go home
delivery.
 High Risk of Replacement: To avoid risk of replacement in the future, Starbucks should have
a strategy to diversify their products. They can expand sales of products like fast food,
Vietnamese drinks to attract more customers.
 Furthermore, to compete with other coffee brands in Vietnam, Starbucks should also focus
more on developing their technology, especially on smartphone.
5. Apply frameworks, hypotheses and principles that help Starbucks capture and view
strategic directions
a. Strategic Plan

According to an interview with CEO of Starbucks in Vietnam, Mrs. Patricia (2018) noticed: Most
of Starbucks' goals in Vietnam closely follow the vision and core values of the whole enterprise.
However, for long-term development, Starbucks will always need to make efforts to develop and
change its image to suit market demands. (Dang Hoa, 2018). In general, Starbucks' vision,
mission, and core values should be kept constant, that is, unchanged.

However, on goals and objectives, the company should set bigger goals to expand its brand.
For example, Starbucks' current goal is to open a chain of coffee shops in 4 big cities in
Vietnam. Nevertheless, in order to develop more, Starbucks should raise the scale of the
strategy to the national level, that is, in every province and city of Vietnam.

Starbucks' strategic model is to focus on differentiation and sustainable development. (Koehn,

2002). When using this strategy, Starbucks focuses on environmental protection products and
services, as well as geographical location selection, aims to provide the best Starbucks
Experience for customer on each store and the special culture of the company to optimize its
brand. (Howard Schultz, 2012).

In Vietnam, despite its extensive development experience worldwide, Starbucks still has some
specific limitations. The reason that Starbucks customers in Vietnam is middle/upper class, so
the price of a cup of coffee here is said to be relatively high for daily use. Moreover, the habit of
drinking Vietnamese coffee for a long time is also a big obstacle for Starbucks.

On the other hand, Starbucks' green production and consumption strategy is a strong point of
the company. Its stores also have special locations, suitable for everyone's travel. In general,
Starbucks also has many opportunities for sustainable development in Vietnam when they have

21
their own impressions. Their biggest obstacle in the future is to combine the quality of the
company's translation with the Vietnamese consumer culture.

Overall, Starbucks' strategy in Vietnam is quite limited, but because this unique feature makes
the company special, so Starbucks does not need to change its strategy in the future.

Starbucks strategic direction is shown by Ansoff's product-market matrix

Products Existing New

Market
Existing Market Penetration
 Starbucks Roast
 Seasonal favourites:
Christmas Blend Espresso
Roast, Holiday Blonde
Roast, Christmas Blend,
Autumn Blend.
New Market Development
 Frappuccino Blend.
 Frappuccino Light Blend.
(Starbucks, 2013)
Product Development
 Starbucks Card
 Starbucks Awards
Diversification
 Relevant diversification:
tea, cake, Muffin cake,
sandwiches.
 Unrelated diversification:
accessories, drinkware,
machines.

Initially, Starbucks entered the coffee market with its distinctive products such as: Starbucks
Roast and Seasonal favourites. Here, Starbucks writes the customer's name on each cup of
coffee to create its own uniqueness. Then, in order to retain loyal customers and attract new
potential consumers, Starbucks developed special customer appreciation programs (Starbucks
Card and Starbucks Awards) in parallel with its coffee product chain. To develop the diversity of
its products, Starbucks also aims to some new markets, besides its simple coffee drinks, such
as Starbucks ice cream: Frappuccino Blend and Frappuccino Light Blend; or foods: tea, cake,
Muffin cake, sandwiches. Futhermore, they also created exclusive support products of
Starbucks like: accessories, drinkware, machines. Overall, Starbucks offers a good product
range aimed at both current and new customers. (Chris Stern, 2014).

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b. Operating Plan

As mentioned above, Starbucks should adjust its goals and objectives in accordance with its
vision and strategy in the future, as follows:

Strategy Action Goals and Deadline Priority level

objectives
Financial  Increase  Increase From now until Highest
revenue for profits, reach 2030
businesses by the top 1 best-
100%. selling coffee
brand in
Vietnam.
Operational  Create monthly  Maintain 100% From now until High
staff training environmental 2030
workshops. friendliness
 Invest in new through the
technology entire
products in production
production but process and
still have to be provide
environmentally services and
friendly. products at
each store.
 Speeding up
the production
of products
faster over
time.
Human  Recruit  Improve the From now until Low
Resources employees with quality of 2030
at least 5 years' personnel at
experience in every
retail Starbucks
store
Marketing  Increase brand  Expand brand From now until Lowest

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 promotion in all image 2030
aspects: nationwide
promotions,
phone
applications,
television,
radio, etc.

III. Conclusion

All in all, Starbucks strategy has been completely dissected through internal and external
environmental analysis.

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