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Strategy Of Starbucks Company & Apple Inc

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Question:

Discuss about the Competitive Strategy of Starbucks Company & Apple Inc.
 
 

Answer:

Starbucks Company

Starbucks is a food and beverages services provider firm who is currently managing its business worldwide. The company is famous for providing high-quality coffee to coffee lovers. The company diversified its business to 70 countries by opening 24,000 stores (Starbucks 2017). The company is famous for delivering best coffee along with good and satisfactory services to its customers.

The reason for selecting Starbuck Company in analyzing the organization excellence is that the company has initiated many projects for development and increasing the efficiency of the company. Also if asked with the target audience for their preference, major segment of the society will vote for Starbucks being their first choice; which shows that Starbucks is widely appreciated and used by them (Starbucks 2017).

The mission and vision of the company suggest that the company wants to achieve leadership in all facets of the business by providing pleasant and satisfactory services to its stakeholder. For the same purpose, Starbucks initiated an innovative strategy in order to excel in their existing business. The company commenced the strategy by initiating following steps:

Firstly Starbucks identified a few questions in their organization and then focused on making strategy by solving the questions (Trefis Team 2016), which are:

Where do we compete: this identified the target market and other environmental factors under which the company is going to prevailing in the market. Further the company analyzed the market conditions under which they were entering; also they looked after the geographic advantages and disadvantages which would help the market in future for achieving the goal and objectives. For the purpose of attainment of organization objective, it is a mandatory procedure for the company to gain adequate knowledge about their product and the market in which they are (Galliers, & Leidner 2014).

What unique value does the company input in their product in order to gain market capitalization: for a company to differentiate themselves in the market, the need to initiate their unique selling proposition. USP refers to that product differentiation aspect which is not present in any other similar product in the market. Due to this quality the product is being highly sold in the market. Thus, the company Starbucks focused on selling coffee made of rick coffee beans which attracted many customers. Due to the richness in taste of the coffee, customers started using their product which made the company gain the market capitalization (Starbucks 2017).

Resource and capabilities: the company optimized their input properly in order to generate output for the company. Resources of the company such as efficient human resource and networking system etc. are used to achieve profits. Human resource helped the company in achieving the target by working efficiently and effectively. Also social media helped he company in delivering the services on time and seek for customer feedback. Feedbacks gave the company a path to follow and gain mission.

 


How to sustain USP: in order to maintain the market share, the company took steps to sustain in the market. Such as, the company introduced various vouchers and gift in order to keep the interest of the customer in the company. Also, the company updated their menu to maintain their specialization in the market (Peng, Wang, & Jiang 2008).

Apple Inc.

Apple Inc. is a multinational company who serves electronics to the customers worldwide. It is the world largest information technology company which works under a wide network of 498 retail stores in 22 countries. The reason for choosing Apple Inc. is that the company gave a new innovative phase to the technological world. Also currently apple is gaining market capitalization because of its efficient and innovative business model (Slack 2015). The company is perceived to excellent the technology industry due to its leadership traits and product differentiation in the market which attracts the customers to buy their products; this leads to the growth of the company in the market (Hahn, Kolk, & Winn 2010).

For the purpose of efficient working in the system along with maximization of profit, the company adopted the razor and blade framework back in the year 2001. Razor and blade framework refers to strategy model under which the company provides certain complementary advantages to the customers apart from their main business line product. Such as the company apple sold its products at a minimum range (to make it economical for the customers) and then earn revenue from the accessories (Dormehl 2015).

 Like, the apple watches uses high tech spin in this case, the company smartly use this technology to earn revenue with maximum profit. The company sells watches with minimum profit margin and the buyers also prefer to purchase the various band for the watches. The company increases the cost of the band and earns high revenue with it (Andersson et. al., 2015). For instance, the sports band which cost around $2.05 to the company is sold for $49. So, in this way the company applies the razor and blade strategy and earns the profit. Other ways through which this tool is used by the company is that, the company sells iPhones at a minimum profit margin and earns revenue from iTunes and other application installed in the phone (PatentlyApple 2015). Per song, the company earns 65 cents per song. Through this technique the company lures the customers to buy the product at cheap prices. Also, the model cannot be imitated by any other competitor in the market as in the Apple Inc. All the departments are interlinked with each other (complex design) resulting to which profits of the company is shared by all (Peng, Wang, & Jiang 2008).

The razor and blade is an innovative as well as aggressive business technique used by the company to gain profit. Perhaps the Apple Inc. uses this technique efficiently to sell all its products in the market along by gaining the satisfaction of the customers. It becomes easy for the customers to purchase the product at cheap prices and company also gains profit by providing them additional services with maximum profit margins (PatentlyApple 2015). Thus it can be said that the company optimally uses all the resources provided to it along with effective management strategy in order to gain market capitalization and satisfaction of customers.

 

References

Andersson, U., Gaur, A., Mudambi, R. & Persson, M., 2015. Unpacking interunit knowledge transfer in multinational enterprises. Global Strategy Journal, 5(3), pp.241-255.

Dormehl, L, 2015, Forget the Apple Watch, extra bands are where the big profit is, viewed on August 5, 2017 from < https://www.cultofmac.com/326702/razor-blade-business-model-giving-apple-an-edge-on-watch-bands/>

Galliers, R.D. & Leidner, D.E. eds., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

Hahn, T., Kolk, A. & Winn, M., 2010. A new future for business? Rethinking management theory and business strategy. Business & Society, 49(3), pp.385-401.

PatentlyApple, 2015, Apple's High-Tech Spin on the Razor-Blade Business Model is Paying Big Profits with Apple Watch Bands, viewed on August 5, 2017 from < https://www.patentlyapple.com/patently-apple/2015/06/apples-high-tech-spin-on-the-razor-blade-business-model-is-paying-big-profits-with-apple-watch-bands.html>

Peng, M.W., Wang, D.Y. & Jiang, Y., 2008. An institution-based view of international business strategy: A focus on emerging economies. Journal of international business studies, 39(5), pp.920-936.

Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.

Starbucks,  2017, Company Information, viewed on August 5, 2017 from < https://www.starbucks.com/about-us/company-information>

Starbucks, 2017, Starbucks Company Profile, viewed on August 5, 2017 from < https://www.starbucks.com/about-us/company-information/starbucks-company-profile>

Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning, 43(2), pp.172-194.

Trefis Team, 2016, Let's Look At Starbucks' Growth Strategy, viewed on August 5, 2017 from < https://www.forbes.com/sites/greatspeculations/2016/09/19/lets-look-at-starbucks-growth-strategy/#57d3172a3d71>

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