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Competing Organizations In The Same Industry

"There may be no one easiest way to produce strategy, nor will there be one best form of group. Quite different varieties work well specifically contexts. It is believed that discovering a fuller variety systematically will create a deeper and even more useful understanding of the strategy process". (Mintzberg et al, 2003). There is absolutely no single generally proven description of strategy. A variety of supervisor and article writer use strategy in a diverse way. For example, some contain goals and aims within strategy while others make firm differences between them. However, Mintzberg define strategy as a style or plan which integrates organizations major goals (which articulate what's to be attain so when results are to be consummate), insurance policies (that happen to be system or guiding process that express the confines within which take action should take place) and action sequences into a cohesive entire. Furthermore, Strategy" is a word which originates from traditional Greek "strategios" which means a plan to beat the enemy. The word strategy however is abstract and is probably top secret of success' income' plan etc.

In addition, in this task we will produce a team work end result on two competitive companies called Starbucs Caffeine and Costa caffeine in the UK fundamentally about their corporate strategies, tactical decision, proper business guidelines, global strategies, concept and also their performance.

More to the point, the first Starbucks was open by Gordon Bowker, Zev Siegl and Jerry Baldwin during 1971 in Seattle's Pike Place Market. The maritime name seems suited to a store that imports the world's high grade coffees to the wintry thirsty folks of Seattle. Corporation formed in 1985 and went in public in 1992. In 1982 CEO Howard Schulz joined up with in Starbucks as Director of Retail procedures and marketing. Its custom logo is mermaid. The full total property of Starbucks are $5. 3billion by March 2009. Starbucks successfully entered the Western market in-may, 1998 through its acquisition of 65 Seattle espresso company stores in the United Kingdom. The look and atmosphere of Starbucks stores are specially designed to cosy and personal. http://www. fundinguniverse. com/company-histories/Starbucks-Corporation-Company-History. html

On the other side of Costa record, during 1971 Costa was founded by Italian brothers Sergio and Bruno Costa which is now in the UK's popular restaurant brand with over 400 stores in the united kingdom. http://www. costa. co. uk/coffee/costa_story. aspx

Strategic management:

According to Johnson and Scholes (1997), proper management worried about taking decision about major issues that facing the organization and also worried about making certain the strategy is put into result. Strategic management has three main elements: Strategic analysis, tactical choice, strategy execution. Strategic analysis identifies about organization's tactical position, resources, and competencies can these provide special benefits to the business. What about people and groups associated with the organization professionals, shareholders, owners, unions while others, who are stakeholders in the organization desire to, and just how do these affect what's expected for future years development of the organization. Costa, which is part of Whitbread and has 965 shops in the UK. The strategy of Whitbread's is to value for our shareholders based on concentrating investment and growing in expanding areas of the hospitality industry, mainly in the UK but also in picked overseas markets. Costa is got waiting for you baristas who are coached in the fine art of coffee making at the company's Costa Coffee University in London. Every collection manager in Costa whether they are based in the support centre, corporate sales or stores, works with a training platform made for the role they are in; because of this it is always be encouraged to develop themselves and skill as well. During recruitment Costa ensure right person for the company and also Costa is right for that prospect as well. Costa believes that quality of coffee is mainly depending on the making people experienced. http://www. costa. co. uk/coffee/the_coffee. aspx

On the other palm, Starbucks treat their employees as lovers with admiration and dignity and carry each other to that standard. In the case of customer Starbucks Company said that, "were fully engaged with, chuckle with and uplift the lives of your customers even just for minutes. In no doubt, it starts off with the offer of correctly made drink but our work should go very good beyond that". Starbucks encourage their shareholders because of their success and accomplishment of the business.

Competitive Analysis of Starbucks and Costa:

Porter 5 makes evaluation of Starbucks and Costa:

Bargaining ability of Customer and consumers: In the caffeine industry customer has high bargaining power with no cost and risk, so they can easily turn their brand. If so, Starbucks doing a slightly different customer support from its challengers. Starbucks really value their customer buy guaranteeing third place notion for his or her every consumer. Starbucks know that customers look for not only quality caffeine but also a relaxing environment where they can enjoy their time away from work and home. In in contrast, Costa also continues their customer by providing greater services and quality.

