Starbucks Global Expansion And Success

Introduction

Starbucks coffee company is one of the most successful coffee brands in the USA as well as all across the globe. Founded in Seattle Washington in 1971, the company has over the decades grown and expanded to different countries all across the world including china, the Middle East and the Asian Pacific. Currently, according to Rivero (2015) starbucks operates 28,218 stores worldwide with the majority of them, about 5,415 licensed in the USA, 3,000 stores licensed in China and the Asia pacific while about another 1,143 stores licensed in Europe, Middle East and Africa. The increasingly growing global demand for coffee in the consumer market in countries such as Brazil, India, China, South Korea and Vietnam further enhance the need for expansion to satisfy their market. This calls for innovation and creativity especially with regard to the context of this location, such as the cultural differences, ethics and responsibilities within social norms as well as the innovative organization principles, systems and practices such as leadership and marketing. This essay will therefore focus on the strategies of innovation and creativity employed by Starbucks to enhance their products and services as well as the new systems and processes in place with regards to leadership, marketing and organization culture.

Tidd and Bessants’ Framework

Innovation according to Saunila and Ukko (2012) refers to a continuous transformation process of new ideas, information and knowledge in order to be able to create new systems, products as well as processes that will be able to significantly and sustainably help in the improvement and development of a business or organization. Tidd and Bessant (2013) highlight four phases to the process of innovation including: Search, Select, Implement and Capture. This essay critically highlights Starbucks innovation process using these four steps to adequately understand their success based on their creativity and innovation processes.

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Search

The first step in the framework to creativity and innovation by Tidd and Bessant (2013) include the Searching stage. This is the process of identifying a gap which can be capitalized on by the organization or business to be able to develop new processes, products or systems that are unique and beneficial to just them. Leadership is a crucial element in being able to conduct the search and identification of such opportunities. According to Nabil, Abderraouf and Nadira (2017) to be able to reap the benefits of creativity and innovation, effective management and leadership structures have to the first set up within an organization. In Fact the authors emphasize that the meaning of creativity is the tendency to generate or recognize ideas, alternatives, or possibilities, and innovation is turning these new and imaginative ideas into reality to help organizations in achieving its goals, in essence highlighting the role of leadership and management in enhancing innovation and creativity within an organization. In fact innovative leadership according to Goffin and Mitchel (2017) significantly impacts the eventual success of a brand or company.

An example at Starbucks involves the Search for alternative international markets that are viable to invest in and thereby expand the company’s market. Given the complications presented by the American Company operating in the global market including cultural and civilization differences, setting up and operating stores in countries such as Brazil and Vietnam and others across the world presents a challenge related to ethics and responsibilities within social norms (Rivero, 2015). But at the same time provide a viable opportunity of being able to expand production in readily available markets that guarantee profits and returns to investment.

To be able to be successful in these areas therefore Starbucks embraced innovative and creative ways of leadership in the stores in these areas so as to enable inter cultural connections and improved services and consumer experience within the stores in such locations. Nabil, Abderraouf and Nadira (2017) further emphasize that to develop creativity, the organization must have a flexible structure that ensures a good culture that the leader could provide the right climate to his employees, inspire them, and motivate them, so they could have the ability to generate artful ideas. Moreover, to apply innovation, the organization must have the culture that accept change and put leaders that could make employees feel the necessity to innovate and to do more initiatives in order to achieve organization’s goals.

Starbucks leadership strategy is innovative and creative due to their use of multicultural managers and branch leaders who facilitate communication with the local laborers and employees due to their capability of appreciating different cultures, eventually this enables the foreign brand to be effectively delivered and served to locals in different locations all across the globe impacting new processes and systems that impact on optimizing the services provided by the coffee company.

Select

The next step in the process of innovation involves the Selection phase. Putz (2018) likens the process of innovation to gold mining, while millions of ideas will be dug up from the Search process the crucial part involves the selection of the most viable ideas from the variety that has been identified. This process of selection is highly dependent on the eventual company objectives and goals as well as the available resources in disposal. According to Tidd and Bessant (2013) the organization has to prioritize which ideas to be implemented first based on either the amount of resources available or how significant or urgent the idea could be in enabling the achievement of the desired goals.

For instance Starbucks has had various innovative ideas to implement within the previous year’s including development of new distribution networks, opening up stores in new locations and impacting creative and innovative ideas such as using multicultural leadership strategies as well as a variety of innovative marketing ideas that would impact new systems in enhancing popularity and effectively increasing the company’s sales and thus success. Starbucks for instance selected and acted upon new marketing strategies such as new and effective product packaging systems, market segmentation as well as the use of social media which currently presents a great opportunity in being able to reach the much vibrant and younger market of the Millennials.

