Why do businesses need innovation is simple, the world is changing at a rapid speed and no one can predict what is coming in the future. Organizations are facing many new types of vulnerabilities everyday. Innovation helps to determinate the strategic management within an organization and prepares organizations for the unforeseeable change and to make the change. Although very organization have different priorities, or balance the unique issues of their own, ignoring the innovation, or implementing the strategic plan inefficiently can bring risks of losing key employees, inefficiency of the operation, and lose competitive advantages to the competitors. This paper will create a new division for Starbucks Coffee Co. Using this division as an example to explain the importance of the innovation in company’s vision, mission, and values, and how it related to strategic management.
THE NEW BUSINESS MODEL
Starbucks Corporation, doing business as Starbucks Coffee, is an American global coffee company and coffeehouse chain based in Seattle, Washington. Today, with more than 21,000 stores in 65 countries, Starbucks is the premier roaster and retailer of specialty coffee in the world. And with every cup, the company strives to bring both their heritage and an exceptional experience to life. (Starbucks.com) Since the first Starbucks opened in 1971, the company has a goal to share great coffee with friends and help make the world a little better place. (Starbucks.com) To better server Starbucks Coffee’s customers, and provide quick and easy coffee for the people who have to fight the morning or anytime traffic, Starbucks coffee co. has purposed a new business model of Self Severed Coffee Machine. This new Machine will be located outside of Starbucks stores, shopping centers, and large office buildings to better server the consumers who does not have time to wait in line and get their favorite cup of coffee.
In this tough economic climate, Starbucks needs to compete smart, this means to stay a step head on ensuring the best response to customers’ need and demand. It is often to see a line of customers either inside the store or in the drive through. While we appreciate the their patience to wait in line, we also share their frustration. It is our intention to ensure everyone loves his or her coffee. While we are proud that every cup is made to earn our customers’ satisfaction, we are also spending a considerable amount of time on making them. The Self Served Starbucks machine has an ability of produce majority flavors of the coffee, which our customer likes.
Simply pay the cash, wipe the credit card, or scan the mobile Starbucks App on your smartphone, the machine will make a fresh brew cup of coffee in just 45 seconds. With this machine outside of store or mall, our customer can save time on waiting in line. Even more convenient, the machines outside of the office building not only can save our customer a trip to the coffee shop in the morning, also be able to enjoy a hot fresh coffee when they sat down by their desk. This new machine can ensure the competitive advantage by its product differentiation, more focused group on customer service, and operational efficiency.
MISSION VISION AND VALUE
Starbucks’ mission is a reason for the company’s existence. With the unique style of combining both, our vision and mission statement is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” (Starbucks.com) To align with this mission statement, our new division’s mission statement is to ” bring the best quality coffee and convenience to our customers on the go, one machine at the time” This mission statement reflected the company value and beliefs to show our costumers that we care, it will also guide our employees on understand and establish what the company truly does. A good mission statement inspires employees and provides a focus and direction for strategic planning. While mission statements vary from organization to organization and represent the distinctness of each one, they all share similar components. (Mission and Vision Statements, 2010) The new division’s mission statements include descriptions of Starbucks’ target market, the geographic domain, and concern for survival, growth, and profitability.
Being the giant leader of the coffee and snacks industry, Starbuck coffee company needs to develop a strong strategic plan through the analysis of SWOTT. SWOTT stands for strengths, weaknesses, opportunities, threats and trends. A SWOTT analysis identifies strengths and weaknesses within a company, and outside opportunities and threats. The most important parts of a SWOT analysis specify the actions that correspond to the elements the company identify. By using the results of the analysis to improve the situation of the new division, we can reduce the likelihood of developments that negatively affect the business while improving performance. (Smallbusiness.Chron.com)
Starbuck is currently in the retail coffee and snacks industry. The self-serve coffee machine will be able to satisfy customers not just a cup of coffee but also tea, water and juice, which Starbuck currently provide in the store. The loyal based reward programs provide customers with convenience, giving presents, and increasing frequency of the machine visit.
Although there will not be any customer service involved, but the efficiency of leveraging technology with the capability of mobile App will still attract customers. The machine will provide extra ideas on the screen related to recycling and reducing waste; this is a great way to communicate with people about the social responsibility initiatives of the company. Due to the economic crush in 2008, this industry has experiencing a major downfall in sales. Because of the sensitivities to the macroeconomic factors, most of industry consumers have to give up extra expenses such as over priced drinks, snacks, and food.
However, with economy slowly recover, consumers will start feeling the relaxation of the financial situation, it is safe to say, this industry will has a considerable amount of growth in the near future. With Starbuck having the most of market share in the industry, they have a monopolistic competition. By far the biggest threat the company face is the mature stage of the industry. Dunkin donuts, McDonalds, or Pete’s coffee are all the main pressure on Starbucks. Starbucks brand recognition and the convenience of the self-severed machines differentiates itself, the brand and the machine will draw more customers’ attention, gain competitive advantages for the company.
The self-served Starbucks coffee machine will be located in some of the most prime and strategic location across the city such as universities, office buildings, and grocery stores. They will primarily targeting mid-income individuals and students. This strategy will gain competence due to the customer convince factor. The Starbuck coffee-pricing factor does pose a weakness to some targeted consumers; however, the self-severed machine will be 5% cheap because there are no labor costs involved. Expansion into a global market is an opportunity for these machines. Starbucks has a great growth potential in further expanding into the emerging and developing markets.
