Answer the questions in short 1- what strategy(both corporate and business level

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Answer the questions in short 1- what strategy(both corporate and business level) is Starbucks using to maintain its strong position? Why? Wish an inreasing wamber of oeign and domestic coffee shops emerging in China's c coffe higiant Sar&s; is rning to traditional Chinese tea to boost business Sin Febn?25and thn-h April 25, 2010, Starbocks began to sell white Mu Dam, BL ode and Evicntal Heauty holong teas for 20 ywan (53) a cup with one free refill in ahout 700 of a Osher eas will be isteosduced in the future and Chisese tea will become a permanent ofering on Searbck menu "Searbucks sees the opportunity in China's tea consumer markct, which is male up of many small-scale teahouses," said a tea industry expert. China is the worlds higgest tea market, with around 200 million regular tea drinkers. There are more than 60,000 teahouses around the country, mostly based in Chengdu, Hangzhou and Beijing. However, thc large market has resulted in a well-established national tea chain brand. Chinese tcahouses lack strategic planning and a standard production process."the expert said "I Lnow some teahouse owners in Hangzhou. They run teahouses based on their personal intcrest and dont want to enlarge their businesses. Starbocks would bring its international experiences to the tea industry. Currently the Chinese tea products are sourced from Taiwan and tea products cultivated from the mainland will be released in the future Starbucks' regulars who were asked seemed apathetic about the company's move to be more Chinese. Wang Sensen, a 27-ycar-old Starbucks fan, said she recently tried Oriental Beauty Oolong. "The price is ok, but the taste is just so-so." However, Wang, who works at a French company said she had no problem with Starbucks enlarging its drinks menu. "But me and some of my colleagues prefer coffee most of the time." Some other people think that people go to Starbucks not just for what they drink, but for the environment. So consumers actualy do not care much about what Starbucks sells, but care how it is sold Some people think Starbucks move is to strengthen the competition with other coffeechains especially McDonalds coffee brand- McCafe. McDonald's McCafé concept with small comfortable coffee shops next to the hustling, bustling burger outlets is the biggest challenger to Starbucks. Although there are only five McCafe's in China, McDonald's plans to open 65 new restaurants with the coffee shops in Beijing. Shanghai, Guangzhou and Shenzhen this year, as well as upgrade half of its 1,100 existing outlets with the coffee shops. It also plans to increase the percentage of McCafe's to 80 percent by 2013. About 90 percent of McDonalds a moderate price, and is hopeful of prices outlets in Beijing, Shanghai, Guangzhou and Shenzhen also offer free 30-minute wif connections. McDonald can offer high-quality coffee a creating a "McCafé Culture". Its advantages lie in its large number of outlets and low but can't provide the same atmosphere as Starbucks. As one customer says "I like free refill but the environment is always too noisy." 8/10

Explanation / Answer

1. The corporate level strategy that Starbucks is using to maintain its strong position is to focus on providing and being the primary source of the best coffees in the world. Starbucks focuses on profit maximization on one hand and business growth on the other hand by using the primary plan of expansion. In order to support their global strategy, Starbucks Corporation must continue to global expand into worldwide markets. To do so, the firm either licenses their name through companies with location property rights or franchises their shops through their subsidiary, Seattle’s Best Coffee.

The company’s business level strategy focuses on enabling Starbucks to compete successfully compete in the marketplace in the long run. In this context the business level strategy of Starbucks is ‘differentiation’. The company focuses primarily on coffee related products and on retail stores. This has enabled the company to offer gourmet beverage and confection offerings to its customers on a regular basis. The company uses the differentiation generic business strategy to offer gourmet products that have a perceived value with customers as being exceptional in flavor and quality, thus allowing premium market pricing. Starbucks Corporation has effectively differentiated themselves from their competitors in a manner that has established substantial brand loyalty and satisfies customers in a way that others do not. This level of differentiation would not be possible without all functions of the firm working together to achieve a common goal: to offer customers premium products while obtaining profit.

2. The corporate level strategy of Starbucks is good. This is because the company’s corporate level strategy of expansion (with an eye on profitability) has enabled it to establish a profitable business while expanding globally in an increasingly competitive market. It has also enabled Starbucks to strike a balance between global franchise and licensing expansions while still maintaining great customer service, which has caused the brand name and logo to be recognized everywhere.

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