In context to strategic management, search the Fortune \"Most Admired Companies\

Question

In context to strategic management, search the Fortune "Most Admired Companies" 2010 and compare that list to the latest one of 2017. (www.fortune.com) Which companies have fallen out of the top 10? Pick one of the companies and investigate why it is no longer on the list. Which companies appeared both in 2010 and 2017? Why? Which companies go to the top 10 list from not even being on the 10 in 2010 list? Pick one of the companies and investigate how it reached the top 10 list. Conduct research on the selected companies. Try to explore what are the company's opportunities, threats, strengths, and weaknesses? Prepare a 3- to-5 page report of the company. The report should include the following: a. Does the firm have any core competencies? Are any of these distinctive (better than the competition) competencies? Does the firm have any competitive advantage? What is its business model? Provide a SWOT analysis. What is the likely future of this firnm if it continues on its current path?

Explanation / Answer

Answer:

The top ten most admired companies of 2010 are -

The top ten most admired companies of 2017 are -

The companies which appeared in both 2010 and 2017 are -

Companies of 2010 which were kicked out of top 10 in 2017 are -

The company which reached top, yet which was not a part of 2010 list is Starbucks.

STARBUCKS

Starbucks is the most delicious, rich and flavored coffee and the largest coffeehouse chains in the world. Starbucks product line includes fresh brewed coffee, hot and iced espresso beverages, coffee and non coffee blended beverages, Tazo tea, baked pastries, sandwiches, and salads. Starbucks paraphernalia includes coffee grinders, espresso machines, coffee brewers, and music CD’s, books, movies and gift cards. The global consumer products include bottled Frappuccino, iced coffee, and espresso drinks, whole bean coffee, tea, coffee liqueurs and premium ice cream.

Starbucks understands concepts of brand identity and product differentiation. They have tapped in on what the consumer perceives and had managed to identifiable differentiate themselves between other companies’ products or services. Starbucks realizes this success depends significantly on the value of the Starbucks brand while relying on its excellent reputation for their product quality, superior, and consistent customer service.

Starbucks believes it must safeguard and develop the value and importance of the brand in order to bring continued success in the future. The perception of brand value by the consumer is based on an array of personal qualities. Starbucks has been able to establish an ambiance of sophistication and intellect. Loyal customers enter the retail chain as an escape from their mundane lives into a serene, regal atmosphere where they proudly sip from their branded mugs. Starbucks profits from the way they make their customers feel, allowing them to portray a prominent image and feel like the upper crusted elite in society. Therefore, Starbucks brand equity and quality is synonymous with high prices and a classy image. The Company already owns and has also applied to register many service marks and trademarks both in the United States and in many countries around the world. Some of the Company’s trademarks, including Starbucks, the Starbucks logo, Frappuccino, Seattle’s Best Coffee and Tazo are all of great value to the Company.  

Market Structure

Starbucks, despite their inflated prices have been able to create a sense of brand loyalty with and array of loyal followers. Coffee is a fairly homogeneous item which Starbucks has been able to market their standards of portraying a luxurious lifestyle. Starbucks operates in a monopolistically competitive market structure in which they have been able to maintain a control over their inflated prices. They have been able to create a standard for their coffee and in which they require their customer base to be exaggerated prices for a cup of their various brews. With usage of the Starbucks logo, quality, and various trademarks, they differentiate their coffees from their competitors. Starbucks prides itself on being completely different from any other coffee house and its competitors, which is a reason why Starbucks has become so successful. The company’s strategy to focus on their core competencies to differentiate themselves has made Starbucks into a coffee powerhouse. Starbucks has mastered knowing how to benefit their customer; leverage the company widely to many products and markets, and create ideas that are hard for competitors to imitate.

Starbucks is not the only coffee shop on the market, others like Dunkin’ Donuts, McDonald’s, and Panera Bread have an identical item with similar tastes and effect as the Starbucks brew, yet they have been able to charge a premium for their blends by luring in customers with the aroma of an inflated lifestyle. There are other homogenous coffee shops in the market, but their loyal customers believe that the superior quality, taste, and aroma cannot be found from any other coffee brewing entity. At one point, their customers were more interested in the pretense that holding a Starbucks cup represented.

Monopolistically competitive firms, like Starbucks are driven by mass advertising and the establishment of brand names and logos. Starbucks ambiance and products are marketed by the elevated, intellectual connotations. There are many coffee shops on the market that also offer tasty aromatic coffees, but the advertising and atmosphere of the Starbucks shops draws customers in. People are spending more on Starbucks brews because of the logo and status attached to them. Because coffee many times is virtually identical, advertisers and producers narrow in on what the consumer wants and allow their products to portray those ideals.  

Competition

Starbucks main competitors are quick-service restaurants and specialty coffee shops. There are an abundant amount of competitors in the specialty coffee beverage industry. The company believes that its customers choose among retailers primarily on the basis of product service, service, price, and convenience. Starbucks, in recent times, has experienced drastic direct competition from large US competitors from quick-service restaurants. These restaurants have significantly greater marketing and operating resources than they do. Starbucks is also faced with well-established competitors in the International markets with increased competition in the U.S. ready-to-drink coffee beverage market.

Pricing Strategy

Starbucks positions itself as a specialty premium coffee retailer and has a strong and well known brand image. As Starbucks is a premium coffee brand, its target market has always been middle and upper class with the disposable income needed to frequent the coffeehouse. One of the main reasons Starbucks has been so successful is because they focus on quality and experience rather than price. The Starbucks’ image and experience has been one of the key elements to their success. Starbucks has succeeded in giving coffee a new cachet and established themselves as a price setter through product differentiation. Consumers have been willing to pay for what they consider an elite lifestyle and many believe that the higher the price, the better the quality. Although premium brand coffee makers have some market power to set prices above the generic value brands, Starbucks operates under monopolistic completion where there are many small firms that sell similar products, therefore they do not exert complete market power in the industry.

Starbucks relies on its relationships with coffee producers, outside trading companies, and exporters for its supply of green coffee. The company is dedicated to selling only the finest whole bean coffees and coffee beverages therefore it purchases green coffee beans from coffee-producing regions around the world. Because the supply and price of coffee are subject to significant unpredictability, the company tends to trade on a negotiated basis at a significant premium above commodity coffee prices. The amount negotiated depends on the supply and demand at the time of purchase. Supply and price can also be affected by other factors in the producing countries, including weather, political and economic conditions. Agreements establishing export quotas or by restricting coffee supplies have also affected price. Due to unpredictability in the prices, the company has largely used fixed-price purchase commitments to be sure they have enough of a supply of quality green coffee and control the price. All these indicate responsible sourcing from the farmers and other suppliers and the quality of the coffee they offer to its customers makes the company one of the most admired companies in the world.

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