Starbucks Increase Value through the Acquisition Assignment Help

How can Starbucks increase value through the acquisitions? Economy of scope (shared activity or corporate level core competency)? Market power? Financial economy?

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Starbucks increase value through the acquisitions

The quality products provided by Starbucks is due to its strategic acquisitions that enables reliable sources and product diversification of coffee and other products. With the help of acquisition, Starbucks maintains superior control over its supply chain as it gathers coffee beans from more than 30 nations worldwide.Within the last ten years, the organization has acquired ten firms and constantly gained new opportunities to enhance growth within the organic food industry (Starbucks - The Best Coffee and Espresso Drinks. 2019). After acquiring food and beverage organizations, the company builds a partnership with the technology companies like Apple and Square to adopt Apple Pay by enhancing its iPhone app. The marketing campaigns of Starbucks gives priority to its quality. The strategic partner of Starbucks would help them to acquire certain capabilities and learn the necessary skills to increase the value. The acquisition will be helpful for Starbucks to enter into a new product market to increase its value.

Economy of scope

Starbucks possesses a strong brand name for selling coffee products on the high street. It decided to produce instant coffee by utilizing its brand name and financial resources. This is determined to be an economy of scope as it makes use of shared activity to provide a greater variety of coffee to its customers. Starbucks made efficient use of shared activity as it enables the organization to gain value and profit from horizontal relationships with different organizations. It allows Starbucks to effectively respond to the changing customer's product life-cycles and preferences that resulted in increased sales (Bocken, de Pauw, Bakker & van der Grinten, 2016).With the help of economies, the company will gain efficiencies of creating a wider range of coffee products. Such efficiencies include lower average costs that maximize the revenue that leads to increasing in value in the new emerging markets. Therefore, by using the resources and size of the goods, the organization must produce related or similar products.

Market power

Starbucks has expanded its business and market share by strategic acquisitions, joint ventures, and partnerships, like Teavana.As a result, the company has gained considerable buyer power by building relationships with exporters, growers, and suppliers within the market.The organization must approach various avenues to promote its products. For example, Starbucks must enhanceits marketing strategy with the help of new market segments by diversifying and innovating its product line. The positive market leadership position of Starbucks could be enhanced by the implementation of acquisitions and alliances expansion strategy (Boubaker, Saffar&Sassi, 2018).This will help Starbucks to gain the ability to increase the market price of a product than the marginalized cost.By gaining market power, Starbucks will be able to increase its product cost without losing its existing customers.Providing mobile payment options and engaging with social media outlets will help Starbucks to utilize new technologies that will enhance customer experience.

Financial economy

The company generates $15 billion in sales per year that provides them several opportunities to explore their business and diversify their products by seeking acquisitions.Starbucks must use its financial economy to set prices for its coffee products. It is significant for the company to further enhance the market by redirecting its research and design capabilities and financial resources to make the products more attractive to the customers.Starbucks must consider reducing the unprofitable categories of a product like traditional coffee equipment and merchandise. This will help minimize the additional financial resources that are essential to execute the extension of currently hip and profitable product lines. The financial solution enables Starbucks to execute its acquisitions and expansion strategy (Manninenet al., 2018). It has been observed that Starbucks is likely to maximize its financial profits over the next five years by constant growth in Asia, creating a niche market for luxury coffee and integrating advanced technology.

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