SCHOOL OF BUSINESS AND ECONOMICS

MGM4149 INTERNATIONAL PRODUCTION AND OPERATIONS MANAGEMENT

ASSIGNMENT 1

LECTURER’S NAME: DR. Yee Choy Leong

NO. STUDENT NAME MATRIC NUMBER

1 HU TIANYI 218420

2 LUTHFI NABILA NUR AMALINA ES05344

3 ROIS ICHLASHUL AMAL ES05349

4 Wais Mohammad Shahid 217941

5 WANG YUYANG 218691

 Introduction

This assignment is based on the article “Analysis of Starbucks’ Financial Strategy and
Operational Strategy” (2023), which explains how the company runs its business, stays
ahead of its competitors, and deals with different challenges in the global market. The
purpose of this assignment is to look at how competitive Starbucks is compared to other
coffee brands, what strategies it uses to stay successful, and suggest ways it can
improve its performance even more. By studying Starbucks’ business and financial
strategies, this paper shows how the company stays strong in the fast-changing food
and drink industry.

Q1. Evaluate the competitiveness of Starbuck as compared to other competitors.

Answer: Starbucks stands out as a global leader in the coffee industry, with competitive
advantages that far exceed those of most rivals. Based on the 2023 article “Analysis of
Starbucks’ Financial Strategy and Operational Strategy”, the following key points
illustrate its strong market position:

1. Market Share Dominance

As reported in the article, Starbucks holds 40.8% of the global ready-to-drink coffee
market, which is more than double that of its nearest competitor, Stok (Figure 4). This
reflects the brand’s powerful market penetration and consumer preference. The
company’s steady revenue growth and focus on cost control, as highlighted in the
article, further solidify its market leadership.
 Figure 4

2. Successful Global Expansion

According to the company’s operational overview, Starbucks operates in 83

countries with over 35,000 licensed stores as of 2022. It aims to grow this
number to 45,000 stores by 2025 and 55,000 by 2030, maintaining a projected
annual revenue growth of 10%​. Starbucks’ aggressive global expansion strategy,
with a target of 55,000 stores by 2030, strengthens its market presence and
ability to outperform regional competitors. This extensive reach gives Starbucks a
significant strategic advantage in market access and resilience.

3. Strong Brand Equity and Customer Loyalty

The article’s SWOT analysis highlights Starbucks’ strong global brand image and
reputation as an employer of choice, which attracts top talent and ensures high
levels of customer retention​. Its unique “third place” concept—providing a space
between home and work—adds emotional value beyond product offerings.
4. Advanced Technological Capabilities

Through the PEST analysis, the report identifies that Starbucks has leveraged
e-commerce and social media to enhance customer experience and personalize
product offerings. This use of technology allowed the company to effectively transition
during the COVID-19 pandemic and continue driving revenue through delivery and
online platforms​

5. Financial Strength and Strategic Discipline

Financially, Starbucks reported $32.25 billion in global revenue for 2022, maintaining
strong performance despite the company facing growing competition and rising costs,
particularly in inflation-impacted markets. The article notes a shift to a more
conservative cash flow strategy, indicating resilience and prudent financial management
during volatile market conditions​

Starbucks’ unmatched market share, robust global presence, strong brand recognition,
technological edge, and stable financial foundation make it the most competitively
positioned company in the coffee industry. Compared to other players, Starbucks
consistently leverages its core competencies to maintain and expand its leadership.
Q2. What strategies are adopted by Starbucks to outperform their competitors?

According to the 2023 article “Analysis of Starbucks’ Financial Strategy and Operational
Strategy,” Starbucks has successfully outperformed its competitors by implementing a
combination of broad differentiation and intensive growth strategies. These align closely
with Porter’s Generic Strategies and Ansoff’s Matrix, helping the company sustain a
strong market position while adapting to global and local challenges.

1. Broad Differentiation Strategy (Porter’s Model)

Starbucks differentiates itself through premium product quality and an exceptional

customer experience, which allows it to command higher prices compared to
competitors like McDonald’s and Dunkin’.

