Internal Analysis Flashcards
4 criteria for sustainable competitive advantage
- inimitable
- durability
- appropriability
- sustainability
4 criteria for sustainable competitive advantage: inimitable
- physical uniqueness
- brand loyalty/trust
- causal ambiguity
contect and resources matter
- dont overestimate transferability of capabilities
- constantly update resources
- acquire new capabilities
primary value chain activities
- Supply chain activities
- operations
- outbound logistics (distribution)
- marketing & sales
- service (follow up)
value chain: 3 support functions
- infrastructure
- HR management
- Tech. development
value chain: 3 support functions: infrastructure
- organizational structure
- finance (makes things possible)
- company culture
value chain: margin or profit
depends on firms effectiveness in performing these activities efficiently so that WTP>cost of the activities in the value chain
cost advantage and the value chain
- reducing the cost of individual value chain activities
- reconfiguring the value chain
differentiation and the value chain
- changing individual value chain activities to increase uniqueness in final product
- reconfiguring value chain
differentiation strategy
- firms produce nonstandardized/unique G/S for customers
- customers value the unique features more than they value low cost
- willing to pay a premium price for perceived uniqueness
- constant innovation to product lines
starbucks: 6 principles
- great work environment
- embrace diversity
- apply highest standards of excellence
- develop enthusiastically satisfied customer
- contribute positively to our communities & environment
- recognize profitability is essential to future success
starbucks: business strategy differentiation
- starbucks value proposition
- improves value chain through source of raw materials and marketing (different)
- vertically integrated -> controls all SCMT
starbucks resources: tangible
tangible:
- stores located in high traffic, high visibility settings
- lg. variety of product mix
- 2014 $16.45B revenue
starbucks resources: intangible
Intangible:
- america’s “third place” atmosphere (“hangout”)
- starbucks partners (stakeholders)
- reputation of high quality
Starbucks: primary value chain activities
- inbound logistics operations
- outbound logistics procurement
- channels of distribution
- marketing & sales
- service
starbucks: primary VC activities: inbound logisitcs operations
- paid farmers fixed (and generally higher) $ for high quality beans -> to sustain products
- sourced bean from multiple areas -> allowed it to offer variety range of coffee to customer; spread the company’s risks such as weather, political and economic issues in coffee growing areas
starbucks: primary VC activities: outbound logistics procurement
- centralized control -> processing to distribution
- worked directly with coffee farmers, millers, exporters
- training sessions for suppliers in Guatemala, Indonesia, Costa rica, east africa, and rwanda
- roasted in co-owned facilities & shipped in flavorlock bags
- worked collaboratively with factories to meet performance standards (child/forced labor, wages)
- enables greater consistency of supply and stability
starbucks primary VC activities: 7 channels of distribution
- (broad -> reach customers where they work, travel, shop, dine)
- own stores in high traffic visibility centers
- non company operated retail channels - hotel, airlines, restaurants
- licensed stores (8000 no access to desirable retail space - airports) - not a franchise- only license where cant get RE
- grocery stores & warehouse clubs
- joint ventures with pepsi & dreyer’s (bottled frap & ice cream)
- online and mail order sales
- international licensed stores
starbucks primary VC activities: marketing and sales
- mkting initiatives emphasized human connection (dont spend a lot on mkting)
- community based high touch, low reach efforts radically different
- break w/ longstanding strategy -> move to traditional ad channels
starbucks primary VC activities: service
- “just say yes” policy
- ie division to improve store operation 3 minute goal (order placement -> hands - idea behind service)
- hired engineers to shave off time
- “floaters” during peak time -> saves 20 sec
- pre-measured scoops
- complexity of barista’s job compounded by drink customization
starbucks support activities
- company culture & HR mgmt
- technology development
starbucks: company culture & HR mgmt
- employees called “partners” - partner satisfaction leads to customer satisfaction frontline communicators of co. culture
=> labor exp > coffee expense
- trained in hard & soft skills
starbucks: company culture & HR mgmt: benefits
generous benefits to entry level partners (health, dental, vision insurance, & stock options
starbucks: company culture & HR mgmt: partner satisfaction
- partner satisfaction hovered in 80-90% range (fortune mag ranked as 1 of best places to work
- lower turnover in the industry (70% vs 200%) => adv.
=> learning curve -> dont have to train as many e’ees
starbucks: company culture & HR mgmt: promotion
- promotion from w/n - store managers were ex-baristas
- senior executives had to train as baristas
starbucks: technology development
- automated espresso machine->reduced waste & # of steps
- customer loyalty program -> SBX card accounted for 18% of company rev (27% of domestic retail rev)
=> similar to amazon’s prime membership
- 2014 processed 5M mobile pmts a week
starbucks: the troubled years
- 2008-09
- new competitors
- recession
- brand dilution b/c had to answer to SH who want growth – 2 options:
=> open new stores
=> show g in current stores – sell more=> incr variety
starbucks: recession blues
- rapid store growth cannibalizing existing ones
- expansion became butt of jokes (ex. the onion)
- “watering down of the starbucks experience”
=> sterile cookie cutter feel b/c had to stdize operations
=> efficiency gains (risk personal connections)
=> introduction of new beverages, food offerings
- customers tighten their wallets
- dunkin donuts & McDonalds join
starbucks: the rebound
- schuttz returns as CEO
- rethinks growth strategy
- scales down plans
- stores closing in the US
- target international opportunities
- rethinks growth strategy
- gets out of music & mkt movies busn
- refocus on the coffee experience - 15th avenue coffee & tea
- successful entry in 2009 to the instant coffee market - Via racks up $135M in 1st yr sales -> turn around
=> savvy mktg: 1st pushed in stores & then grocery stores
starbucks: long range growth strategy
- changed logo
- migration to the grocery aisles/mass merchandisers
- 03/11 strike deal with green mountain coffee roasters to sell starbucks/tazo coffee & tea for use in keurig
- plan to open juice bars (evolution fresh)
- battling mcdonalds & dunkin donuts – seattle’s best coffee
- SBX sells 1st single cup machine
