Joint Venture

Joint Venture

Starbucks’ Joint Venture with Uber Eats

Starbucks is one of the world’s largest coffeehouse chains, specializing in coffee sales and roastery reserves. Starbucks depends on distribution channels in delivering products to the consumer. The firm’s brick and motor operations have transformed from “be where the people are” to “deliver whereby people are” in countering competition from both e-commerce and retail stores (Oliveira, 2020). This transition was inspired by the company’s findings of new trends whereby reliance on food shifted from business-centered and large malls to convenience stores. Furthermore, the proliferation of food delivery services such as Uber Eats, Door Dash, and Grubb Hub disrupted the traditional restaurant business based on the brick and motor model (Mogg, 2019). For this reason, Starbucks partnered with Uber Eats to target the online customer segment. Starbucks developed web and Android/IOS applications from where customers can order coffee. The first phase of this execution entailed developing and launching the Starbucks Card App in 2009 that emphasized loyalty rewards in simplifying the stores’ payment process. Notably, the firm collects information on each customer’s purchase. The second phase of this joint venture was launching the Mobile Order and Pay which saved customers from queuing in the stores during peak hours. Notably, this service’s launch did not pick as expected since the layout did not segregate mobile order customers from regulating clients. For this reason, the store changed its layout such that Mobile Order and Pay customers did not queue for the service.

This strategic alliance benefited Starbucks by enhancing the accessibility of its products to customers. Starbucks’ customers can order up to 95% of the firm’s products from its menu from the Uber Eats app (Oliveira, 2020). This partnership facilitates the timely delivery of products seeing that customers receive their deliveries within an n hour. Short delivery times are especially crucial because coffee is best served when hot. The firm would not achieve these short turnaround periods through other logistics service companies. Starbucks’ partnership with Uber Eats allowed the firm to offer its products competitively since customers only pay a $2.49 booking fee. The reduced expenses resulting from economies of scale facilitate the low rates. This partnership positively affected the firm’s revenue seeing that Starbucks experienced increased profitability from the joint venture that was first implemented in Miami. Subsequently, Starbucks penetrated seven other cities, specifically San Francisco, Boston, Chicago, Los Angeles, New York, and Washington, DC. Uber Eats is geographically diversified, seeing that it delivers food and beverage from 200,000 restaurants to customers in 36 countries, which is more than Starbucks’ 29,000 stores located in different global regions (Oliveira, 2020). This diversification is crucial for Starbucks since it promotes the company’s expansion of its online delivery operations.

Starbucks’ partnership with Uber Eats created synergies since both firms feature high brand equity. Uber Eats is among the industry’s top players, while Starbucks is a market leader in the industry. This combination enhances Starbucks’ profitability. This partnership has proven important in the current wake of the COVID-19 pandemic since Starbucks mostly relies on its online sales (Oliveira, 2020). Importantly, Uber Eats announced its partnership with Ali Baba, which would help Starbucks penetrate the merging Asia markets. At the same time, exploring some of the negative impacts of this partnership is crucial. They include the technological integration of both companies, which was needed to facilitate efficient delivery. Secondly, Starbucks initially transported coffee in cups, leading to spillage and loss in customer value. For this reason, the company replaced these cups, as these incidents also affected the Uber Eats brand.

References

Mogg, T. (2019). Starbucks coffee delivery lands in 6 more cities via Uber Eats. Digital Trends, 22.

Oliveira, S. I. S. D. (2020). Growth Is Not Over For Starbucks, It Is Empowered By Digital And Geographic Expansion (Doctoral dissertation).

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Organizational research assignment

This week the readings/video focused on Corporate Level Strategy.

Joint Venture

For this assignment I would like for you to identify a company (you may not use a company in the text but you may use an airline) that is part of a strategic alliance or joint venture that you are interested in learning more about.

Once you have identified a company, I would like for you to do an write a 2-page double-spaced brief on the strategic alliance/joint venture that they are a part of and the impact participating in this partnership has on their business/sector.