Starbucks is one of the largest coffee houses in the world. Since its inception in 1971, the company has established itself as the most respected coffee brand in the world. Currently, Starbucks has over 20000 stores globally in over 55 countries. Besides, management is expanding its products to more new places like Africa. However, in recent years, the company is going through many problems, which has affected its revenues. The major problems facing Starbucks currently is maintaining the national competitive advantage. As such, this paper examines the problem of competitive advantage at Starbucks and a possible solution.
The lack of competitive advantage is a significant concern that Starbucks should address. The number of players has increased gradually since 2000 hence growing competition in the industry (Gupta, Nagpal, & Malik, 2018) . With little barriers to entry, new players are picking up and expanding into Starbuck’s market share. In fact, the increased competition led the company to announce they will close some stores. Around 150 stores that are low performing are expected to shut down by the end of 2019. This is a clear indication that Starbucks lacks that competitive advantage it used to have two decades ago. For the last two years the company has not introduced new products in the market, which shows that that the level of innovation at Starbucks has decreased. Non-traditional coffee stores like McDonald's are making it difficult for Starbucks. Therefore, the company should create a competitive advantage that can thrive in the current coffee industry.
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Starbucks needs to develop a new competitive advantage to increase its profits in the coffee industry. Firstly, the company should lower its prices for more people to buy their products. Currently, Starbucks targets the high-end customers leaving out other companies like McDonald's to accommodate the rest. As a result, new coffee companies are winning more customers that cannot afford the prices at Starbucks. Notably, the economic recession makes it difficult for many people to spend on high-priced coffee (Harrington, Ottenbacher, & Fauser, 2017) . As such, Starbucks should lower the prices for them to win more customers and making more profits. Secondly, Starbucks should increase the level of innovation to attract more customers compared to McDonald's and other new stores. For instance, for the last two years, the company has not introduced any new product in the market. As a result, the existing products become monotonous to customers who then choose to try out other new stores. Therefore, Starbucks should be more innovative to have a competitive advantage over existing companies. Lastly, rising prices of coffee beans have been a major blow for Starbucks when it comes to making profits (Nair & Weber, 2017) . The drought in producing areas such as Vietnam and Brazil have affected the products and the prices. As such, the company should find alternatives for sourcing coffee beans instead of transferring the costs to the customers.
From the above possible solutions, the best among them is for Starbucks to be innovative. The increasing number of company in the coffee industry requires the company to offer something different to the customers (Samper & Quiñones-Ruiz, 2017) . All the coffee companies are operating in the same business environment; the only different thing is the level of innovation. Some have invested in service delivery technology while others are offering the customers a variety of products. As such, Starbucks should offer their customers something different that is missing in their competitors. As a result, the customers will no longer care about the high prices but will go for value. That different experience for their customers will play a significant role in attracting more customers and increasing the profits (Atzori, Shapoval, & Murphy, 2018) . Innovation is important because it will create appealing products for customers and effective processes that make an outstanding experience for customers.
While other solutions will affect the business, it will not have a major impact on Starbucks ' current state. The probable closing of shops later this year is due to the lack of creativity compared to other coffee stores. Firstly, finding an alternative for high prices of coffee will not have huge impact on creating a competitive advantage for the company. McDonald's and other companies are still using similar coffee beans for their products. As such, it would not have a significant impact on the current state at Starbucks. Secondly, the lowering of prices will not create a competitive advantage for the company. In fact, it would increase sales, but they would be around the same. McDonald's and other companies have already created loyal customers, which low prices at Starbucks would not affect them. It requires something different in the market.
Conclusively, Starbucks has established a large customer base over the years that should be maintained by creating a competitive advantage. Companies such as McDonald's, Dunkin' Donuts, and Caribou are becoming more innovative in the coffee industry hence winning many customers. As a result, Starbucks realizes fewer profits compared to a decade or two ago. The company should become creative in new ways of attracting customers. While they are investing in modern technology, they should offer their customers new products. This will help create a competitive advantage for the company.
References
Atzori, R., Shapoval, V., & Murphy, K. S. (2018). Measuring Generation Y consumers’ perceptions of green practices at Starbucks: An IPA analysis. Journal of foodservice business research , 21 (1), 1-21. http://dx.doi.org/10.1080/15378020.2016.1229090
Gupta, P., Nagpal, A., & Malik, D. (2018). Starbucks: global brand in emerging markets. Emerald Emerging Markets Case Studies , 8 (4), 1-22. https://doi.org/10.1108/EEMCS-03-2018-0044
Harrington, R. J., Ottenbacher, M. C., & Fauser, S. (2017). QSR brand value: Marketing mix dimensions among McDonald’s, KFC, Burger King, Subway and Starbucks. International Journal of Contemporary Hospitality Management , 29 (1), 551-570. https://doi.org/10.1108/IJCHM-06-2015-0300
Nair, A., & Weber, T. (2017). borjo coffeehouse: Franchise, Independence, and Starbucks. Entrepreneurship Theory and Practice , 41 (5), 861-875. https://doi.org/10.1111%2Fetap.12215
Samper, L., & Quiñones-Ruiz, X. (2017). Towards a balanced sustainability vision for the coffee industry. Resources , 6 (2), 17 https://doi.org/10.3390/resources6020017