While most of the other competitors in the retail and distribution of beverages including Costa Coffee, Caffe Nero, Dunkin Donuts and McCafe also invest in online marketing and the use of social media to help popularize their products, Starbucks further enhances online marketing and with their status as the most advanced coffee house in the US this has significantly impacted on their sales. The marketing of products as well as services, new systems and processes at Starbucks is another sector that has been innovatively and creatively advanced thereby equally amounting to the high and rising popularity and reputation of the coffee company all across the global market. Christensen (2016) states that “social networking is not about farming followers and establishing popularity based on the number of views and likes on the sites but rather a way of cultivating relationships.” She goes ahead and highlights that “Starbucks is one of the companies that have maximized their creativity and in lines with using social media for adequate and efficient marketing of their products.”

The company has invested in innovative processing and packaging of their products to provide a unique taste and change the soluble coffee market. Allsup (2018) highlights an innovative automation in the new process of soluble coffee production which took Starbucks up to a year to perfect and is distinct to the company to include a number of unique features including: operational flexibility regarding what product of distinct qualities to produce, Nitrogen blanketing that preserves taste, texture and color, ensures temperature control, Aroma recovery that removes bitter and acidic odors and flavors while preserving the pleasant rich and robust aromas, product concentration which helps to preserve the flavor of the coffee as well as same day packaging which ensures the coffee is packaged within 12 hours of process if to ensure maximum freshness and a variety of other features that ensure superior quality in product and therefore maximum consumer experience.

Market Segmentation

The company through maintaining good coffee, quality services as well as a nice environment to hang around has been able to segregate itself and remain within the upper scale of the coffee market which competes on comfort and quality rather than convenience thereby enhancing the consumer experience and impacting the rise in demand.

Implementation

The next step is innovation. According to Tidd and Besssant (2013) the most crucial element in this phase is the selection of the most efficient implementation process that will lead to effective results with the least possible resources. The process of innovation is perhaps the most crucial process in the innovation undertaking requiring skills such as leadership, skills, organization culture as well as actual resources. After the search and selection of the most efficient and viable ideas Starbucks in the last decade settled on product improvement and marketing enhancement, this led to the implementation of creative ideas to improve their product as already discussed in the Selection phase as well as strengthening and enhancing the marketing process.

Some of the examples of implemented marketing ideas by the organization include intense online marketing and the use of social media, mobile interactions as well as strategic marketing partnerships Through the use of social media and the internet the company has been able to insert itself into the American Urban landscape faster than any other company in the retail companies’ history strategically using innovative and creative online marketing techniques to successfully market themselves. Some of these innovative techniques are highlighted by Schoultz (2019) to include:

Mobile and Mobile Payments

Through a recognition that a wide sector of the market have migrated to the digital world as well as the latest technological innovations such as the Internet of Things which literally automates almost any process available, Starbucks realize that consumer services and experiences are shifting to the online platforms and mobile sphere, This inspired the further enhancement of the companies already world class digital technologies by introducing programs such as Mobile Order and Pay as well as mobile delivery and expansion of loyalty programs (Schoultz (2019)). This has enabled the streamlining of stores, attraction of new customers especially from the online market and maintaining as well as growing consumer experience in terms of product and service delivery which enhances the companies’ reputation and maintains its competitiveness.

Utilization of New Social Media Innovations

The company has taken up a social media marketing strategy for their products and services built around the official company websites and 6 other social media platforms including: Twitter, Facebook, Pinterest, You Tube, Google +and the companies App My Starbucks Ideas, this not only ensures the proximity and ease of customers to access Starbucks products but also an ease of consumer engagement as well as ensuring customer loyalty programs which further builds the companies market and enhances its growth (Ahmed and Shephard, 2010). Through innovative and creative ways the company utilizes its application to reward consumer loyalty for instance through encouraging customers to perform certain tasks such as fast purchases the customers gain benefits such as discounts on their next purchases, access to new premier collections as well as coupons to services and Products in different locations all of which are geared to further encourage customer retention.

Alliances and Partnerships

Cope (2005) points out one of the most creative and innovative strategy in being able to build and maintain a successful brand to include strategic partnerships and alliances. This represents one of the areas that Starbucks invests in order to impact the continued growth of the company. Schoultz (2019) highlight among the strategic partnerships the company has taken to include Mobile companies to be able to develop and provide the mobile services such as mobile order and pay as well as delivery. The company is also in alliance with the New York Times which enhances the magnification of the company’s vision and enabling it impact the consumer experience in terms of ease of service and product delivery. Further the company has a partnership with twitter that launched the Tweet-A-Coffee campaign enabling customers to buy each other coffee through a tweet by sending a $5 Starbucks gift card to anyone within the USA. This is not only creative and innovative but it is also unique and interesting and with the potential of greatly attracting new customers to the company.