Power of Company: Both companies 've got a strong relationship with their company.

Rivalry among rivalling sellers: The competition in between Costa and Starbucks. Its simply proven that Starbucks doing business over Costa by providing variety of tastes and the quality. Furthermore, Starbucks offers a differentiated environment by taking many newspapers, mags, free Wi-Fi internet for customers. Perhaps at exactly the same time as Starbucks might lose some of the market anticipated to Costa's lower prices however in the long term Starbucs of course regain its highest earnings.

Threat of new entrants: The threat of new entrants is high for both companies. For instance, more recently vending machines offering caffeine like cappuccino, and also hot chocolates etc with cheaper price.

Threat of swap: During summer and an extremely warm region like Midsection East coffee may not be the first selection of beverages for customer. So, in case there is substitution Starbucks received some risk from its other competitors like smoothies, fruit juice company, Pepsi etc. and Costa an extremely little. Nevertheless, Starbucks has in its range a frigid line of refreshments the frappuccino, as a supplement for his or her products and can be competitive. Alternatively, Costa give you a very few cool drinks which creates hazard for company also less competitive with Starbucks.

Starbucks and its own opponents Financial Performance over last few years:

Starbucks is a global leading caffeine brand. Inside the Western continent its performance is a lot more superior than Costa espresso. However, some of the next reasons Starbucks 've got a downward change in its earnings:

Customer downgrades to cheaper beverages

Customer making espresso at home

Customer appointments Starbucks store an extremely few more recently.

Lots of small coffee companies witnessing a slow decline, nonetheless they are benefitted from customer commitment to a local brand even in a downturn. For example in home country Costa coffee manages its business calm successfully than Starbucks.

Figure: Starbucks and its own competitor's revenue changes

Data source: www. starbucks. com

McKinsey 7s Model examination among two companies Starbucks and Costa:

The McKilsey 7s platform illustrates the structure, management and strategy of a business are sophisticated network of interdependent elements in a organization, each of them is collectively and separately important. The illustration depicts a wheel, explaining that the seven factors incorporating the overall construction in concert and no single component is more important than others.

Although Starbucks and Costa caffeine run same industry, and the purpose of both of them are intended to extend their espresso business worldwide, their design of development is not in the exactly same way. By research with McKinsey 7s model, we can easily see how each factor of 7s operates in Starbucks and Costa. DATABASES: http://www. glowa. ca/Starbucks_7s_Method. pdf


Starbucks framework is relatively level in essence store and corporate organization is high with four degrees of management above store management.

In contrast, in store position of Costa is a just a bit different from Starbucks and that is

Store Manager

Assistant Manager

Team Members Team Members Team Members

However they position a person assistant, to reduce the job quantities of assistant director, more beneficial to the store, to wthhold the dedicated customers.

Data source: http://www. costa. co. uk/coffee/costa_story. aspx

System: The info system in Starbucks company which already signifies the first choice of coffee business, they received the innovative business technologically procedure system, to satisfy the objectives. Their Corporate headquarter exercises settings over specific sites, TQM is specifically built into their procedures and company also uses a large amount of computer system.

Figure: Usage of IT at Starbucks

Data source: http://www. fundinguniverse. com/company-histories/Starbucks-Corporation-Company-History. html

In in contrast, Costa use Exchange Processing System

The Costa Caffeine Transaction control system that means it is in essence using Office Automation System. Costa restaurant are more focused on office system operation, the grade of staff, the knowledgement of associates, they persuaded that only they can select the right people, all the business enterprise would go well, which is more very important to obtaining success in the competitive environment.


The basic management design of Starbucks is Laissez -Faire, managers observes that associates of the group working well on their own. In addition, the management inspires through reviews and increases, work responsibilities are designated by move supervisors, allow personnel to use effort and empower to make decisions. However, Costa espresso involves employee engagement, present of motivational plan, and identify on brand management style with formal networks for practical and workers development. Costa builds older management level as a typical management style for growing its brand and supporting new managers get up to accelerate and facilitating new device openings. Implementing its knowledge management programmers in Costa coffee as its management style to be able to improve its business procedures.

