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Mini Case Starbucks

1.How did Starbucks create its uniqueness in the first place? Starbucks create its uniqueness by
offering premium coffee beans, thus creating an amazing image. Every store is a unique place with a
wide range of products and a special homely ambience, emphasized by relaxing music and
comfortable seating furniture. Other than that, customers can use the free wireless hotspot or just visit
with friends. The high quality of the products connected with a fair price attracts many coffee lovers.
Starbucks also offer a wide range of products for example 30 different blends of coffee and first
supplier of beverages “to-go”. The special flavor of the coffee beans in every Starbucks reflect the
high standard of quality by providing high quality beverages and food, combined with superior
customer service in a friendly and welcoming environment. They can create unique experience
among their customer, thus will increase their loyalty level.

2.Was Starbucks’s uniqueness a VRIO resource? Did it help Starbucks gain and sustain a
competitive advantage? Why or why not? YES

Valuable : Starbucks is competence in creating a unique customer experience the world over. This is
becaue they are not only paying for a cup of coffee or tea but also can enjoy the good ambience.

Rare : The Starbucks possess the resource or can or can perform the capability in the same unique
way. It also on the path to competitive advantage when it possesses a valuable resource that is also
rare. Starbucks build its initial sign through barista and through its ambience where music and
comfortable chairs and sofas cannot be find in other places.

Costly to imitate : Their potential competitors seems like hard to produce the same idea as what they
do. They might able to open a coffee house business but with no baristas and other uniqueness.

Organized to capture value : Starbucks have an effective organizational structure and coordinating
systems to fully exploit the competitive potential of its resources and capabilities. So, Starbucks has
gain and sustained competitive advantage.

3. Why and how did Starbucks lose its uniqueness? Starbucks lose its uniqueness when baristas
used to grind beans throughout the day whenever a new pot of coffee had to be brewed which was at
least every eight minutes. Many baristas began to grind all of the day’s coffee beans in the morning
and store the rest of the day. Baristas now use push-button machines to make espresso drinks. That
stores no longer smell like coffee and that every store looks cookie-cutter.

4.How is Starbucks attempting to re-create its uniqueness? Do you think it will be successful? Why or
Why not? Starbucks attempting to re-create its uniqueness by introduced many new products such as
instant coffee. These new products undercut the integrity of the Starbucks brand for coffee purists.
They also challenged the baristas who had to wrestle with an ever-more-complicated menu of drinks.
With over half of customers customizing their drinks, baristas hired for their social skills and passion
for coffee, no longer had time to dialogue with customers. The brand experience declined as waiting
times increased.

Moreover, the price premium for a Starbucks coffee seemed less justifiable for grab and go
customers as McDonald’s and Dunkin Donuts improved their coffee offerings at much lower prices.
Second, the early adopters who valued the club-like atmosphere of relaxing over a quality cup of
coffee found themselves in a minority. To grow, Starbucks increasingly appealed to grab and go
customers for whom service meant speed of order delivery rather than recognition by and
conversation with a barista. Starbucks introduced new store formats like Express to try to cater to this
second segment without undermining the first. As a result, Starbucks is successful in creating their
uniqueness because since then they are able to increase their outlets for more than 18000 stores
around the world in 2013. 5.Explain Starbucks’s ups and downs using (a) strategic activity systems
and (b) the dynamic capabilities perspectives. What implications can you draw?

(a) Strategic activity systems is the conceptualization of a firm as a network of interconnected

activities. - grinding beans - second home - friendly service - relaxed atmosphere

- beverages ( desserts, sandwiches), books, music - more than 30 blends of coffee (b) Dynamic
capabilities perspective is a model that emphasizes a firm’s ability to modify and leverage its resource
base in a way that enables it to gain and sustain competitive advantage in a constantly changing
environment.

The implications can we draw from this is :- (i) Starbucks forgot what made it unique (ii) Intangible
resources were forgotten (iii) Lost appeal that made it special, its unique culture 6.What
recommendations would you give Howard Schultz? Support your arguments.

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