23A – Your Venture’s Unfair Advantage

1. Human Capital

VRIN Analysis: Human resource plays an important role in ensuring that a company achieves its goals and objectives. Starbucks has a good human resource strategy to enhance its operations. The company has a recruitment department that ensures that it attracts the best talent in the market. Starbuck has a coffee master course that is supposed to be taken by all employees. All employees who have undergone this course wear black aprons, and the company has also come up with a good mentoring program to ensure that senior and more experienced employees are able to mentor their juniors. Recruitment revolves around attracting, screening, and finally selecting the best individuals for a specific job in an organization. This process can be done by the firms’ professional recruiters or it can still be outsourced to other recruitment organizations. Starbucks has continually recruited people to join its operations. The company has operations in more than 39 countries and ensures that it attracts the best talent to enhance their operations through their services.

2. Social Responsibility

VRIN Analysis: Starbucks has been working towards developing a campaign emphasizing the corporation’s use of ethical sourcing and environmental stewardship for their products. The brand has realigned its departments to be more effective in community investment efforts. Starbucks promotes social, economic, and environmental standards while following Coffee and Farmer Equity (CAFÉ) Practices, which ensures coffee quality. The tea is also produced in a socially responsible way, impacting 75,000 families in more than 200 farming communities in Indian and Guatemala. Loans are provided to farmers at reasonable terms, in order to promote the brand’s farmer support model. The pre-requisites the corporation follows are quality, economic transparency, environmental leadership, and social responsibility in order to maintain a sustainable and social responsibility. CAFÉ Practices work via a point system, with points given to compliance with individual indicators with a total of 185. From the indicators, there are over 100 points to be awarded under a plethora of categories that the brand use to measure criteria.

3. Social Capital

VRIN Analysis: Social capital is the trust of people in society which some parts can measure people's ability to work together in an organization. These capabilities have importance to develop sustainability in every status of society. In the fragmented and individuated age of postmodern consumer culture, a nostalgic view of community has become a highly commercialized trope through which consumers are able to forge an ephemeral sense of interpersonal connection via common consumption interests. Through these postmodern forms of community, consumers seek a palliative for the distressing feelings of isolation, inauthenticity, and depersonalization that can be precipitated by the conditions of postmodern consumer culture. Absent from these consumerist and therapeutic communal retreats are the sociopolitical agendas and goals that formerly animated urban third places and their constituent forms of social capital. This effective human capital management translates into great customer services. Starbucks has recently turned to the capital markets to raise funds to help people overcome their own challenges.

4. Organizational Culture

VRIN Analysis: Starbucks has one of the most unique cultural characteristics out of all the firms, which influences the performance of the business and employees. The corporation’s organizational culture ties in with the company’s tactics for successful brand development and global expansion. Starbucks culture also relies on five main features of its organization culture, including servant leadership “employees first”, relationship-driven approach, collaboration and communication, openness, inclusion, and diversity. The mission statement of Starbucks is, “Our mission: to inspire and nurture the human spirit, one person, one cup and one neighborhood at a time.” Some of the problems the corporation faces include their reliance on suppliers which have volatile prices, the lofty prices, and the fact that every store is consistent around the world, which may impact the customer or consumer’s experience there. The average revenue per company-owned store for Starbucks has been increasing over the past few years, and graphs depict an upward trend.

5. Financial Capital

VRIN Analysis: In July 2019, Starbucks reported a fiscal third-quarter net income of $1.37 billion, or $1.12 per share, up from $852.5 million, or 61 cents per share, a year earlier. The company's market value of $110.2 billion increased by 41% in the mid 2019. The earnings per share in quarter three were recorded 78 cents, much more than the forecast of 72 cents. Starbucks is concentrating on expanding its footprint and also changing its store mix. Instead of opening more dine-in restaurants, the coffee giant is concentrating on drive-thrus in the outer edges of urban and suburban areas. In addition, Starbucks is opening up express stores which essentially function as walk-thrus in New York, Boston, and Seattle. This strategy is aimed at increasing the company’s store penetration. To fully leverage off the gaining popularity of its complementary coffee and food menu, the company is working towards establishing partnerships and making food one of its major future growth drivers.

6. Location/Geographics

VRIN Analysis: The geographics for Starbucks consists of three regional divisions for the global market, Americas, China and Asia-Pacific, and Europe, Middle East, and Africa. Within the United States, it is further divided into Western, Northwest, Southeast, and Northeast regions. Starbucks corporation has the most stores in the Americas, but is also heavily focused on China, where it has opened around 1,400 stores. The new and potential target audience in China has great potential, with same-store sales growths outpacing the segment. As of May 2018, Starbucks is looking into adding 3,000 new stores in mainland China within the next few years. By pushing a coffee culture in China, the rewards will be healthy, long-term, profitable growth for decades to come. Starbucks has offered their mobile app for several years, which has a location-based feature that allows users to find the nearest Starbucks and placing an order online in order to save time waiting in line.

