Topic: Why does Starbucks continue to be the number one coffee company in the world

 

 Introduction

Starbucks global presence can be seen in over 60 different countries across the globe. Even though they have expanded rapidly worldwide, their main focus has always been in the United States. According to Securities Exchange Commission (SEC) report in 2013, Starbucks have more than 7,000 retail store in the United States and over 10,000 stores worldwide (SEC, 2013).  Starbucks outlets are always located in prime locations with heavy traffic. Those properties represent good investments as most of them occupy prime real estate. The designs of Starbucks outlets are always visually appealing, cozy and emanate “coolness”. This aspect attracts customers and makes them want to stay.  The company has net revenue of $11.7 billion in 2013, listing them as the company with the highest market share in the coffee and snack shops industry in the United States (SEC, 2013). This high level of sales came from a variety of product mix. Starbucks products include fresh brewed coffee, non-coffee beverages, snacks, sandwiches, a variety of instant coffee, canned drinks, music, and books.

Research design

This part describes in a vivid manner the procedures and strategies that were used in carrying out this study. Research methodology encompasses elements like research design, study location, target population, sample and sampling procedures, research instruments, pilot testing of the instruments, data collection process, and data analysis procedures. The section is an overall plan conceiving to aid the research in answering the research questions. It is a stage where most decisions about the research will be approached as well as when, where and how the research will be completed. In particular, the section describes the target population, the sample sampling producers, research instrument, validity and reliability of instruments, data collection procedures and data analysis. It must be noted that this section is very important to this study because it gives the methods used to collect the primary data from the source.

 

Research design is sorted into three sections. These sections are exploratory research, explanatory research and lastly descriptive research. These research designs are described below.

 

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Exploratory Research

Exploratory research enables the researcher to determine the best research design, selection of subjects and data collection method for a problem that has defined. Furthermore, exploratory research is based on secondary resources such as looking at available literature and data and such as qualitative research interviews with customers, companies, individuals, competitors, focus groups, case studies and so on so forth. Exploratory research aims at gaining an insight for new phenomenon or obtains a familiarity to be able to formulate hypotheses

Explanatory Research

The main purpose of explanatory research is to find out the answer for the question of Why. Explanatory research is an attempt to go beyond exploratory and descriptive research in order to identify what the real reasons are for why a phenomenon occurs. The reasons behind a theory can be enriched and built by this type of research design.

Descriptive Research

There are many researchers who strive to identify and to figure out the terms of these kinds of researches. Descriptive research is also known as statistical research and describes characteristics and data in regards to phenomenon or population that the researcher has studied. In this regard, even though the description of data is accurate, real and systematic, it is almost impossible that the researcher is able to find out what has caused the situation. Hence, it is not proper to use descriptive research in creating causal relationship, where one variable influence another

Justification of Research Design

This research will use exploratory research for research design. It is necessary to state and ask a lot of random questions for the interview regarding with the subject which there is no enough information.  According to Gay mills and Airsian (2009) this design involves collection of standardized quantifiable information from members of a population or a selected sample.

Target Population

A population is the entire set of relevant units of analysis, or data. It can as well be referred to as the aggregate of all cases that conform to some designated set of specifications. In this research the target population is the city of Baltimore,where a sample population was used for the research

Methods of Data Collection

This study will apply various number of research instruments collection of data. It is therefore fundamental to note that the researcher used different types of research instruments. The use of various number of research instruments is always encouraged so as to ensure that the data collected is accurate and holistic. This will contribute to the trustworthiness of the data

Questionnaires

A questionnaire is a set of questions or statements that assesses attitude, opinions, beliefs and biographical information..The research employs questionnaires to elicit the desired information since they are economical, ensure anonymity, permit use of standard questions have uniform procedures provide time for respondents to think and are easy to score.

Self-administered questionnaires to the sample population in Baltimore will have five sections and should take 20 – 30 minutes to complete.

Interviews

This research will employ the use of semi structured interviews. The interviews always compliment the questionnaire through corroboration of the quantitative information. An interview guide, according to Budha (2000) describes interviews as vocal questionnaires which involves the gathering of data through direct and verbal interactions between(s). This allows clarifying any ambiguity or obscurity in the questions.

Thematic concerns on research questions shall guide the division of the interview schedule into sections. For all the owners selected interviews will be conducted in their sites and will last for between 35 – 45 minutes. Open ended questions in unstructured interviews are used for greater flexibility and freedom for the respondents.

Validity and Reliability of Research Instrument

According to mills & Airsian (2009), validity refers to the extent to which a researcher’s instrument measures what is designed to measure. Kothari (2003) argues that validity is the appropriateness, meaningfulness and usefulness of any inferences that a researcher draws based on data obtained through the use of an instrument. Instruments validity is the extent to which an instrument measures an aspect in respect of what it can be projected to evaluate. Content validity is the extent to which a measuring instrument provides adequate coverage of the topic under study, and its determination is basically judgmental and intuitive. Marlon (2001), points by designing the questionnaire, the researchers can construct the document to accurately reflect the concepts that the research intends to measure. Therefore this research uses instruments that are expressively written for the study. To ascertain the validity of questionnaires, interview schedules and FGD guides, a pilot study will be done among the workers and owners who will not participate of the study. To ascertain reliability of the results, alternate method will be used and a Pearson product of co- efficient of the results obtained from questionnaires and those obtained in FGD and interview guides.