In the last phase of the innovation process: Capture, the major concern for an organization is to evaluate the performance of the innovation process or processes undertaken in order to ensure the realization of all the benefits (Tidd and Bessant, 2013). The performance variables for innovation and creativity include an expanded market as well as improved performance from systems and increased sales and profits from the products and services. The last process involves an evaluation of the actions undertaken against the benefits expected and thereby retaining the most viable and effective innovations based on their eventual performance after which they can either be retained or replaced by other innovative ideas, systems, processes and products for improved performance.

According to Starbucks.com (2019) the organization carries out quarterly evaluation board meetings to highlight the effectively performing parts and replace the in effective ones. In these processes the company is capable of evaluating the creative and innovative processes they put up and as such be able to emphasize the implementation of the successful ones and replace the less effective strategies taken up.

Conclusion

Innovation and creativity is an important aspect of business growth and development and can indeed be applied in different sectors of an organization or business to improve the overall company performance as demonstrated by Starbucks. Not only does innovation and creativity guarantee superior and unique products and service as well as the satisfaction of the consumer due to a great and memorable customer experience, but it also ensures the growth and maintenance of a brand which leads to the success of the organization. However innovation can only be successfully implemented within an organization through its systematic take up involving the four phases of: Searching for innovative ideas that have the potential of impacting the organization in the lines of their strategies and goals; Selection of the most viable innovation ideas from the variety of ideas and processes identified, Implementation of the most viable idea using the most viable implementation process in order to ensure the proper and conservative use of the resources available within the organization and finally evaluating the performance of the innovative ideas in achieving their intended goals, this so as to retain the successful ones and replace the ineffective ideas. As such it is within an organizations interest to develop innovative and creative strategies and ideas that can be effectively and efficiently utilized to improve the business especially with consideration to local factors such as culture and consumer preferences.

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References

  • Ahmed, P. &Shepherdm C. (2010), Innovation Management, FT Prentice Hall
  • Allsup, T. (2018). 10 Game-Changing Process Innovations Inside the Starbucks Soluble Coffee Plant. [online] Stellar Food for Thought. Available at:[Accessed 21 Feb. 2019].
  • Christensen, C. (2016), The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change), Harvard Business Review Press
  • Cope, J. (2005) Researching entrepreneurship through phenomenological inquiry: Philosophical and methodological issues, International Small Business Journal, Vol.23, Iss.2, pp.163-189
  • Dawson, P. and Andriopoulos C. (2017), Managing Change, Creativity and Innovation, Sage
  • Foster, L. (2018). 5 Ways Starbucks is Innovating the Customer Experience. [online] QSR magazine. Available at: [Accessed 21 Feb. 2019].
  • Goffin, K. &Mitchel,l R. (2017) Innovation Management: effective strategy and implementation, 3rd edition, Palgrave Macmillan
  • Nabil H., Abderraouf A. and Nadira R. (2017). The Impact of Leadership on Creativity and Innovation. International Journal of Humanites and Social Science Invention. 6(6). Pp55-62
  • Putz, M. (2018). Selection of ideas - 500 ideas and how to proceed?. [online]
  • Rivero O. (2015). Starbucks Corporation: Leading Innovation in the 21st Century. Journal of Alternative Perspectives in the Social Sciences. 7(1), pp23-38
  • Tidd, Joe., and Bessant, John. Managing Innovation: Integrating Technological, Market and Organizational Change. 5th ed. John Wiley & Sons, 2013. Print.

Interview Questions

Name of respondent
Department

Are you involved in any decision making processes within the organization
Yes
No

What are some of the decision making techniques that are applied within the company in developing growth strategies within the organization

Orders
Discussions
Board meetings
Instructions
Others, specify…..

At what level of management are these decisions made, especially those that affect the store that you are an employee of Are you as employees allowed to participate in the decision making processes that require creativity and innovation especially regarding the stores you work in? Yes No Does the company take into consideration any decisions made at the management level of individual stores when making decisions on factors impacting the stores? Yes No How does the company develop creative ideas and innovative strategies to impact the growth of the particular store that you work in? Has the previous innovative and creative ideas that have been adopted been successful in impacting sales and growth within the stores you are an employee in? Are the techniques and practices adopted for developing innovative and creative ideas for change effective in their purpose?


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