High-Quality Products: Starbucks uses ethically sourced Arabica beans and avoids
artificial ingredients, which appeals to health-conscious consumers.

Ethical and Sustainable Sourcing: Over 99% of its coffee is sourced through C.A.F.E.
practices, ensuring fair labor and environmentally sustainable farming.

Customer Experience: Its stores are designed to be a "third place" between work and
home, providing a cozy ambiance with Wi-Fi, comfortable seating, and curated music.

Brand Values: The company promotes inclusivity, community, and sustainability,

resonating with socially aware customers and building emotional loyalty.

2. Market Penetration

To strengthen its position in existing markets, Starbucks employs the following tactics:

Store Expansion: Continuously opening new stores in both urban and suburban areas
increases accessibility and visibility.

Loyalty Program: The Starbucks Rewards Program fosters customer retention by

offering points, discounts, and exclusive offers.
Digital Engagement: Its mobile app enables seamless ordering, payment, and
personalized promotions, enhancing convenience and user engagement.

Seasonal Campaigns: Limited-time offerings and festive drinks generate buzz and drive
repeat visits.

3. Market Development

Starbucks pursues international growth by entering new markets and adapting offerings
to local cultures:

Global Expansion: With operations in 83 countries and over 35,000 stores, Starbucks
plans to reach 55,000 by 2030.

Cultural Adaptation: The menu is tailored to regional preferences—such as Masala Chai

in India or Matcha drinks in Japan—to appeal to local tastes.

Local Partnerships: Licensing and partnerships help navigate local regulations and
establish community connections.

4. Product Development

Innovation in food and beverage offerings keeps the brand dynamic and competitive:

Ready-to-Drink Options: Bottled drinks like Frappuccinos and cold brews extend
Starbucks’ reach beyond cafés.

Health-Focused Choices: Items such as dairy-free alternatives and protein-packed

snacks attract wellness-focused consumers.

Strategic Collaborations: Collaborations with companies like Nestlé expand distribution

via retail channels worldwide.

5. Financial Strategy and Resilience

The article also highlights Starbucks’ shift toward a conservative cash flow strategy,
ensuring stability during inflation and economic downturns. This financial discipline
complements its operational initiatives, enabling sustainable long-term growth.

Starbucks also integrates technology and personalization to gain a competitive

edge. Features like mobile ordering, digital payments, and AI-driven recommendations
enhance convenience and tailor the experience to individual customer preferences.

In addition, Starbucks’ sustainability initiatives, such as reducing carbon emissions,

promoting reusable cups, and maintaining ethical sourcing, appeal to eco-conscious
consumers and help strengthen brand loyalty. Unlike many competitors, Starbucks turns
its sustainability practices into a strategic advantage that improves its public image and
attracts value-driven customers.

By combining a strong differentiation strategy with focused growth tactics, Starbucks

has created a business model that is both competitive and adaptable. Its emphasis on
premium quality, technology, ethical practices, and global market understanding has
allowed it to stay ahead in the coffee industry while building long-term brand loyalty
around the world.

Q3. Despite the challenges, suggest various ways to improve the productivity of
Starbucks.

Despite facing challenges, Starbucks can enhance its productivity using several ways,
such as:

1.​ Launch Tiered Product Lines to Reach Broader Markets

To solve its focus on high-end pricing, Starbucks should introduce affordable

sub-brands or tiered menu options. For instance, in price-sensitive regions,
launching a "Starbucks Essentials" menu with budget-friendly coffee and
snacks may attract low- to middle-income customers without losing the premium
brand image. I think it can increase market penetration and customer base,
especially in emerging economies where affordability is important.
2.​ The organization should enhance supply chain resilience through sourcing
materials locally

Starbucks should expand procurement through more local material

procurement and regional supply alliances. Using local suppliers will minimize
risks stemming from international events and achieve faster time to market. This
may be effective because it reduces costs while enhancing sustainability
measures and preventing delays in the supply chain which has become crucial
during times of international unrest.

