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Starbucks Innovation Case Study

Essay by   •  February 19, 2013  •  Case Study  •  480 Words (2 Pages)  •  1,624 Views

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Starbucks is one of the top leading companies as of today and they are also a company that will have room for new ideas. Along with the new ideas and innovations will also be factors. When thinking about the internal factors of Starbucks, consider their strengths and weakness. Starbucks is in the lead for going green in this industry. Since 2006, Starbucks has saved about 78,000 trees annually by using recycled paper in the production of its coffee cups (Ness, 2012). By being a very innovative coffee shop, it has taken leadership in the industry as for going green. Starbucks recently announced a new line of energy drinks - Starbucks Refreshers and instead of copying other energy drinks, and use the same active ingredients as the usual suspects, they instead decided to use something uniquely from Starbucks which is green coffee extract (Kelley, 2012). According to The World's 50 Most Innovative Companies (2012), Starbucks is listed as number twenty-four. Starbucks serve such a wide product range; it's hard for competitors to step up. A weakness for Starbucks would be that they are vulnerable so they create something called "self- cannibalization". This is where strategic planning comes into play in order to keep any setbacks from happening. One key factor for a company to prosper is its location, but with too many locations causing self-cannibalization. Driving around the city seeing a Starbucks on every corner leaves the shops in competition with each other and cause prices to rise. The typical java junkie in New York City, on average, spends $3 for a Starbucks latte (Wong, 2004). If prices rise on the cups of coffee, then consumers may just skip the coffee.

With Starbucks being innovative, the company has to face external factors too. In March of 2007, Starbucks and Concord Music Group formed a new record label, Hear Music, in March 2007. Hear Music Label will form relationships directly with artists and distribute recordings at Starbucks locations as well as through traditional music channels (Datamonitor, 2010). Being diverse in the music industry would improve visibility of Starbucks and add stability to its revenues. Even though it seems that they are on top within the coffee industry, they still face some type of threat. One huge threat to this corporation would be the increasing conciseness of health would reduce the demand for coffee. Starbucks products consist of caffeine, dairy products, sugar and other ingredients that would cause health affects among Americans. In today's world more people are starting to be more conscience of their health more so the demand for coffee may drop, causing them to lose in sales. Particularly in the US, there is increasing consumer awareness of health risks, including obesity, due in part to increasing publicity and attention from health organizations, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food products(Datamonitor,2010).



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