7. Satisfaction Guaranteed

VRIN Analysis: Starbucks offers a 100% satisfaction guarantee on all food and drink products. For Starbuck's gift and consumer products, they offer a 60-day guarantee. Exchanges are processed as a refund of original purchase price, and you must also place a new order for a replacement product. Starbucks is oftentimes the third place in consumers’ minds, with the first being home, second as the office, and the third as a place to relax and grab a drink like Starbucks. The consumer market for Starbucks is predominantly located in North America, followed by China and Japan. The American customer satisfaction index scores peaked in 2011 and 2013, with an ACSI score of 80, and was at its worst in 2015, with a score of 74. A breakdown of Starbucks company statistics reveals that 75% of product sales resulted from beverages, followed by 19% in food, 4% in packaged and single serve coffee, and the remaining 2% in coffee-making equipment and other merchandise.

8. Brand Personality

VRIN Analysis: Brand personality is a set of human characteristics that are attributed to a brand name. A brand personality is something to which the consumer can relate; an effective brand increases its brand equity by having a consistent set of traits that a specific consumer segment enjoys. The brand personality of the corporation is frequently associated with excitement and sincerity. Starbucks’ objective is built around cultivating lasting customer relationships by treating them like family in a welcoming environment. All the personality traits the Starbucks brand is believed to convey to customers resulted with a list that mirrors the traits people seek in a best friend, gracious, encouraging, respectful, warm, genuine, and quick-witted. A brand’s personality is a shorthand way to convey a brand’s belief system, and entrepreneurs should create a list of brand personality traits to serve as a guide to help them design marketing materials and programs that are on-brand in spirit and in the marketplace in order to convey both the brand’s purpose and message.

9. Product and Services

VRIN Analysis: Starbucks products appeal to what consumers want both qualitatively and quantitatively. Consumers tend to lean towards Starbucks not only for the products- mainly the beverages, but for the experience as well. What sets Starbucks products aside from its competitors is the fact that the corporation offers limited edition drinks, along with Instagrammable menu items. The elimination of online retailing enables the store to return as the third place in consumers’ minds, with the first being home, second as the office, and the third as a place to relax and grab a drink like Starbucks. The corporation was described as “trailblazers and fearless innovators” by a consumer, despite its lack of modernization and technology. However, technology innovation is ingrained into the company, but is not emphasized towards consumers to maintain the homely environment. What Starbucks embodies that is important towards the audience is that they have packaged something that is relied on by many- caffeine, and made it appeal towards a larger intended audience.   

10. Loyal Target Audience

VRIN Analysis: The target audience for Starbucks are men and women ages 25 to 40. The target market is affluent or high-income consumers, but multiple Starbucks are also surrounded by middle-income neighborhoods, due to these people spending their discretionary income on the brand’s beverages. The corporation targets the working class, or people who are occupied in their daily lives. Due to their immersive lifestyles, customers can grab a drink “on the go,” and Starbucks also offers bottled drinks for convenience. Technology also plays a role in determining the target audience, a majority of the market is tech savvy, implying that they use social media frequently. Starbucks is also flexible with their target audience, but knowing that changes arises with growth, the company views changes as opportunities, rather than burdens in the future. By creating “an image to which customers want to associate themselves with,” this generates a sense of belonging among the audience and can be leveraged to achieve success along with enhancing brand loyalty.

Top Resource: My top resource is human capital. As the number of jobs that require cognitive skill increases, people are more important than ever. Every part of a business or company boils down to the people. And by understanding the human element, it'll be more profitable, lead more effectively, create brand loyalty, close more deals and do better work. Taking this approach also forces the company or business to consider their own desires and motivations, and this can lead to becoming more empathetic and understanding. A company’s greatest asset and resource is its human resource.  An engaged, loyal, fulfilled group of people working together, regardless of obstacles, will likely always outperform a group of people who don’t feel that same connection with their roles and with the overall goals of the company. Firms and institutions must recognize the importance of human capital as a critical first step in tapping into unrecognized potential. Executive education is an investment in that capital, a way to unlock that untapped talent. What companies get in return is better leaders, more effective managers, better decisions, and a greater return on investment. Without human resources, the daily business function of an organization will not be performed as well, or ready. Human resources are relevant to one organization’s profitability, and their ability cannot be replaced by technology. The skills, knowledge, and experience of each individual contributes to the growth or organizations, communities, and nations. Valuable human talent is thought of in terms of human capital, and it makes up one of the primary requirements for national economic development, fostering development and growth within a company or business. No matter what business, the human element is omnipresent. Companies and businesses need to understand that just like family members, employees, and clients, people are only human. Leading with empathy is the best way to attain success in business. And by cultivating a culture that prioritizes the human element, they can get back to what really matters, people. By doing so, companies and businesses will flourish and succeed within the industry, but in order to do so, they must build and integrate the human element into their company’s core values and mission statements.