Wednesday, November 18, 2015

Coherence Premium: Leveraging your strengths -Starbucks

In order to succeed anywhere it is important to know your strengths. Just as no two individuals are the same. I believe no two companies are the same. There is an old proverb “Everybody is a Genius. But If You Judge a Fish by Its Ability to Climb a Tree, It Will Live Its Whole Life Believing that It is Stupid”. The same can be said for companies. In order to formulate a strategy a company must know its strength weaknesses and how these can facilitate its growth.

While reading more on the coherence premium and GE’s Goes with what it knows. I started thinking about companies that I thought follow the Coherence Premium. One of the first to come to mind was Starbucks. One of its USP is it’s the third place after home and work one goes to Starbucks be it for leisure or for work. Everything from catching up with friends to completing assignments, to business meeting has been conducted here. In order to build this environment Starbucks has strategically placed its resources and capabilities. These capabilities help formulate the company’s goal and therefore strengthen its mission statement. Using these resources a company can inspire its employees and therefore attain success.

The CEO of Starbucks Howard Schultz in my opinion identified from the start the company’s goal and strength. He knew he wanted to get Italian coffee drinking experience to America and was aware his key strength was the quality coffee beans and the experience his coffee house would bring[3]. He knew his capabilities: manpower and quality coffee. The careful strategy of customizing coffee and the unique flavors added to the experience gives us insight into this.He focused on this quality and provided customers with an experience none of his competitors could provide. Thus differentiating his company

Starbucks other strength is its man power. Schultz has ensure all of his employee’s top priority is customer satisfaction. Schultz understood his customers and how to generate value for them. They wanted the same experience and ambiance at any Starbucks location. After all Starbucks was their third home. He therefore decided to keep the experience uniform throughout all 17000 locations. Schultz accomplished this by  conveying his mission statement to his employees. These employees believed in his mission statement and values and helped drive Starbucks.

By combining his company’s capabilities with the market and today Schultz helped make Starbucks a success.This is  brief  on Starbucks is reminiscent of Welch’s advice “Have a plan and stick to it” [2]. Any company that wants to survive in today’s market place has to understand its core purpose. This in turn has to be in line with the companies capabilities. In our strategy class we discussed an example, Google cannot go into farming. It may have the revenue but it does not have the capabilities to achieve this goal.   A company with happy employees, clear understanding of the market, and its capabilities can help build a strategy that would eventually lead to its success. 


       2. GE’s Growth Strategy: The Immelt Initiative (Bartlett, Harvard Business School, 2006)
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