3.​ Standardize Store Operations with SOPs Implementation

To increase productivity and maintain consistency across its global operations,

Starbucks should implement more detailed and localized Standard Operating
Procedures (SOPs). SOPs would cover critical areas such as beverage
preparation, inventory management, cleaning routines, and customer service. By
eliminating variation in workflows and clearly defining each task, stores can
improve speed, reduce training time for new employees, and minimize errors,
especially during peak hours. Standardization also helps store managers monitor
performance and ensures uniform quality regardless of location. This can
enhance consistency, shortens learning curves, and increases operational
control across global outlets.

4.​ Digitize Inventory and Supply Chain Monitoring Starbucks

By implementing this method can significantly boost operational efficiency by

shifting from manual inventory tracking to cloud-based, real-time monitoring
systems integrated with point-of-sale and supplier networks. This digital
transformation enables automatic restocking based on predictive usage data,
reduces food and beverage waste from overstocking, and helps prevent stock
 outs that lead to lost sales. Technologies like RFID tags, IoT-enabled shelves, AI
forecasting, and many more can trim the entire inventory cycle while maintaining
high accuracy. This also could prevent waste and shortages, saves staff time,
and strengthens supply chain responsiveness and visibility.

5.​ Optimize Capacity Planning and Demand Forecasting

With using historical sales data, seasonal trends, and AI-driven analytics,
Starbucks can achieve better forecast demand and plan its capacity
accordingly. This also includes adjusting staffing schedules, inventory levels, and
equipment usage based on projected customer traffic. For instance, stores near
schools may need more staff and stock during exam weeks, while others may
scale back during off-peak hours. Accurate forecasting also reduces
unnecessary labor and ensures sufficient resources are available to meet
demand without over-preparation. This could help Starbucks to improve labor
and inventory efficiency, reduce wait times, and ensure better alignment
between resources and customer needs.

6.​ Enhance corporate social responsibility and optimize brand image，

First, solve the tax scandal problem and improve transparency, disclose tax
compliance information openly and transparently, and then actively participate
in social welfare and organize social welfare activities to regain public trust and
improve brand integrity. At the same time, regional brand cooperation activities
can be carried out to enhance brand affinity and expand market awareness.

7.​ Satisfy personalized & diversified production and consumption needs &
enhance customer stickiness and experience

Develop innovative beverages with regional characteristics based on the taste

preferences of consumers in different countries and regions. At the same time, in
line with the "DIY coffee" trend, launch personalized coffee products that allow
consumers to participate in formula matching and production, such as DIY coffee
sets, self-selected coffee bean combination services, etc., and further strengthen
emotional connections with customers, launch holiday-themed drinks and
birthday gifts, to increase user participation and brand stickiness. Innovate in
product form and packaging, launch product designs that consider both health
and environmental protection, such as degradable packaging, additive-free
healthy coffee, etc., and develop products such as portable coffee powder,
outdoor special brewing utensils and combination packaging for the growing
"outdoor coffee" consumption scene to meet consumers' convenience and quality
needs in scenes such as camping and hiking.

Conclusion

Starbucks dominated the worldwide coffee market using strategic financial

discipline, operational excellence, and creative differentiation strategies. The
company holds large market domination worldwide through continuous store
development paired with digital transformation initiatives and its deep dedication
to environment-focused strategies and customer-centric improvements.

The company secures its position in the market through Porter’s Generic
Strategies and Ansoff’s Matrix and uses ethical sourcing and a focus on brand
value to build faithful customers. Starbucks should raise productivity by building
operations across local supply chains, digitizing procedures, promoting
personalized customer interactions, and introducing a tiered product series for
expanded market inclusion.

Starbucks maintains its dominant position in the competitive market through

strategic innovation and resilient operational performance aimed at its customer
base, yet it will need to continue adapting and enhancing operations for lasting
long-term success.