Essay on Business: Marketing and Growth

Submitted By tigercub94
Words: 1219
Pages: 5

The coffee retail chain, Starbucks, has achieved an average annual sales growth of over 20% in recent years. It now has over 10,000 outlets and operates in nearly 40 countries. Should the directors of Starbucks aim to maintain this fast rate of growth in the future.
In some ways of measuring how successful a business is sometimes it means looking at whether they have grown, how much have they grown and also how quickly has it occurred? With some businesses their growth is instant because they may have a high demand in their product, or their target market has grown too whether this be from an increase in the population i.e. birth rates or that maybe the target market has increased like students going to uni, as this means there will be more consumers that may have disposable income from their student loans etc. Although growth is normally a good quality for a business to have sometimes it can be bad for the business too.

Lets have a look at Starbucks, they are within a market that is quite niche as its in the coffee market, this may mean that Starbucks actually doesn’t have the much competitors which makes growing within this market easier, so they can eventually have the majority of this market and set up high barriers to entry so when it comes to other businesses trying to be successful in this market it will be difficult. (porters five forces) However there are other competitors like Costa coffee which sells very similar products and offers very similar services to Starbucks. With this competition in mind the directors will need to think whether it would be best to focus on maintaining the growth of the business or to focus on staying competitive so other businesses don’t take over the position they have within the market. Competition may be a main feature when considering to maintain growth as this is could determine how long the business will last within this market without going into liquidation like many businesses have done recently in the recession. Other point to consider is government intervention, just recently it has been known to consumers that Starbucks has in fact avoided paying their corporate tax, this may have a huge affect on the current customer base they have the possibility of growth in the future. It may put people off buying from their as they may partly blame Starbucks for the horrific financial crisis we experienced in 2009. The government may intervene which could lead to a decrease in the growth of consumers purely because of the bad image that has been shown but also because the government has to somehow punish Starbucks for not paying these taxes which could cost them financially. If the directors had perused concentrating on the maintenance of the growth then further problems may arose even bigger than they are currently in at the moment. As Starbucks has grown to now having over 10,000 outlets this will mean more costs on each department as it grows. For example HRM will need to consider recruiting more people to fill these outlets out this means recruitment costs, customer and machine trained which too leads to costs. Costs put aside this also puts a strain on the business performance too, although most businesses try to have the most efficient business by utilising their capacity to have great economies of scale it can have a bad effect too. The staff may get over worked with the growth of consumers which can have a de-motivating effect on them which could lead to low customers satisfaction levels, high labour turnover and will essentially decrease the number of consumers. Also suppliers may be under a strain to perform as they may need to be able to provide for higher quantity of orders and at shorter periods of time, this could have a strain and add more on the lag time for the business but also will have a strain on the supplier and buyers relationship which may make orders more difficult in the future.
However, maintaining growth may bring many rewards to the business, for such a…