Resources and Capabilities of Starbucks.
Starbucks is the leading coffee brand of the world. It has an extensive global presence. The brand is known for its premium quality products as well as great customer service and in-store environment. The company has acquired a leadership status in the coffee industry through its consistent focus on quality of products, customer service as well as excellent supply chain management. Products and service of Starbucks are well differentiated from its competitors and over time the brand has built excellent reputation and popularity as well as a large customer base throughout the globe. It has built a strong competitive advantage in the coffee industry. For any rival to be able to match its strengths would be really difficult if not impossible. This is also why the brand has consistently been growing profitably. Here are the major resources and capabilities that have helped Starbucks build a strong and sustainable competitive advantage in the coffee industry.
Brand equity:
Brand equity is an important core strength of any brand. It is an advantage which differentiates your brand from the competition. How your customers perceive your brand? How much your customer experience is differentiated from the other players? All these factors affect your brand equity. Strong brand equity is also essential to sustain the other competitive strengths of a brand. If you have all the other factors right but have not been able to build strong brand equity, then it is a sign of weaker customer connection. Starbucks is known as a customer centric brand. It is a brand that customers trust. There are several factors that have enabled Starbucks to build a differentiated and strong brand equity. However, Starbucks has got the overall picture right and the result is higher demand and stronger customer loyalty. The customer centricity of Starbucks is the main reason that it has built strong equity. Simultaneously, it did not depend on marketing to push customers but instead good product quality and customer service so as to pull customers to its stores.
Global presence:
The extensive global presence of Starbucks is also an important strength. It is also a source of higher revenue and has helped the company acquire a larger customer base than the competitors. The total number of Starbucks stores in the year 2017 was higher than 27K. Largest number of these stores are located in the Americas. Of the total 27,339 stores, the company had 16,559 in the Americas. However, the brand has also maintained an impressive presence in the Asia pacific and Middle East. The number of Starbucks stores in the Asia Pacific at the end of 2017 was 7,479. US is the primary market of Starbucks. Number of company owned stores in US in 2017 was 8,222 and that of licensed stores was 5,708.
Customer loyalty:-
Competition in the industry has kept rising. The competing brands are also focusing on quality, customer service and marketing to grow their customer base. However, Starbucks has always invested in better products and focused on customer service. These things have helped it win the customers’ hearts and achieve higher customer loyalty. The result is faster growth, better sales and higher revenue.
Supply chain:-
Starbucks always brings best quality products for its customers. It sources its cocoa from some of the best suppliers in the world. The famous Arabica coffee is sourced exclusively from farms located at higher altitudes. Apart from that the company has established a responsible supply chain and sources from responsible suppliers only who offer matchless quality of coffee beans. The company also works to empower its suppliers and help them sustain their quality of raw products. Due to its strong and stable supply chain, the company has been able to offer its customers excellent quality products consistently.
Product quality:
Product quality is the central attractions of Starbucks’ offerings. It has brought a large range of product offerings in coffee and snacks categories. Premium quality is also among the primary drivers of demand of the brand. Its premium quality products have helped it build a distinct and differentiated image in the industry. Starbucks products belong to the premium price range. However, the demand for its products is still strong and so is customer loyalty because of steady focus on product quality.
Customer service:
Starbucks is a customer centric brand and therefore maintains the highest level of focus on customer service. High level of focus on customer service has helped retain customers in larger numbers and build strong loyalty. Customer experience has become paramount to achieving highest customer loyalty as well as for effective marketing and higher sales. While most brands are focusing on customer service, for Starbucks it has also remained an important method of marketing its brand. Apart from empowering the customers and being more inclusive, the company has trained its staff to provide the best quality customer service. This has strengthened the company’s reputation and made it the leader brand in the coffee industry.
| Capability | Valuable | Rare | Inimitable | Organized | Result |
| Brand equity | Yes | Yes | yes | Yes | Competitive advantage |
| Global Presence | Yes | No | No | Yes | Temporary advantage |
| Customer loyalty | Yes | Yes | No | Yes | Temporary advantage |
| Supply chain | Yes | Yes | No | Yes | Temporary advantage |
| Premium Product quality | Yes | yes | Yes | Yes | Competitive advantage |
| Customer service | Yes | Yes | No | Yes | Temporary advantage |
- Sources:
- Starbucks Annual Report 2018.