Dear Kevin Johnson,

Its important to identify Starbucks competitive advantage because this is directly related to the
success of the company but also help to solve key issues.

1. Starbucks main features on which its competitive advantage is built on are various. These are
related to its activities, resources and capabilities. Starbucks can be analyzed as a value chain
since it has a manufacturing component and a large set of activities.

The value chain Starbucks has is divided into the primary and support activites. In primary
activities there is inbound logistics, which is a key activity for Starbucks and this is related to
provisioning of high quality coffee beans. This is important because the company must
purchase from the coffee bean farmer, which is most likely In another country and this has
import implications, also coffee beans must be transported in their optimal state so time and
preserving aroma is very important, this is why it requires well planned logistics.

Starbucks coffee grinding processes are very important as a key logistics point of view and as
well a value added point of view. This process is an activity that is automized by machines
which makes the process faster, these machines are important resources to Starbucks.

The outbound logistics of Starbucks are key because they must be transported to thousands of
stores but also guarantee that the roasted coffee will conserve all its traits, color, aroma, and
other important coffee characteristics.

Another important primary activity is marketing and after sales. Starbucks has created and
marketed an idea of premium coffee as well as making the costumer feel its buying an
affordable luxury product. This can be done by marketing in elements different than coffee
like mugs, retail products, etc. After sales are also key, Starbucks has developed the loyal
point programs, in which they reward the costumer after consumption and with an
application on their phone they keep calling their attention and keep Starbucks on their
minds.

Now, moving onto support activities, Starbucks has research and development department, in
which they are always trying to find a new recipe to which the costumer in the future will be
always wanting of and be loyal to new flavors offered by Starbucks. Also human resource
management is key, since making their employees feel as partners is important to them, their
motivation and efficiency.

2. Now that we have discussed the primary and support activities as well some resources that
the company has, its worthwhile to wonder, are this activities creating sustainable
competitive advantage in the long run?

To answer this question its important to analyze the barriers to imitation of Starbucks
products and services. First, lets analyze the channels in which Starbucks products are
 present, direct (shops), retail and bottling. This is an important barrier because a new
competitor must comply to sanitary and factory rules and permits which are not easy to meet
and take a lot of capital.

Human capital management is a great competitive advantage of Starbucks, being able to

make your employees feel good and motivated because they see themselves as partners of the
company is a great advantage. Also being able to provide benefits aside from salary related to
health insurance, retirement, stock options, free coffee and college education support is very
difficult to compete with, since this requires a lot of capital but also steady sales which is
reached after some years of operating.

Probably the strongest sustainable competitive advantage that Starbucks offers is the
experience, the costumers feels cozy in its third place of the day, also they feel they can
afford luxury when consuming Starbucks products. This is a barrier hard to bring down since
a product becoming luxurious come with phycological work done by cultural and social
analysis of design and satisfaction factors.

Hence, we should focus on working on the competitive advantage elements in order to decrease
any degree of imitation capabilities by other companies or competitors.

Thanks for you attention,

Paulina