Business Model Canvas of Starbucks

Business Model Canvas of Starbucks

Introduction

Business model canvas is used by business organizations in building strategic frameworks and tools that deliver effective service delivery. The model helps in challenging, describing, inventing as well as designing a business model of an organization (Patterson, Scott & Uncles, 2010). Each building block describes in the business canvas offers some assumptions that help an organization to change various operations to adapt to the changing market environment. Starbuck is a coffee chain with American origin that leads the coffee industry in the United States and global markets. The company is concerned with selling coffee, beverages, fast foods, coffee machines among other diversified food products demanded by customers in its operations (Gallaugher & Ransbotham, 2010). The business model canvas of Starbucks is important to help the management come up with appropriate strategies to help achieve a competitive edge in the market.

Value Proposition

Starbucks is committed to providing high-quality products that attract customers for increased revenue generation thus enhancing profitability (Patterson, Scott & Uncles, 2010). The first aspect of its component is acquisition and offering quality coffee to its customers in various market segments across the world. Starbucks is known to offer high-quality coffee in the world and this is enhanced through supply chain controls and contracting quality producing farmers. The organization has been engaging coffee growers in the effort of purchasing the right quality coffee that enables it to deliver high quality in the market. The organization has the most efficient and effective way of the coffee custom roasting process and controlled distribution around the world to help deliver high quality in the market. Therefore, the provision of quality coffee to its customers to various coffee retail houses has been one of the major strategies that have put Starbucks ahead of other companies in the industry.

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The other important component is an exemplary service that is also known as customer intimacy to achieve enhanced successes. The organization is committed to delivering high-quality services to its customers to ensure a return to business thus sustainability (York, 2010). The organization has trained employees that understand customer needs and this helps them to deliver high-quality services in the market. The other important component includes an outstanding atmosphere that makes many people come and stay in their coffee retail shops. The organization offers soft background music, mobile charging as well as reading books that makes the environment exemplary to their customers. The organization prefers to offer a comfortable atmosphere that allows for a sense of community and relationships within the society (Gallaugher & Ransbotham, 2010). The major focus of Starbucks is offering high quality and the most effective services to meet the increased needs of customers in the market.

Key Resources

Starbucks is a resourceful organization with a variety of resources as well as capabilities that enable it to meets various needs of the market. The organization has invested more resources over its employees to achieve increased training, skill acquisition, and motivation for increased service delivery. The human capital of the organization has the required skills and capabilities of offering high-quality services to Starbucks customers. The other important resource includes facilities and equipment as well as accessories that help to roast and processing quality coffee in the market. The organization offers high-quality coffee and other related foods that meet the tastes and needs of customers. Suppliers are the other important resource to Starbucks because of high-quality coffee that is delivered on time (Patterson, Scott & Uncles, 2010). Suppliers enable Starbucks to meet the various demands of customers as well as sell their food products to customers on time.

Starbucks has the capability of expanding its operations to strategic locations across the world to achieve high profitability levels (Phillips & Rippin, 2010). It has adequate finances invested in critical economies such as Japan and china for increased profitability levels. Starbucks usually situate their stores in customer traffic areas such as grocery stores, malls, universities, airports among others. The major reason for locating their coffee houses in these points is increasing customer traffic and revenues to its operations in the market. The reputation of Starbucks in the community is considered as critical resources that ensure increased customers in its coffee shops around the world. The organization has a highly valued brand name in the market and this has facilitated increased success and profitability in the market (Patterson, Scott & Uncles, 2010). The organization has a customer-centric culture that ensures the customer comes first in its market operations.

Customer Relationship

Customer relationship is the major concern of star bucks to meet its profitability goals in the fast-food industry. The brand is successful in forging personalized relationships with its customers as well as suppliers to deliver high-quality products in the market (York, 2010). Customer-centric services offered makes customers feel special and thus choosing Starbucks as its own choice in the fast-food industry. Marketing management is one critical aspect that ensures Starbucks maintains and nourishes its relationship s with various customers in the market. Through marketing, the organization can keep the customer informed with various options and products offered with their respective benefits to customers (Simon, 2011). The marketing strategy of Starbucks is inspiring and has always ensured that the organization has remained at the top in terms of profitability and success in the market.

Apart from building relationships with customers, Starbucks has developed important relationships with businesses, suppliers and nonprofit organizations to improve its operations (Gallaugher & Ransbotham, 2010). These relationships are important in bringing diverse skills and expertise that help in promoting relationships and productivity in the market. Relationship building has helped the organization to come up with innovative ideas that helps in promoting ethical sourcing and community involvement. Starbucks has been providing loyalty cards as well as reward card programs that have helped in promoting businesses and products in the market. The organization has lowered its pricing as a strategy of attracting customers as well as promoting customer relationships in the market (Simon, 2011). The organization is the best selling in the fresh cappuccino and other attractive products that wins the heart of various customers in the market.