Data source: http://ru. linkedin. com/in/natalyafilkina and

http://www. whitbread. co. uk/our_people. cfm?id=senior_management_development

Shared value:

Starbucks stresses its distributed value on offering the great environment for its customers and treating them with value and dignity, expanding enthusiastically satisfied customers, making use of the highest quality benchmarks for products. What's more, the company cares about community and miscellaneous environment, donation to them as a quest. Needless to say, Starbucks see that the nature to future success is profitability. So, which it does not have any choice to are in a vacuum, this means has to be an integral part of the globe, must plan for a much better future in espresso world. This implies respecting staff, adding to communities, and planning for raised sustainability, and progressive economic, social, and environmental working conditions for farmers. In comparison, Costa stresses its shared value on broadening its market to acquire significant profitable segments alone, uses both its company and mainstream espresso label to pursue a built-in marketing, which directly related to its name. Execution of company's branding and positioning flawlessly as the distributed value of Costa caffeine all together, which is enabling to Costa leading making industry in the united kingdom for years. Furthermore, by combining the determination of Costa company to quality of service and solution for success.

Data source: http://www. fundinguniverse. com/company-histories/Starbucks-Corporation-Company-History. html


The most significant Starbucks's strategy is to launch its brand to be the best distinguished and esteemed about the world by bringing up its market talk about in present marketplaces and to open stores in new marketplaces to become the key coffee retailer and also to reach more customers by establishing a strategy to utilize third gatherings such as inside a whole lot of bookstores, some hotels and some airlines. These causes Starbucks operate more than 6, 400 of their own shops worldwide as similar as Costa Espresso now works 893 outlets in britain as of May 2009 and works franchises in some bookstores, banks, superstores, some hotels, some train stations and in a few workplaces. Also, in some countries such as China, India, Spain and so forth but this strategy is not the main for Costa.

On the other side, the most crucial of Costa's strategy that concentrating on their center competencies as the professional coffeemaker with an emphasis on it's properly trained baristas who hand-make every cup of coffee to make its customers attractive often, Starbucks has different point that to extend its brand by adding a number of consumer lifestyle products such as salads, sandwiches, music and catalogs to their product offerings in the last years cause Starbucks has been shedding market show so Starbucks should be improve its issues by reinforcing the key of its company culture, customer support and product differentiations again.


Starbucks skills include "people skills" as well as the ability of drink prep. All Starbucks companions get training to find out about products, coffee making methods, techniques of sales and also customer support. Employee's skills in coffee shop as Starbucks and Costa are very similar that are highly customer give attention to retail operations, so staffs being friendly and experienced are important for both caffeine companies to be able to claim an edge over their rivals. For the caffeine experience, Costa ranks it as the primary skill for its employees to make and serve a perfect cup of coffee.


The staff plan for Starbucks and Costa look as well as Gordon Lyle, Individuals Resource director of the United Kingdom at Starbucks, payment and benefits is one of the most crucial roles in the business. Starbucks gives baristas above the minimum amount wage and will be offering a broad pay variety for store managers (Personeltoday. com) and also trained employees is significant as 'Partner' resources comes with learning and development, ability management and reimbursement and benefits as identical to with Costa that the Whitbread's human being reference team is focusing on reward, employment plan, training and management development. In addition, it oversees brand criteria and internal communications. 'Team people' are paid above the minimum wage and there's a broad pay variety for store professionals. Because of this, the current level of Costa's staff turnover is approximately 73 percent and Starbucks' turnover rates are impressively low for the sector at 15%, weighed against a median average of 30% within the coffee industry.

BCG matrix evaluation of Starbucks and Costa coffee

The BCG matrix is a chart that were created by Bruce Henderson for the Boston consulting Group in 1968 to help companies with studying their sections or product.

Data source: http://www. bcg. com/about_bcg/history/history_1968. aspx

According for the BCG Growth Talk about Matrix, Starbucks and Costa coffee both company are are categorized as Cash cow which symbolizes low expansion, high talk about business or products. Starbucks and Costa coffee expansion rate is high but it is ideal for within small amount of time. Both of these are in cash cow. Because Starbucks offers 16, 862 world wide stores in 49 countries by March 2009. It again demonstrates that Starbucks has got an extremely wider market show in compare with its competition Costa.

Figure: Starbucks numbers of store worldwide.

