The Starbucks’ Growth and Its Competitive Environment Report (Assessment)

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Introduction

Business growth and expansion is one of the major goals of business organization which requires critical application of business strategies. For business organizations to expand, they must maximize the use of any of the opening maximization opportunities before being overtaken by its competitors. The maximization of the opening expansion opportunities is accompanied by the assessment of possible impeding dangers to minimize investment risks.

Organization’s growth and expansion is also powered through organization marketing, products advancement and branding. (Dubois 2007). In order for a business organization to succeed in its expansions, it requires to critically assess several factors that support business progression.

Generally, it requires reviewing of its financial status/ stability, its product strength, its market position and competitiveness within the industry of its operations, among others (Capon et al 2009). Based on the statements presented above, this paper will focus on the Starbucks’ growth opportunity of its sales and perhaps its revenues in relation to its competitive environment.

Financial Statements

In the year 2011, Starbucks Corporation obtained total revenue amount to around 11.7 million. This indicated an increase from 10.7 million, which is the figure of the previous year, 2010. The 11.7 million revenues thus represented almost 1% increments of the total revenue of the company.

This gives an idea and evidence of a great organization performance and improvement. The company’s income statement data shows that the organization had been experiencing good performance in sales returns. Except for the year 2009, the organization sales revenues have always increased on the yearly basis.

The company’s annual sales’ growth rate appears to be maintained at almost 1%, which is indicative of the extent the organization might have dominated the markets in the areas of its operations. On the side of sales costs, the organization incurred the highest cost in the year, 2008. However, the company’s sales have been greatly reduced since then, and the cost of about 4.9 million recorded for the 2011 was almost set a 50 % below the sales cost for 2008 (STARBUCKS CORP 2011).

The Starbuck Corporation obtained very lean gross margin and gross operating profits of around 2.0 million for the year 2008. Despite the low gross margin and gross operating profits realized during thas time, the company has changed this situation of lean incomes. In 2011, the Starbucks financial records indicated an estimate of 6.7 million as the organization’s gross margin and also gross operating profit (STARBUCKS CORP 2011).

This lucidly implies that the organization has done a lot in increasing its sales by more than three folds within duration of four consecutive years. Looking at the various situations in the business operation, one would realize the change in sales and incomes, like gross margins or gross operating, Profits were a result of decreased sales costs (Aaker and McLoughlin 2007). The organization has put much emphasis and control on its sales costs to grow and expand on the financial ground.

Table 1: Income Statement

Period ending09/201109/201009/200909/2008
Operating revenue11,700,40010,707,4009,774,60010,383,000
Total Revenue11,700,40010,707,4009,774,60010,383,000
Cost of sales4,922,6004,482,2004,296,3008,335,200
Cost of sales with depreciation4,949,3004,458,6004,324,9008,390,400
Gross margin6,777,8006,279,2005,478,3002,047,800
Gross operating margin6,777,8006,279,2005,478,3002,047,800
Selling Gen, & Administrative expense4,703,2004,414,1004,142,500786,100
Operating income1,728,5001,419,400562,000503,900

Starbucks marketing and product objectives

Marketing of the company is one way through which the company has been able to dominate the state’s coffee market. Rising costs of material, fuel and many other business factors that are determinant of the organization profitability seem to deteriorate, the marketing of the company and its products makes it to maneuver it way in its competitive business environment (Doyle, 2001). In its marketing campaigns, Starbuck integrates distinct marketing strategies to reach the targeted audience.

Although its marketing campaign aims at reaching the consumer and creating an awareness of the company’s products, it takes the organization’s marketing team to think on reaching the consumers using more unique approaches. The use of the organization’s logo has been a major way of reaching potential consumers around all of its stores. The company employs mostly the modern systems and media such internet emailing, blogging in its marketing strategies (Brennan et al 2008).

The company has also applied collaborative approach to capture its market particularly through the use of other organizations’ products on high demand such as mobile phones where it places its logos (Bruhn 2003). The company’s major aim of the marketing campaign process is geared towards educating the consumers on the significance of the organization products.

By doing so, the organization breaks several barriers which the competitors set to trap its customers, and through the betterment of the client’s knowledge on the product, the organization get assured of a clients’ repeated purchase of the company’s products (Best 2009). Similarly, the marketing campaign of Starbucks products is not built on persuasive communication for the clients to use their products. However, the company ensures that any product being marketed is of a superior quality.

The organization’s superior quality products are necessary and needed in ensuring that the consumers get the feeling of satisfaction. The emotional feeling of clients’ satisfaction is a key way through which Starbucks’ clients are driven to make repeated purchases of the organization products (Doyle 2008).

Differentiation and positioning using product life cycle

Starbucks Corporation has its products highly differentiated from those of its competitors. Branding of the company’s products is one way through which the organization has differentiated its products (Bradley 2007). Starbucks is said to be a brand by itself, and therefore differentiation commences with the organization chosen name. Apart from the name Starbucks, there are several other products of company which it has as its brands.

The Torrefazione Italia coffee and the Seattle’s best coffee brands belong to Starbuck company products. The organization thus shields and protects its products from being used by other competitor companies mainly by branding them. The company licenses its brands to distributors at retail levels.

This kind of practice ensures that consumers are assured of the getting the right product they need at point of purchase without getting lied to. The licensing of its distributors is a better way of eliminating the possibility of having vague or counterfeit product being circulated and sold to consumers in the market (Baker and Hart 2008).

Conclusion

Under assumption that market conditions remain stable for the next five years, Starbucks income generation is expected to increase on a year-to-year basis. The fundamental outlook on Starbuck growth opportunity emanates from the assessment results, which suggest that the organization has strong understanding on the issues relating product brands and differentiation. In short, the organization has the ability to expand from its profitability operations based on its understanding of the concepts of marketing.

Reference list

Aaker, D. A., & McLoughlin, D 2007, Strategic Market Management, European Edition, John Wiley & Sons Ltd, Chichester.

Baker, M & Hart, S., 2008, The Marketing Book. 6th edn, Butterworth Heinemann Elsevier, Oxford.

Best, R J 2009, Market-Based Management Strategies for Growing Customer value and Profitability, Pearson, New Jersey.

Bradley, F 2007, Strategic marketing: in the customer driven organization, John Wiley & Sons Ltd, Chichester.

Brennan, R., Baines, P., Garneau, P., & Vos, L. 2008, Contemporary Strategic Marketing, Palgrave Macmillan, Basingstoke.

Bruhn, M 2003, Relationship Marketing, Pearson Education, Harlow.

Capon, N., Capon, R, & Mac Hulbert, J 2009, Managing marketing in the 21st Century, Wessex Inc, New York.

Doyle, P 2001, Marketing Management and Strategy, F T Prentice Hall, Harlow.

Doyle, P 2008, Value-based marketing, John Wiley and Sons, Ltd, Chichester.

Dubois, P., Jolibert, A., & Muhlbacher, H 2007, Marketing Management A Value-Creation Process, Basingstoke, Palgrave Macmillan.

STARBUCKS CORP (NASDAQ: SBUX). Income Statement: Annual Financials for Starbucks Corp. Market Watch. <>.

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