Methods of Data Analysis

This research uses qualitative and quantitative data analysis. Kothari (2004) asserts that data obtained from the questionnaires and interviews in its original form may be difficult to interpret. Data analysis is therefore the process of bringing order and meaning to raw data. This is achieved through cleaning, coding and entering it into a computer and analyzing it. Quantitative data will be obtained from will be obtained from the close – ended items in the questionnaires. It will thereafter be quantitatively analyzed in order to identify general trends in the selected population. The raw data is analyzed after being coded e.g. 1 for YES and 2 for NO, 1 for male and 2 for female, and entered into the computer by use of statistical package for Social Sciences (SPSS, Version 17.0). Data will be summarized using descriptive statistics as frequencies, means and percentages.

On the other hand qualitative data is derived from interviews and from the open – ended items on the various categories of questionnaires. The raw data will be examined and completeness determined by analyzing qualitative data through systematically searching, arranging, breaking data into manageable units. Synthesizing and looking for patterns among the variables. In this study data will be categorized into themes and use thematic analysis through discussion and present it in form of narrative direct quotes and excerpts. The data will therefore be fed in a word processing documents (MS word)

Operational Definition of Variables.

This part gives a detailed specification of how the given variables will be measured. Like in other research, this study has variables which can be measured in more than one way. For instance, the interaction with respondents is expected to create anxiety which can be measured by asking the respondent how they feel, observing their behaviour and measuring their psychological responses.

During the study the questions address to the respondents are tailored to be able to give answers relating to the main subject been investigated. Since operational definition cannot be 100 percent accurate, the qualitative research will help the researchers to gather any information required to explain on the variables.

Ethical Issues

Ethical issues to consider in any research include privacy, confidentiality, sensitivity to cultural differences and gender. The study makes sure that the purpose of this study is fully explained in advance to respondents, informed consent will be obtained where respondents are requested to sign a consent letter. To safeguard anonymity of the identity of the respondents, the study uses the coding system. The research team should also be open and honest in dealing with respondents. All information from sources other than the research will duly be acknowledged to avoid plagiarism. Findings of the study are reported with the highest possible objectivity and utmost honesty.

Findings

In our research we found that starbucks maintained the top position in coffee making industry because of the following reasons:

In conducting operations, it pays close attention to their social responsibilities. Social responsibility is a very important aspect because it shows what you’re giving back to the community. Starbucks implemented sustainable farming method to ensure long term supply of coffee; they also provide job opportunities globally (Starbucks, website). The company encourages diversity in their company and they also provide leadership training for communities that they’re involved in. These activities prove the communities around the world that Starbucks is a socially responsible company.

It is taking advantage of technological development that are present to improve their service and productivity. Free Wi-Fi connection is always available in all Starbucks locations. The company also created an app that enables its customers to view their menu, order items, and even make payment. In 2012, the company began accepting Square Wallet, which is an application for mobile payment. Today, the mobile payment app accounts for 10% of all US Starbucks payments and the Starbucks mobile app generates 30%.

 

We however found that the company still faces some challenges. Starbucks products are considered of premium quality compared to their competitors. This might be another factor that could halt global expansion. The price of Starbucks products might be considered too expensive in other countries. This can make this convenience product look more luxurious than usual. Moreover, as coffee is a convenience product, people switch brands which could pose a threat for Starbucks.

Starbucks may have thousands of shops that spreads across United States, but having too many retail location can cause self-cannibalization. The distance between each Starbucks outlet is usually not that far, causing them to fight over market share within a location. This kind of problem often occurs when there are too many competitors from the same industry. It slows growth because each outlet is competing with each other as well. Starbucks owns almost 20,000 stores worldwide with around 8,000 of it located in the United States area (SEC, 2013). This shows how unbalanced the spread of Starbucks retail store. It proves that they are too focused on US markets.

Starbucks has increasing product recalls lately. One of its latest pastry product line La Boulange had to recall some of their soft caramel jams because it contains undeclared hazelnut, which might be potentially harmful for some people that did not know. Earlier in 2011, the company also had to recall all chipotle chicken wraps due to salmonella contamination.

Conclusion

Starbucks needs to maintain the position it holds in the industry. To do this it will have to work on its strengths and try to eliminate the weaknesses that it is facing. The research has shown that the good practices in the management have contributed a lot in placing the company at the top. These need to be emphasized for the company to stay at the top of the industry.

 

References

Aaker, D. A., Kumar, V., & Day, G. S. (1998). Marketing research. New York: Wiley.

Bussing-Burks, M. (2009). Starbucks. Santa Barbara, Calif: Greenwood Press.

Canadian Broadcasting Corporation., CBC International Sales., & Educational Film Services. (1996). Starbucks. Toronto, Ont.: CBC International Sales.

Kachra, A., & Richard Ivey School of Business. (1997). Starbucks. London, Ont: Richard Ivey School of Business, University of Western Ontario.