Strategies in Action,Implementing Strategies and Finance and Growth Assignment

Strategies in Action,Implementing Strategies and Finance and Growth Strategies - Assignment Example CLS is basically about cost-related efficiency. Thus scale economies play a very significant role here. Selling a standardized product at a lower price to a large segment of customers is the underlying principle of CLS (Pretorius, 2008). While Starbucks being a network of high street coffee shops meets some of these requirements, its inability to keep prices low has been attributed to rising costs. In fact with Shultz assuming duties as the Chairman of the company in 1987, things began to improve at Starbucks and the trend continued till 2000 when he became the President. n the first few years of the current decade Starbucks faced some of the worst problems. In the first place, prices began to rise much faster and bureaucratic bungling hampered progress on many fronts. The current developments show that rising demands by employees for higher salaries and the addition of frills such as flavors have been the main cause of rising costs. Porter’s Generic Strategy requires such costs to be brought under control so that scale related economies become positive by way of reduced average costs and mass sales. Right now, unfortunately, it seems neither is happening at Starbucks and most probably this is partially due to the economic downturn. Despite Shultz’ efforts to bring down costs by curtailing pay and extra benefits to staff, there is a sizeable rise in the paychecks and the company is losing on the competition front. The competitive cost advantage is often attributed to scale economies and at Starbucks, it did not happen as of late. Porter has mentioned two dimensions – strategic scope and strategic strength – as essential factors for CLS to be achieved. The rest of the original cube of 27 points is no more in vogue. However, his emphasis on product differentiation and cost efficiency matters here because Starbucks had a troubled past and is just now emergent from its troubles with Shultz at the helm again as the CEO.  Ã‚