On the other side, only in the UK Costa coffee works 893 outlets as of May 2009. In addition, it has branches in China, Pakistan, India, Egypt, Oman, Germany, Jordan, Poland, Bulgaria, Hungary plus some other country

Competitive Strategies routines:

Value creation:

Value creation is the best way to maximize the success of your company. Quite simply, a firm's value creation is assessed by the difference between its cost of production and the value that consumers understand in its products (Hill, C. W. L, 2008, page, 363)

Differences between Starbucks Value Masterpieces and Costa Value Creation:

Starbucks Value Creation

Costa Value Creation

Costa Beverages ProductStarbucks caffeine is making their product with ensuring higher quality in line with the customer's demand like light, regular beverages that means they are simply exercising more customization of products. For instance, extra shot of coffee, syrup, cream on top of the caffeine etc.

Starbucks is making the merchandise more attractive through different product deviation, tastes, line expansion etc. For instance, Ice combined Frappuccinos.

Starbucks apply differentiation strategy

Costa coffee establishing their product value by causing superior design like take away glass, quality product, and advertising a relatively good deal sit down elsewhere.

Costa applies low cost strategy.

Espresso, Doppio EspressoCaffe Latte

In addition, the rivalry between these two companies is very much reflected in their sales, offers and new product start. These activities are creating value for his or her customers.

For example, Costa, which is had by the UK's Whitbread group, has arranged a contract with a local partner and is also also, dealing with Devyani International, a glass or two and food group that also looks after Pizza Hut and KFC shops in India. The first store will open up in Connaught Place, Delhi, and you will be able to seat 60 people. Aswell as its more traditional menu items, Costa will also offer food specially designed to suit the Indian market, with sandwich fillings such as chicken breast tikka or cottage mozzarella cheese tikka. http://news. bbc. co. uk/1/hi/business/4179696. stm

Similarly, Coffee chain Starbucks has reaped a sales increase from a fresh low-calorie version of its Frappuccino iced refreshments. The company said earnings in cafes wide open at least annually climbed 10% in the four weeks to 25 July, while total sales rose 27% on the year to $409m (220m). The increase demonstrates the impact of the new Frappuccino, unveiled in June. Starbucks is the latest in a long line of food companies to provide reduced-calorie variants of set up consumer favorites.

Data source: http://news. bbc. co. uk/1/hi/business/3936217. stm

From the employee's value creation point of view, it is clear that both of these company care about their employees and they are very willing to value them. Since Starbucks began with a single store in 1971, its overriding beliefs has been this: "Leave no person behind. " Knowing that, new employees get a day of in-store training, steeping themselves in information about coffee as well as how to meet, greet and serve customers. Full health-care benefits (medical, dental care, vision and substitute services) are offered to all or any employees, including part-timers who just work at least 240 time per calendar 1 / 4. The EAP is available to all employees. Employees talk about in the company's expansion via "Bean Stock" (commodity) of up to 14 percent of the gross pay, and a stock-investment plan allows those to buy shares of Starbucks common stock at a discount (85 percent of fair market value) through payroll deductions. The business also complements employees' contributions to their "Future Roast" 401(k) plans, adding from 25 to 150 percent of the first 4 percent of pay, depending on amount of service. As a result of such methods, Starbucks employees come with an 82 percent job-satisfaction rate, according to a Hewitt Affiliates Starbucks Spouse View Study.

Data source http://www. workforce. com/section/02/feature/23/52/96/

Similarly Costa involve some employee benefit such as pension, medical care, charity giving, bonus offer etc. these are definitely creating values for the employees worker training about making coffees, customer support and it provides career opportunities to their employees.

Turnaround Strategies:

Turnaround is an sudden or an urgent change, esp. one that results in a more favorable situation. It's the process of completing or enough time needed to complete a task, esp. one regarding receiving something, digesting it, and mailing it out again.

