Corporate Strategy and Success Analysis

Corporate Strategy

• Corporate strategy concerns two main questions:
  • What business should a corporation be in?
  • How should the corporate office manage different business units?

Defining Success

• Success, in this context, is defined as higher profits.
• Textbook definitions of success include profits and income. Other factors such as educational achievement can also indicate success.

Success Levers

• Profits are calculated by subtracting costs from revenue.
• Profitable companies can reinvest profits to grow.
• Non-profitable companies may face bankruptcy, especially startups.
• Some companies experience extreme success, but this can't always be attributed to inherent factors like luck alone. Instead, deliberate choices and strategies are usually the reason for their success.

Starbucks Success

• Starbucks has a revenue of $24 billion, which is significantly higher than its major competitor.
• It operates in 80 countries.
• It has 340,000 employees.
• Starbucks' market share is 57%.
• Its market capitalization is $99 billion.

Magdalena Vintage Cafe

• This cafe has a much smaller revenue (< CHF 0.5 million).
• It only operates one store in one country.
• It employs fewer than 5 people.
• The cafe's value is also less than CHF 0.5 million.

Comparing Two Coffee Businesses

• Starbucks and Magdalena Vintage Cafe are in the same industry, selling similar products, but have drastically different outcomes.
• The key difference lies in factors that make one business successful and another not.

Starbucks' Competitive Advantages

• High-quality products, strong global brand, focus on customer experience.
• Creating a “third place” for relaxation, socialization, or work.
• Consistent branding, personalized service, and premium positioning.
• Leverages technology, ethical practices, and innovation to retain customer loyalty.
• Inviting environment in stores, encouraging customers to stay.
• Globally recognizable brand and focus on customer satisfaction.

This quiz explores the fundamentals of corporate strategy, focusing on what businesses should be pursued and how to manage various business units effectively. Additionally, it defines success particularly in terms of profitability and discusses factors contributing to a company's success, using Starbucks as a case study.