VRIO Analysis of Starbucks Coffee

Starbucks VRIO Analysis

Starbucks is a well known name in the world of coffee.  It has close to 35,000 stores open globally (as of 2022). The brand has achieved success through years of ethical business and by focusing on customer service and product quality. Since 1971, the company has remained committed to ethical sourcing. The main factor driving the success of Starbucks Coffee is product differentiation. There are three important things that differentiate the premium coffee brand from others.  The first important point is quality and the second customer experience and third is excellent branding.  Starbucks serves only premium quality coffee and is known for offering a unique customer experience across its stores and is also one of the leading successes in terms of branding. Unlike Pepsi or Coca Cola, Starbucks hardly invests anything in marketing, which proves the strength of its brand image.

Starbucks had started its humble story from Seattle.Today, it has spread globally to become an international brand critically acclaimed for quality coffee, excellent customer service and ethics.  This has also helped the brand build customer loyalty and grab the position of number one coffee brand in the market. Several of its strengths can be easily noticed by anyone. This VRIO analysis presents a deeper analysis of the resources that have helped Starbucks generate a sustainable competitive advantage. In this article, we have discussed the main strengths of the coffee brand and its most important resources and then their importance relative to the competitive advantage.

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Main strengths of Starbucks Coffee:

Strong brand image – Starbucks has a strong brand image that rests on three important pillars –  ethics, product quality and customer service.

Special flavours and quality of coffee – The brand is known best for its quality and diverse flavours of coffee it serves; which is the main attraction for most customers.

Customer service – Another important factor well known about Starbucks Coffee is its customer service. The company places a central focus on customer service and provides special training to its baristas and store staff in this area.

Store environment – The customer friendly environment of the Starbucks stores is also a distinct feature of the brand which works to attract and retain customers. The company stores do not just attract the coffee lovers, but also the ones who need a break and want to relax.

Supply chain – A well managed supply chain allows Starbucks to source the best Cocoa from around the world.  Also, its main enabler of great quality. A well managed supply  chain is now critical to maintaining product quality and operate profitably. In case of several of the leading businesses across various industry sectors worldwode, securing a strong supply chain has proved to be a critical driver of competitive edge.

Global presence – Another important strength of the brand is its global presence. Starbucks has close to 35,000 stores operational globally. The company is also aggressively investing in expanding its global footprint and aspires to have more than 50,000 stores operational globally by 2025. In terms of competition, its global presence gives the company a sharp edge against all its rivals.

Valuable:

Strong brand image –  Yes, a strong brand image is a valuable resource that  helps at growing the customer base and a great reputation is also good for marketing.

Special flavours and quality of coffee –  Yes, a valuable resource for it is the primary reason that customers flock to Starbucks.

Customer service –  Yes, a valuable resource that  complements the quality of Starbucks products and helps at customer retention.

Store environment – Yes, a valuable resource leading to increase in popularity and good for customer retention.

Supply chain –  Yes, a highly valuable resource that  helps source good quality raw material and retain the quality of products

Global presence –  Yes, a valuable resource that makes Starbucks more competitive and stronger than competing brands.

Rare:

Strong brand image –  Rare and a big challenge for the competing brands.

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Special flavours and quality of coffee –  Yes, significant investment goes into procurement and then creation of special flavours.

Customer service –   Can be achieved by other firms too. However, requires investment in staff training and special focus. A culture of customer service is also essential to achieve solid customer satisfaction.

Store environment – Can be achieved by other firms too. However, requires investment in store make up, staff training and other things. 

Supply chain – Difficult to achieve for others because requires both investment and strategy. Apart from that, supply chain management can be a complex area.

Global presence –  Difficult to achieve for others because of the significant financial investment involved. However, improving global presence also requires a strong brand image since without strong branding and marketing, market expansion cannot be porofitable.

Inimitable:

Strong brand image –  Difficult to imitate, requires heavy focus upon customer service, product innovation, supply chain integration, etc. Apart from that, it also requires investment in consistent branding and marketing, which is generally a very challenging area for businesses.

Special flavours and quality of coffee –  Difficult to imitate because of the prices and procedure. Securing supply of quality beans is also difficult and apart from financial, oeprational challenges also pose a difficulty for coffee businesses.

Customer service –  Somewhat difficult to imitate if not altogether. However, starbucks has created a culture of customer service and imitating its company culture is difficult if not impossible

Store environment – Somewhat difficult to imitate.

Supply chain –  Difficult to imitate but possible in the long term. However, still it will require hevy financial investment, know how and dedication. Especially, building supplier relationships can be complex in the coffee industry.

Global presence – Difficult to imitate because of the heavy investment. Businesses need to focus first on strengthening their brand image and after that, they can achieve profitable geographical expansion into new markets.

Organized:

Strong brand image –  Yes. The company has benefitted throughout its history from its strong brand image.

Special flavours and quality of coffee –  Yes, Starbucks’ flavours are the talk of the town and an important part of Starbucks’ marketing and customer retention strategy..

Customer service –  Yes, another important fact that has made Starbucks Popular.

Store environment – Yes, it is an important part of Starbucks’ marketing and customer retention strategy.

Supply chain – Yes, Starbucks sources 99% of its coffee ethically. Exceptional quality beans are sourced from around the world giving the brand an edge.

Global presence –  Yes, and it helps Starbucks generate high revenue.

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