Turnaround strategy is the implementation of a couple of actions necessary to save a business from business inability and return it to functional normality and financial solvency. Turnaround management usually requires strong command and include commercial restructuring and redundancies, an investigation of the main causes of failure, and long-term programs to revitalize the business. Recognize a dependence on a turnaround in 1982 Howard Schulz joined up with Starbucks Caffeine Company as director of businesses and marketing. In those days Starbucks acquired only four stores. In August 1987, Schultz purchased Starbucks Coffee Company. In 1992, under his leadership, Starbucks was the first specialty coffee company to become general public company. The development of Starbucks has been amazing: from 17 stores in 1987, to more than 16, 000 worldwide today. Schultz defined some initiatives to help convert Starbucks. These initiatives were essentially governed by the principle - 'getting back again to the essence of what drove Starbucks past success'. Starbucks unveiled plans to start out offering limited free cordless Online sites. The relationship with T-Mobile - which only offered a paid registration service - ended with switching to AT&T Inc.

Commenting on the recent reorganization initiatives Schultz said, "We realize that we are operating in an intensely challenging environment, one where our customers and (employees) have extremely high targets of Starbucks. In January 2008, Starbucks released that it will stop reselling warm breakfast sandwiches. The reason why: the egg, mozzarella cheese, bacon and ham competed with the coffee aroma in stores. Perhaps to re-ignite the emotional connection with customers and restoring the associations customers have with Starbucks espresso, brand, people and stores. A three-hour work out for any employees on making espresso was also planned. In 2008, Starbucks will start hundreds fewer U. S. stores than initially planned and can close about 100 badly performing home stores. It will crank up its expansion international to improve the profitability of Starbucks outside the U. S, even redeploying a portion of the administrative centre at first earmarked for U. S. store development to the international business. Also, in February 2008, Schultz released 600 job slashes (about one-third who did the trick at the business's Seattle headquarters in the US) within an e-mail to Starbucks' more than 170, 000 employees, contacting it a difficult decision aimed at sharpening the business's focus on customers. Some analysts believed the move was to eliminate bureaucracy and lower costs.

On the other palm, turnaround strategy of Costa which is part of Whitbread, said different situation. They is convinced there continues to be room to grow and, despite acknowledging the tough economy has had a direct effect on sales, it reported same-store sales were up 2. 6% in the 13 weeks to 28 May.

Clive Bentley, property director at Costa, says they are really one of the very most acquisitive retailers and they still plan to expand with desires for 100 this financial time.

Global Strategies:

There are two using issues for companies or managers around the world these are:

Whether to globalize

How to globalize

Companies are also seeking to globalize by integrating their worldwide strategy. That is why they categorize pursuing four key tactical decisions for global aspects:

A) Product

B) Market

C) Method of entry

D) Speed

On the basis of product and market aspects companies are deciding which product should serve which market according to the customer demand. For example, In Asia most of the people choose tea. That's why Starbucks offer tea in that region as their highest quality. In European countries customer like strong coffee, so in here Starbucks offer different variety of coffee like espresso, estima etc. and in the us Starbucks provide premium coffee based on their consumer demand. In the case of global market procedure Starbucks has got a number of products in compare with Costa.

For example,

Starbucks Beverages


MachhiatoCaffe AmericanoCappuccino


Caffe LatteCaramel MacchiatoCaffe Mocha


Eggnog LatteCaramel Brulee Latte


Toffee nut LatteGingerbread Latte

Espresso con pannaSingle Espresso, Doppio Espresso

Syrup Flavored LatteEspresso Macchiato

Espresso TruffleWhite Chocolate Mocha

Cinnamon Dolce Latte

Starbucks Setting of access strategy is a lot more superior to Costa caffeine. In china Starbucks doing Joint venture with partnership of President Coffee, in Indonesia its doing licensing with relationship of PT. MitraA, in the united kingdom a lot of store are wholly owned or operated and franchised. Alternatively, Costa also doing Franchise as its worldwide entry procedure and it operates 893 outlets in the UK as of May 2009.

In contrary in the case of speed of entry strategy Costa coffee is doing much better than Starbucs. During 2005, within its international extension Costa coffee launched its branch in New Delhi, India and it also plans to enter in the wholesale coffee business in India and aims to start open 300 outlets through its franchise by 2007. It's the first international coffee who first type in the worlds second greatest population retaining country India where Starbucks not yet. In that case Costa savored the first mover advantages by creating its brand image, having no international rival except local rival and as a result Costa contains the highest market show in India. Now Costa offers branches in Bulgaria, China, Egypt, Oman, Poland, Jordan Greece, Hungary, India plus some other countries

New products, store ideas and marketing strategy of Starbucks and Costa espresso:

Starbucks joined with PepsiCo to stamp the Starbucks Brand on bottled Frappuccino and its own dual shot espresso drink. Starbucks ice cream marketed in a join opportunity with Dreyers is currently the leading make of coffee glaciers cream.