The company can leverage their size, experience, financial prowess and efficiencies to make new market share. (Forbes.com) Starbuck has putting significant amount of time and money on training their employees. Their employees are known for highly knowledge and experienced. They are the main assets of the company and they are provided with great benefits like stock option, retirement accounts and a healthy culture. This effective human capital management translates into great customer services. It was rated 91st in the 100 best places to work for by Fortune Magazine. (CNN.com) The internal threat for Starbucks currently is the change of life style and taste choices of consumers. More and more customers are shifting towards healthy foods and drinks; this treading can hurt the coffee culture of the company, even to industry in the future.
The Balanced scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action. It also provides an organization with feedback of both the internal business processes and external outcomes, which allows for continuous improvement of strategic performance and results. Develop the strategic objectives for the new division of the Starbuck in the balanced scorecard format in the context of key trends, assumptions, and risks. The strategic objectives are measures of attaining the new vision and mission. Below are the three strategic objectives for each of the four balanced scorecard areas identified (Financial, Customer, Process, Learning and Growth).
How to gain the market share is the objective in financial perspective. This is aggressive strategy the new division can use to power our organization and weaken the competitors. The new ” Self served coffee machine” can gain market shares by:
One: New technology. This market has always been a high growth market, and high growth markets has less competitors, it means they will not fight our efforts as fiercely.
Two: Innovation. This new machine is absolutely a breakthrough innovative idea once it is release into the market. Innovation can help the new division obtain large market share.
Three: Strategic Alliance. The new machine can advertise other products, which is great choice when drinking coffee. If the alliance company can help with founding, we can lower our coffee price. This is efficient way to lure customers from competitors.
CUSTOMER VALUE PERSPECTIVE
How do we create value for our customers are the objective for the customer perspective? Customers are the key factor to an organization success. Creating value for our customers in three ways:
One: New Value. This is the most challenging way to impress customers. By setting new machines by the office buildings or school parking lots will be most convenience for people do not have time to stop for coffee in the morning, or anytime during the day.
Two: More value. The machine will provide the same product as in a Starbucks coffee store, but cheaper.
Three: Better Value. To expend on the existing value, the customer will be able to purchase snake from the machine. The addition product provided will simply delivering more powerful impact to consumers.
PROCESS OR INTERNAL OPERATIONS PERSPECTIVE
How we measure the new division performance? The new division will have its own survey attached to the machine. Customers are the top choice for us to know what does the new division do to make them come back for more. Also, customers can leave feedbacks and advice via Facebook, Yelp, or preferred social Media. Our new division will make huge impact on the organization, because it will release the busy traffic in the morning for the store location.
LEARNING AND GROWTH (EMPLOYEE) PERSPECTIVE
There is no employees’ turn over or retention involved with the “Self served machine” However, the mechanics are needed for the daily maintenance and refill. The new technology will notify the mechanic department if the machine needs any attention or checkups.
While having a strategic plan, mission and vision Statement is crucial for the new division, but crafting and developing this plan is only the half of the battle. To have a communication plan is one of the most important factors after the plan and analysis is finalized. Although the new division will not have any human operating the machine, there are still the needs of new policies and procedures to be carried out. The effective of these policies and procedures are most likely effect the success of the plan. For example, machines maintenance schedule, or refill of the machine. Failure to take communication plan into account can cause disastrous.
MONITORING AND CONTROL
Our new business plan is a comprehensive document that outlines key elements of how we going to operate this new division. The plan typically includes an assessment of the market and the competition, operating budget breakdown, and short and long-term business goals. (smallbusiness.chron.com) There are three suggest way to monitor and control our new plan:
CREATE PLAN REVIEW DATES
Any new business plans within an organization needs to be reviewed on a regular basis, especially the expectancy of the busy traffic with the new self-served machine. The new division management needs to set a date, this can be quarterly or annually, to review the long-term and short-term goals. Conducting the comparative analysis will help to ensure the strategic plan is on the right path.
DEVELOP A TRACKING SYSTEM
The management team of new division needs to develop a new tracking system to assess how the sales are doing regularly. For example, if the target sales goal is 5000 cups per month, then track the sales weekly or twice a month to monitor and control the process. Monitor key elements frequently. Key elements of the business plan include research on the market and competition as well as revenue projections. Each of these elements is subject to rapid change, and the management team should remain aware of where you stand with regard to these issues. (Smallbusiness.chorn.com)
COORDINATE BUSINESS AND MARKING PLANS
Our new division will have both business and marketing plans. Sometimes, they overlap in several ways. For example, if the Marketing plans calls for a major launching campaign with the media, but the business plan’s revenue prediction rejects that plan, then the managers needs to revise the plan to stay on track.
ETHICS WITHIN THE NEW DIVISION
Ethical behaviors and organization social responsibility is one of the key factors to bring large benefits for the business. With the new self-served coffee machine, it attracts customers with Starbucks signature products, thereby to boosting sales and revenue. It will create more jobs, therefor, help with unemployment. It will also attract more investors and keep the company’s share price high, therefor, protecting the business and employees’ benefits.
The fact is brutally simple: the accelerated change within the business world is unavoidable. Evidence shows in current business world, customers are changing their needs and interest each day, markets are relentlessly unstable, and competitors are more aggressively capture any chance possible at new ideas. With technology advances faster and faster, and modifying the traditional strategic management that it touches, Innovation has become what shapes the current strategic management trends, and the right strategic management is the key to business success.
Starbuck. Retrieved from:
Mission and Vision Statements. Retrieved from:
History of Starbuck. Retrieved from: http://www.starbucks.com/about-us/our-heritage
How to Monitor & Control Your Business Plan. Retrieved from: http://smallbusiness.chron.com/monitor-control-business-plan-41401.html
by Lisa McQuerrey, Demand Media
The new plan of the Starbuck coffee. Retrieved from: http://www.forbes.com/sites/walterloeb/2013/01/31/starbucks-global-coffee-giant-has-new- growth-plans/
Why Perform a SWOTT Analysis? Retrieved from:
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