SaMa

Starbucks acquired many companies over the years. Let’s look at these acquisitions strategies employed by Starbucks.  Teavana • Type of business: Tea and Accessories • Acquisition price: $620 million • Date purchased: December 31, 2012 Starbucks acquired Teavana as Product Extension Merger and started offering loose leaf tea and tea related products in its stores and online. Although this acquisition gave Starbucks 379 new locations, but Starbucks closed them all instead.  La Boulange • Type of business: Bakery Chain • Acquisition price: Reported $100 million • Date purchased: June 4, 2012 This is mix of Vertical Integration and Product Extension acquisition. Since Starbucks started selling bakery products in its stores as Product Diversification strategy, it was sourcing these bakery products from La Boulange. Later Starbucks decided to acquire La Boulange to vertically integrate its operations and kept 400 locations came with this acquisition. Later Starbucks dec...

Starbucks has strategic alliances with many companies to expand into different markets, segments, and improve brand value. Most of its alliances are Nonequity Alliances. It has alliances with consumer product companies such as  Kraft Food, PepsiCo, and Nestle. They help Starbucks in different packaged and take-home products. From these alliances Starbucks gets the Economies of Scale, which would be harder to achieve if it would be doing these operations in its own. Apart from that, Starbucks has alliances with Target Stores, United Airlines, and Barnes & Noble for offering Starbucks brand coffee in the stores and on airplane. This helps Starbucks to be perceived as high-end brand. It has alliances with under the Seattle Coffee Co. with Subway, Burger King, and AMC to offer low cost coffee and compete with McDonalds & Dunkin without affecting the its main top of line expensive Starbucks brand. Starbucks has some international alliances to capture the markets such as it has a...

  Diversification add value to organization and investors but implementing diversification strategies require communication between managers of different functions, and with investors. An organization might pursue a strategy to implement in-house development of functions to achieve Economies of Scale only if that same resource is difficult to copy by outside investors and is cheaper to acquire. In case an organization decides to go for the production itself, it would need financial and human resources to achieve the goals. Before any investor would invest, they might want to make sure that company and its managers are working towards maximizing shareholder value. Since investors does not interfere with organizations day-to-day activities, they some sort of tools and process for keep getting updates on progress of operations. Monitoring and Bonding are such two tools or processes. Monitoring helps investors keep an eye on management decisions and progress, whereas Bondings a...

Starbucks uses "related diversification" strategy as it offers food items which goes along well with coffee and other beverages. Even within beverages Starbucks has diversified its menu in hot and cold category, coffee and non-coffee drinks, healthy fruit-based drinks and calories heavy crème-based drinks and included tea and sparkling water options to its menu. Starbucks also offers food options for breakfast, lunch, bakery, snacks and sweets, and yogurt and custards. These food items compliment or supplement the customer experience. For e.g. my favorite is beagle with blank-coffee and my wife loves chocolate cake with Cappuccino. Now imagine if Starbucks would just be selling coffee, then it would be just any other coffee place without any clear competitive advantage. Food business is now significant part (20%) of the Starbucks.  Starbucks also realized the Economies of Scope. It has valuable, rare, and costly-to-imitate resources and capabilities and used these capabilitie...

Starbucks is a world leader in serving Coffee and other hot coffee-based beverages. They become leader not only  by serving coffee with smile, but also integrating lot of their backend value-chain functions. According to resource-based approach firms should vertically integrate into business functions in which they currently enjoy a competitive advantage. Starbucks used this strategy in one of the best ways one company can use. They collaborated with farmers in major coffee producing regions all over the world to produce and maintain required level of production. They made sure that they provide all the technology and financial help to these farmers to produce best quality beans. Next step would be bringing those beans to roasting facilitates and Starbucks committed people, time, and other resources to optimize its logistics to improve the efficiency of supply chain. This gave Starbucks an upper hand over competition in lowering the cost and improve the quality by directly deliveri...

Although there is no clear evidence of Starbucks collusion, but we can guess it employs strategies to discourage competitors to directly compete. Think about, how many coffee places we know within our own city ? Maybe 3 or 4, and Starbucks is mostly one of them. So why is it this way ? Starbucks is continually sending soft signals but providing good quality of product with excellent service which is consistent almost every Starbucks store. Other food-chain competitors such as McDonalds and Dunkin are focused on food items and Coffee as side item, whereas for Starbucks Coffee is the main product and even Starbucks not trying to enter food market whole heartily. Starbucks strategy about food is just to offer minimum options with just enough food which would go along coffee. This strategy might not be threating to McDonalds or Dunkin, because as food is side items for Starbucks, Coffee is side item for them. Although this non-forcible market co-operation working well for these companie...