In circumstance of drinks size of cups Starbucks and Costa some times make customer too baffled. Basically, the way they name the glass which is not proper English.

For case,

Actual SizeStarbucksCostaSmallTallPrimoMediumGrandeMedioLargeVentiMassivoSource: Starbucks and Costa store, Liverpool Streets Place, London.

All in all, Starbucks is now an inspiration top brand. Starbucks goal is to be one of the most recognize brands on earth by retailing finest caffeine and related products. Starbucks is culturing customer loyalty by giving customer with the unique "Starbucks Connection with a third place to gather customer beyond a home or work. Although, cramming so many stores close collectively caused one satirical publication to perform this headline: "A New Starbucks Opens In the Restroom of Existing Starbucks". Actually, Starbucks beginning new stores in new and existing marketplaces for increasing its market share (Kotler and Armstrong, 2009, webpage 68). Moreover Starbucks comes after a localization strategy by tailoring its offerings in several countries. Which means Starbucks consider differences among countries, such as culture, level of economical and industrial development, stage of life pattern, media availability and legal limitation. Using its standardized product name, logo and presentation Starbucks uses localization strategy. For instance, tae emerges to get in the Far East, more powerful coffees in Europe and premium coffees in the U. S. Besides, Starbucks also doing Fair-trade. Company ethically sourcing and roasting their coffee, contributing positively to sourcing and other neighborhoods, reducing environmental influences, fairly exchanged with their workers for improve the way they live, charity work like collecting money for the kid clinic, prices trust etc, and every swipe of Starbucks greeting card 0. 5p straight goes to the global finance which is be employed by the dying diseases affected people like AIDS. All of the above methods of Starbucks create an excellent international global brand image, and also company good will. Likewise, competitor Costa also doing charity work a lot more different way than its rivals Satrbucks. During 2009/2010 Costa coffee are building, boosting, and maintaining colleges within five coffee growing communities in Costa Rica, Colombia, Ethiopia, Guatemala and Uganda. Where lots of the kids haven't any education, clean drinking water, sanitation, travel or food for institution meals. This makes the business competitively advantageous using its opponents and global strong image.


Mintzberg, H. Lampel, J. Quinn, J. B. and Goshal, S. (2003), The Strategy Process, (4th Model), Essex, Pearson Education Small.

Johnson, G. and Scholes, K. (1997), Exploring Corporate Strategy, (4th release), London, Prentice Hall Publication.

Hill, C. W. L, (2008), Global Business Today, (5th Edition), McGraw Hill International Publication, Boston.

Kotler, P and Armstrong, G( 2009), Rules of Marketing, (13th release), NJ, Pearson Prentice Hall.

http://www. fundinguniverse. com/company-histories/Starbucks-Corporation-Company-History. html

http://www. costa. co. uk/coffee/costa_story. aspx

http://www. costa. co. uk/coffee/the_coffee. aspx

www. starbucks. com

http://www. dandad. org/inspiration/creativityworks/pdf/authentic. pdf

http://www. glowa. ca/Starbucks_7s_Method. pdf

http://www. costa. co. uk/coffee/costa_story. aspx

http://www. fundinguniverse. com/company-histories/Starbucks-Corporation-Company-History. html

http://ru. linkedin. com/in/natalyafilkina

http://www. whitbread. co. uk/our_people. cfm?id=senior_management_development

http://www. bcg. com/about_bcg/history/history_1968. aspx

http://news. bbc. co. uk/1/hi/business/4179696. stm

http://news. bbc. co. uk/1/hi/business/3936217. stm

ttp://www. workforce. com/section/02/feature/23/52/96/

A small observation on Starbucks and Costa store, Liverpool Neighborhood Station, London.

Md Saiful Azam, Starbucks Worker, Liverpool Street Train station, London.

Md Kokhan, Costa Caffeine Employee, Liverpool Avenue Station, London.

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