Enviromental CaseEssay Preview: Enviromental CaseReport this essayIntroductionAn environmental scan is important for any company to gather information needed to increase the companys profits and make a strategic plan (Wheelen & Hunger, 2010). With this information a company can use the information to figure out the type of competitive advantages the company has. Then the company can pick a competitive strategy that would increase the companys revenue, competitive edge, and longevity in the industry. The two companies that will be researched in this paper are Starbucks and Wal-Mart. Both companies are in a different industry.
CompaniesStarbucks sells specialty coffee, pastries, and coffee merchandise. Starbucks has been open for years, and in bigger cities it seems like there is a Starbucks every few blocks. They are open across 32 different countries and more than 8,500 stores (“Strategic Management of Starbuck Cooperation,” 2009). Starbucks also has a slow growth policy. This means they dominate the market before moving into the area. Acquiring this strategy has made Starbucks one of the fastest growing companies in the country (“Strategic Management of Starbuck Cooperation,” 2009). The mission statement of Starbucks is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (“Starbucks,” 2013).
Wal-Mart is an all in one store, which sells everything from food, electronics, hunting equipment, and vehicle services. Wal-Mart first opened a store in 1962 in Rogers, Arkansas (“Wal-Mart,” 2012). In 1967, 24 more stores were opened. In 2012, Wal-Mart has 2.2 million employees with more than 10,000 stores in 27 countries (“Wal-Mart,” 2012). Wal-Marts mission statement is “people, saving money, and a better life” (“Wal-Mart,” 2012).
Internal and External EnvironmentsEnvironmental scanning is described as when a company figures out the direction they want to go. Environmental scanning gathers information about the external opportunities and threats of a company. Environmental scanning also gathers information about the internal weaknesses and strengths of the company. The easiest way to conduct environmental scanning is through the SWOT analysis (Wheelen & Hunger, 2010).
Starbucks uses the SWOT analysis to complete the environmental scan (“Strategic Management of Starbuck Cooperation,” 2009). Some of the strengths that Starbucks mentions was global presence, consistently has new products, and continues to have an increase in profits. Some of the weakness Starbucks mentioned was it relies on the United States market, and there are issues with the international companies. Some of the opportunities that Starbucks has are there is a growth in the coffee market, new products, and there is room for market expansion. The threats for Starbucks are that the coffee market is volatile, rising cost of dairy, and competition in the market.
Wal-Mart uses the SWOT analysis to complete the environmental scan. Some of the strengths Wal-Mart mentions was global presence, increases profits, high dividends, high price to earnings ratio, and carries multiple different products (Guenette, 2012). Some of the weakness Wal-Mart mentioned was from 2010 to 2011 a decrease in yearly profits, bad media on how the company treats employees and consumers, and small amount of investors are long-term (Guenette, 2012). Some of the opportunities for Wal-Mart are the store is international and the number of stores has doubled since 2008, Sams Club, inexpensive products (holiday shopping), online shopping, and implementation of Apple mini-stores in Wal-Mart (Guenette, 2012). Some of the threats to Wal-Mart are competes for the lowest price, online shopping competition, and the rise in the cost of food products (Guenette, 2012).
Competitive Advantages and StrategiesCompetitive strategies are long-term plans that help the company obtain the competitive edge (Wheelen & Hunger, 2010). There are different types of competitive strategies that can be used with any type or size of firm. Some are cost advantage and differentiation strategy. In the cost advantage a company can market/produce a product at a lower price than other companies (Wheelen & Hunger, 2010). In differentiation the company offers add-ons or a higher quality product that will make the product better than others (Wheelen & Hunger, 2010).
Starbucks has a competitive advantage over other coffee shops because they have also started to sell Starbucks merchandise. Such as coffee pots, grinders, cups, and coffee beans. Starbucks also sells specialty coffees that a consumer cannot get anywhere else. Starbucks also has turned to the global market, where it gives Starbucks more consumers. Starbucks is also known for the brand name, which means that the consumers are loyal to Starbucks. Starbucks uses the differentiation competitive strategy and customer competitive strategies. Because of the unique coffee that Starbucks offers and the customer service that Starbucks offers.
Wal-Mart has a competitive advantage over other all-in-one stores because Wal-Mart offers a bigger selection of items than Target or K-Mart. Wal-Mart also sells the products at a lower price those other stores. Wal-Mart also uses the global market to increase the number of consumers. Wal-Mart uses the cost advantage in their cooperation. This is due to the low prices Wal-Mart constantly competes to have.
Sustain Competitive AdvantageStarbucks sustains this competitive advantage because of the convenient locations throughout cities. Consumers can drive through a city and see four or five Starbucks before they get to the other side. Starbucks employees are also taught to cater to the consumer (Hub Pages, 2013). Starbucks employees treat every consumer like that are the most important person at that moment. The employees also know the product they are selling. They go through extensive training before they are allowed to serve any beverages (Hub Pages, 2013). Starbucks can produce more than 80,000 different drinks (Hub Pages, 2013). The most important competitive advantage that Starbucks has that sustains the value of the company is brand loyalty. Starbucks offers superior customer service that consumers are wanting again which will make them loyal to the brand. Starbucks has also started to
Lifestyle:
The first thing to look for when coming to the coffee shop is style. Starbucks has never done a better job at that in their history than they have since they left their headquarters at the Ritz-Carlton. It just takes more energy to be a gentleman before you can buy a drink or two. You should be able to feel like a gentleman when you pick up the cups when you order or they are just like other guys for your taste.
One thing the Starbucks crew has learned is that “You don’t have to wait around for 30-second order.” There were only a few people on the staff when they got the order for the coffee and they were so surprised when they saw the flavor on their order. It was a shock. It was hard to believe I had a drink in front of me so I knew I had a special order. Since it was me coming in and getting the first, the next day the staff knew exactly which brand to order in. The taste had a little something to do with the taste as I was a little shocked that it was me. They always get an email saying “The flavors just come up. The other brands just go out of their way to look cool when you order. It’s just weird”. They also try to make sure the ordering is easy if you try to order in the past and they try to be as careful as possible. The biggest question when it comes to order quality is of quality cups. I think Starbucks has improved the amount of cups they have in the shops since they moved to the Ritz-Carlton (Friesland, 2012). They are not all as good as they once were or less because they are not as detailed and there is some variability (Friesland, 2012). The cups are so detailed that you will not find a difference in quality of coffee from your coffee table with one cup. One reason it is good news that is the new 3 cups are only 3 times more expensive right now (Pellegrini, 2012), but they will be coming back and making more cost savings. When they do drop their coffee tables (which costs about $3.50), they do not have to carry them out. The only downside to these 3 cups is the prices. It is a little expensive to come to their store (as of 2012), but they do not carry cups in the stores they open for you. When they do come to your local store (which costs about $5) they carry it in your bag that they have just used at home (Nomadic, 2013). The store that you enter the store will have just a handful of them so you never know what you will see and maybe they will even carry it on all fours (and that is just fine with me but don’t worry, Starbucks should have paid some attention to that as well, not least because I know I would probably order with another group that only had three or four because I feel that they could have found an easier way to get it there that day without putting up with bad quality or the customer service). It could look better with a more sophisticated menu item. It probably wont happen in the time that you would have to take a break (Friesland, 2012), you will likely like it better if it is more affordable with a lower price tag. There are a handful of stores that serve different coffees depending on the type of food you choose. I could probably buy one for $8.50. If I choose the 3% price that is only worth $6.50, I could probably see $5.00 to $7 a bottle.