Key Activities

Starbucks is committed to designing various operations and activities focused on delivering high customer value in its coffee shops. The organization does everything to achieve customer satisfaction for increased revenues due to high competition in the market (Phillips & Rippin, 2010). Starbucks restaurants have the best background music, smells and surfaces that are meant to improve organizational success and productivity. The organization manages a variety of activities and programs that are meant to achieve high brand value and customer loyalty in the market. Some of the activities include sourcing high-quality coffee beans from suppliers and growers to produce the best specialty coffee for its customers. The organization does highly innovative roasting of beans to achieve different qualities that are prepared for different sets of customers in the market (Chua & Banerjee, 2013). Processing and production of coffee beans take accounted for steps that guarantee increased quality and productivity in the market.

Starbucks is also concerned with the preparation of seasonal products and services to meet the increasing demands of customers. The organization takes advantage of holidays and special days to individuals and other communities to prepare special food products to achieve high satisfaction levels (York, 2010). Additionally, Starbucks started offering complementary food products to ensure the increased sustainability of the business in the market. Diversification is an important strategy that has ensured Starbucks can deliver variety and high-quality foods in its retail restaurants. The organization diversified its operations intending to increase its markets as well as customers as a strategy to achieve the needs of shareholders (Gallaugher & Ransbotham, 2010). Besides, the organization is offering increased marketing operations and events that are all aimed at increasing its chances of meeting increased success and productivity in the market.

Cost Structure

Starbucks like any other organization in a competitive market is committed to delivering high-quality products and services to its customers (Simon, 2011). The organization has been keen on reducing costs associated with handling coffee beans as well as operations in its restaurants across the world. In the effort of taming increasing coffee prices in the market, Starbucks adopted price contracts and hedging to achieve its set objectives. Purchase contracts are the most important aspect because it ensures coffee from suppliers get into its retail stores in fixed price commitments. It implies that the organization would not feel the effect of short-term price fluctuations because of fixed prices in the market (Phillips & Rippin, 2010). Hedging is another important aspect that ensures Starbucks can minimize commodity risks by arranging to sell its coffee and complementary food products at a future date.

Starbucks is a big business and this makes it vulnerable to incur high costs to meet the large population in the market (Simon, 2011). The organization has a huge number of employees that are paid in terms of salaries and wages. Additionally, the organization uses many resources to train and educate the employees to acquire the necessary skills and expertise to deliver exemplary services to its customers. Starbucks also used huge amounts of resources in purchasing ingredients and merchandise that are used to preparing its various food products and services offered in its restaurants. The organization further incurs high costs in paying rents for buildings hired across the world as well as store maintenance (Chua & Banerjee, 2013). The organization is committed to achieving sustainable operations in the market through reducing costs to lower its prices thus attracting more customers.

Conclusion

Starbucks is a coffee company that is concerned with acquiring coffee beans, roasting and selling it to customers. The company has global operations and is committed to producing a variety of products that suits the tastes and needs of various customers in various countries. The business model canvas is important for the management and leadership of Starbucks to design a critical strategic framework to deliver quality and satisfaction. The organization has been in the coffee market for five decades and has increased its expertise in terms of the provision of specialty coffee to its customers in the market (Chua & Banerjee, 2013). The business model canvas analyzed indicates that Starbucks is a profitable organization and can increase its activity to achieve sustainability and success in the market.

References

Chua, A. Y., & Banerjee, S. (2013). Customer knowledge management via social media: the case of Starbucks. Journal of Knowledge Management, 17(2), 237-249.

Gallaugher, J., & Ransbotham, S. (2010). Social media and customer dialog management at Starbucks. MIS Quarterly Executive, 9(4).

Patterson, P. G., Scott, J., & Uncles, M. D. (2010). How the local competition defeated a global brand: The case of Starbucks. Australasian Marketing Journal (AMJ), 18(1), 41-47.

Phillips, M., & Rippin, A. (2010). Howard and the mermaid: Abjection and the Starbucks’ Foundation memoir. Organization, 17(4), 481-499.

Simon, B. (2011). Not going to Starbucks: Boycotts and the out-scouring of politics in the branded world. Journal of Consumer Culture, 11(2), 145-167.

York, E. B. (2010). Starbucks gets its business brewing again with social media. Advertising Age, 81(8), 34.