Innovation Strategy -Starbucks

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Innovation Strategy

For any organization to succeed and achieve their goals, they need to establish strategies. These strategies will allow companies to remain competitive and deal successfully with any changes in their internal and external environment. Starbucks opened their first store in 1971 with two things in mind; share great coffee with friends and make the world a little better (Starbucks, 2015). Since, this company has grown and transformed in one of the greatest companies that have defied the laws of economic gravity by overcoming global competition and a weak economy. Below, our team will discuss innovation strategy, what are Starbucks new products and or services and the impact this can have in SEC filings.

Innovation Strategy

According to Dave Power, innovation strategy is a plan by an organization to encourage advancements in technology or services, usually by investing research and development activities (Power, 2015). Starbucks has been one of the best companies globally and leader in innovation strategy. From sustainable store designs to generous employee benefits, Starbucks has created a culture that has helped it lead the global coffee business (Starbucks, 2015). It will be incorrect to think this company will stop here, now they are planning to do the same with other beverage categories such as juice and tea, as well as improve the customer’s service experience.

What does the most successful growth companies like Starbucks, Apple, and Amazon have in common? According to Power, these companies follow at least four best practices. All businesses look forward to the time that will be the best to innovate, and it is when the first growth curve hits and inflection point yet the best companies make innovation a continuous process. The best companies also tend to lean on customers. Having a deep understanding of their customer’s problems give them a great advantage if they found a great solution. But this is not enough. Great organizations need to think as like a designer by creating new options. The last best practice Power mentions is to “Lead the way” (Power, 2015). Most of the best companies create a culture based on innovation. Schultz, Starbucks chairman and president, decided at one point that Starbucks had lost its way and decided to fly all store managers from around the world to help redesign its café experience.

Starbucks New Products/Services

Starbucks offers many new products and services year round. Recently, Starbucks launched a contest to give 14 lucky customers Starbucks for life (Starbucks.com, 2014). After swiping a Starbucks® Card or paying with a mobile device customers receive a receipt with a unique sweepstakes code that can be entered online at starbucks.com/play for a chance to win instant prizes (Starbucks.com, 2014). Starbucks has also started testing a new mobile service that will provide all the products and services that can be found in store locations. The service debuted on three college campuses and will move to various locations on campus throughout the day, making it convenient for students and faculty (Starbucks.com, 2014).

Another important product that Starbucks is introducing is the new Teavana Oprah Chai Tea. This partnership with one of the most recognizable media tycoons on the plant should be very prosperous. Oprah Winfrey personally developed the tea with Teavana’s leading teaologist Naoko Tsunoda. The distinctive blend of tea features a bold infusion of cinnamon, ginger, cardamom and cloves, blended with loose-leaf black tea and rooibos. “My daily tea ritual is a vital part of my morning. Savory and spicy chai, with its deep flavor, has long been a favorite of mine,” said Winfrey (Starbucks.com, 2014). Starbucks is also featuring a new carbonated drink. Fizzio beverages are individually handcrafted for each customer, featuring three flavors: Spiced Root Beer; Golden Ginger Ale; Lemon Ale (Starbucks.com, 2015).

SEC Fillings

Over the years, Starbucks Corporation financial statement disclosures have indicated that they’ve been growing their revenue exponentially despite experiencing some hurdles along the way. Shubber (2015), “the company’s strong performance is the result of a turnaround strategy that has focused on engaging with our employees, giving customers more, growing the business and improving our model by rebalancing the store portfolio and carefully managing costs,” (para. 3). For the first quarter in 2015, revenues increased 13 percent to $4.8 billion dollars” (Giammona, 2015). According to Starbucks Investors Relation (2015), this accomplishment is a result of their “growth in food sales, attributed to both new and existing products, successful limited time offering beverages and increased Teavana ® tea sales in our Starbucks” (SEC Filings). An important part of Starbucks success is their commitment to providing exceptional products and services to their customers. This includes the newly developed “Expresso Store”. This new strategic plan will focus on meeting the needs for specific customers, in which if successful, may result in the continuance of global supremacy. Starbucks realize that they must adapt to the environment in which they operate by shifting the brand to fulfill the desires of their customers but also maintain their core brand attributes. Starbucks expectations are to continue to drive revenue growth and margin expansion through net new stores and continued product innovation, targeted at driving growth across all geographies (Starbucks Investors Relation, 2015). By providing their customers with products and services that they request, Starbucks profits will continue to soar.

Conclusion

In the modern business world, most companies are becoming innovative to become the market leading in their segment. Companies are introducing the innovative marketing strategies to mitigate the competition. According to USA Today article titled “Starbucks CEO Schultz on Digital Innovation,” Schultz stated in 2013, “If we were competing with Starbucks, what would we do? I find this strategy very outside the box, so to speak” (Horovitz, 2013). However, Starbuck’s outside the box thinking for their marketing strategies and business plans always helps them to remain competitive market leader. Their innovative ideas to bring the new products line and service for their customers made most American young generation’s first choice for coffee. Finally yet importantly, their customer-centric innovative service and product line offering attract clients of all ages and help them to meet their stockholder’s expectations.

References

Giammona, C. (2015). Starbucks First-Quarter Profit Surges 82% as Food Sales Gain. Retrieved from http://www.bloomberg.com/news/articles/2015-01-22/starbucks-first-quarter-profit-surges-82-as-food-sales-increase

Horovitz, B. (2013). Starbucks CEO Schultz on digital innovation. USA Today, Retrieved from http://www.usatoday.com/story/money/business/2013/04/24/starbucks-howard-schultz-innovators/2047655/

Power, D. (2015). Innovation Strategy: 4 Key Tactics of Top Growth Companies. Retrieved from http://www.dce.harvard.edu/professional/blog/innovation-strategy-4-key-tactics-top-growth-companies

Shubber, K. (02/05/15). Starbucks Financial Times. Retrieved from http://search.proquest.com/docview/1661163727?accountid=458

Starbucks Investor Relations. (2015). SEC Filings. Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-sec

Starbucks Newsroom. (2014). 10 Starbucks Innovations of 2014. Retrieved from http://news.starbucks.com

Starbucks. (2015). Our Heritage. Retrieved from http://www.starbucks.com/about-us/company-information