VRIO Analysis of Starbucks Coffee

Author- | Posted- | Updated: January 4, 2020 |

Starbucks VRIO Analysis

Starbucks is a well known name in the world of coffee.  It has more than 22500 stores open globally. The brand has achieved success through years of ethical business and by focusing on customer service and product quality. The main reason behind the success of Starbucks is differentiation. There are three important things that differentiate the brand from others.  First important point is quality.  The brand serves only premium quality coffee.  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 right at the surface. This VRIO analysis presents a deeper analysis of the resources that have helped Starbucks generate sustainable competitive advantage. First are discussed the main strengths of the coffee brand and its most important resources and then their importance with regards to competitive advantage.

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 various flavours of coffee it serves; main attraction for most customers.

Customer service – Another important factor well known about Starbucks Coffee is its customer service.

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.

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.

Global presence – Another important strength of the brand is its global presence. Starbucks has more than 24000 stores in 70 countries.

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.

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.

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

Supply chain – Difficult to achieve for others because requires both investment and strategy.

Global presence –  Difficult to achieve for others because of the significant financial investment involved.

Inimitable:

Strong brand image –  Difficult to imitate, requires heavy focus upon customer service, product innovation, supply chain integration, etc.

Special flavours and quality of coffee –  Difficult to imitate because of the prices and procedure.

Customer service –  Somewhat difficult to imitate.

Store environment – Somewhat difficult to imitate.

Supply chain –  Difficult to imitate but possible in the long term.

Global presence – Difficult to imitate because of investment.

Organized:

Strong brand image –  Yes

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.

Starbucks VRIO

Resource Valuable Rare Inimitable Organized Competitive Advantage
Strong brand image Yes YES Yes Yes.

Competitive Advantage

Special flavours and quality of coffee Yes Yes Yes Yes Sustainable Competitive advantage
Customer service Yes Yes No Yes Competitive parity
Store environment Yes Yes No Yes Realized temporary Competitive advantage
Supply chain Yes Yes No, but requires much investment and focus Yes Realized temporary Competitive advantage
Global presence Yes Yes Yes, because requires heavy investment Yes Realized temporary Competitive advantage
Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.