Hrm 310 - Strategy Map Analysis
Strategy Map Planning
Chacon
HRM/310
June 5, 2017
LJ Elliott
Strategy Map Analysis
Strategy Map Analysis is one of the phases involved in developing a strategic plan and is also part of what gives a company the competitive advantage. During this step, the organization will look at both internal and external factors that can influence how they compete. Starbucks is an example of a successful company that recognizes external opportunities and threats which contribute to their competitive advantage. A strategy map is a visual summary of what a company plans to do to improve its business, gain more customers and improve its financial outlook (smartdraw.com, 1994-2017) Lastly, guidelines to measure the strategic effectiveness are put into place in conjunction with the gathered information, and then it is easier to identify what changes can be implemented.
Internal Perspective
Starbucks must evaluate their internal environment to ensure that, as a company, they are offering the best product and experience to their customers. This includes employees interaction with co-workers, their interaction with managers, and their interaction with their clients (Das, Eisner, & Korn, 2015). It also consists of organizational structure, brand awareness, and management’s interaction. When Starbucks opened in India in 2012, they realized that to sustain their success they needed to implement a strategy that allowed for leadership innovation and diversification in emerging markets. Key internal resources are tangible and intangible assets and organizational capabilities. Starbucks understands that atmosphere and design are what set them apart from their competitors so they continue to innovate ways to make their stores appeal to their customers and create a place where they can come and enjoy coffee in a relaxing environment. For their employees, Starbucks offers education assistance and full benefits, as well as training opportunities which prove that they realize the benefit of investing in their employees.
Learning and Growth Perspective
An external analysis of the strategic analysis consists of market industry atmosphere, international settings, and macroeconomic factors such as social, government, technological, and international influences. In the instance of Starbucks in India, they have a low threat of suppliers as well as buyers because they have teamed up with a local company that produces their coffee beans. Industry rivalry and new entrants in the market yield a moderate threat as they are competing in a highly competitive market with the constant threat of other players such as McDonald’s and Dunkin Donuts. There is a low threat of substitutes in the Indian market as they expanded to include tea on their menu, and India is known for drinking tea.
Financial Perspective
There are a few ways that Starbucks has gained a competitive advantage by remaining leaders in their market. They have seen success in relaunching seasonal favorites such as the pumpkin spice latte and the peppermint mocha, which increases their profit by 6.96% during that time (Trefis, 2016). It gives the customers something to look forward to and something they have come to expect. Starbucks is flexible by offering non-dairy products such as coconut milk and soy milk as additives to their drinks. This changes the flavor of the drink as well as meeting customer needs that may be lactose intolerant or looking to save some calories. An upside to offering variety is they can incorporate an upcharge. Another competitive strategy used by Starbucks is that they have expanded their selection of food choices which now makes 20% of their revenue. To this end, they are testing a weekend brunch menu in designated locations to see if that is a venture to take in the future. They are changing their expansion strategy by putting in a mix of express stores that allow for walk-up or drive-thru only, while also testing serving brunch and expanding food selection. As part of their corporate social responsibility, they made a choice to open new locations in areas that display low to moderate income rates so they can create jobs for local communities and families. Lastly, they have remained competitive by not franchising their stores. CEO Howard Schultz believes that it takes out the middleman and allows the interaction to be purely between the company and the customer.
Customer Service Perspective
Taking into consideration the words of statistician William Edwards Deming, “You cannot manage what you cannot measure,” Starbucks set out to better understand the customer experience when they visited one of their stores (Gurski, 2014). Their aim was at developing customer loyalty. Instead of introducing products into the market to target customers, Starbucks sent out survey’s for their customers to answer to meet their needs. The surveys were sent out via email, Facebook, and provided on a receipt to call or go online. The reward for taking the survey was a free drink or points to be used towards your next Starbucks reward. They also turned to social media sites, if a complaint was sent out to friends via social media, Starbucks customer service team is quick to remedy the situation and stick by their motto that is if it is not done right the first time, let them know so it can be rectified. This enhanced customer loyalty added value to the brand and provided a quality experience to consumers. The aim of the survey was to find ways to enhance the customer experience with quality service such as what satisfies customers and what could be changed. They wanted to know about the atmosphere, if the store’s design is appealing, and is it clean and friendly. Lastly, they asked what the initial visit to Starbucks was for, for example, meeting friends, passing the time, or only for the coffee. They used the information gathered to make adjustments or address changes that needed to be made in the stores.