Enviromental Case

Introduction

An environmental scan is important for any company to gather information needed to increase the company's profits and make a strategic plan (Wheelen & Hunger, 2010). With this information a company can use the information to figure out the type of competitive advantages the company has. Then the company can pick a competitive strategy that would increase the company's revenue, competitive edge, and longevity in the industry. The two companies that will be researched in this paper are Starbucks and Wal-Mart. Both companies are in a different industry.

Companies

Starbucks sells specialty coffee, pastries, and coffee merchandise. Starbucks has been open for years, and in bigger cities it seems like there is a Starbucks every few blocks. They are open across 32 different countries and more than 8,500 stores ("Strategic Management of Starbuck Cooperation," 2009). Starbucks also has a slow growth policy. This means they dominate the market before moving into the area. Acquiring this strategy has made Starbucks one of the fastest growing companies in the country ("Strategic Management of Starbuck Cooperation," 2009). The mission statement of Starbucks is "to inspire and nurture the human spirit - one person, one cup and one neighborhood at a time" ("Starbucks," 2013).

Wal-Mart is an all in one store, which sells everything from food, electronics, hunting equipment, and vehicle services. Wal-Mart first opened a store in 1962 in Rogers, Arkansas ("Wal-Mart," 2012). In 1967, 24 more stores were opened. In 2012, Wal-Mart has 2.2 million employees with more than 10,000 stores in 27 countries ("Wal-Mart," 2012). Wal-Mart's mission statement is "people, saving money, and a better life" ("Wal-Mart," 2012).

Internal and External Environments

Environmental scanning is described as when a company figures out the direction they want to go. Environmental scanning gathers information about the external opportunities and threats of a company. Environmental scanning also gathers information about the internal weaknesses and strengths of the company. The easiest way to conduct environmental scanning is through the SWOT analysis (Wheelen & Hunger, 2010).

Starbucks uses the SWOT analysis to complete the environmental scan ("Strategic Management of Starbuck Cooperation," 2009). Some of the strengths that Starbucks mentions was global presence, consistently has new products, and continues to have an increase in profits. Some of the weakness Starbucks mentioned was it relies on the United States market, and there are issues with the international companies. Some of the opportunities that Starbucks has are there is a growth in the coffee market, new products, and there is room for market expansion. The threats for Starbucks are that the coffee market is volatile, rising cost of dairy, and competition in the market.

Wal-Mart uses the SWOT analysis to complete the environmental scan. Some of the strengths Wal-Mart mentions was global presence, increases profits, high dividends, high price to earnings ratio, and carries multiple different products (Guenette, 2012). Some of the weakness Wal-Mart mentioned was from 2010 to 2011 a decrease in yearly profits, bad media on how the company treats employees and consumers, and small amount of investors are long-term (Guenette, 2012). Some of the opportunities for Wal-Mart are the store is international and the number of stores has doubled since 2008, Sam's Club, inexpensive products (holiday shopping), online shopping, and implementation of Apple mini-stores in Wal-Mart (Guenette, 2012). Some of the threats to Wal-Mart are competes for the lowest price, online shopping competition, and the rise in the cost of food products (Guenette, 2012).

Competitive Advantages and Strategies

Competitive strategies are long-term plans that help the company obtain the competitive edge (Wheelen & Hunger, 2010). There are different types of competitive strategies that can be used with any type or size of firm. Some are cost advantage and differentiation strategy. In the cost advantage a company can market/produce a product at a lower price than other companies (Wheelen & Hunger, 2010). In differentiation the company offers add-ons or a higher quality product that will make the product better than others (Wheelen & Hunger, 2010).

Starbucks has a competitive advantage over other coffee shops because they have also started to sell Starbucks merchandise. Such as coffee pots, grinders, cups, and coffee beans. Starbucks also sells specialty coffees that a consumer cannot get anywhere else. Starbucks also has turned to the global market, where it gives Starbucks more consumers. Starbucks is also known for the brand name, which means that the consumers are loyal to Starbucks. Starbucks uses the differentiation competitive strategy and customer competitive strategies. Because of the unique coffee that Starbuck's offers and the customer service that Starbucks offers.

Wal-Mart has a competitive advantage over other all-in-one stores because Wal-Mart offers a bigger selection of items than Target or K-Mart. Wal-Mart also sells the products at a lower price those other stores. Wal-Mart also uses the global market to increase the number of consumers. Wal-Mart uses the cost advantage in their cooperation. This is due to the low prices Wal-Mart constantly competes to have.

Sustain Competitive Advantage

Starbucks sustains this competitive advantage because of the convenient locations throughout cities. Consumers can drive through a city and see four or five Starbuck's before they get to the other side. Starbucks employees are also taught to cater to the consumer (Hub Pages, 2013). Starbucks employees treat every consumer like that are the most important person at that moment. The employees also know the product they are selling. They go through extensive training before they are allowed to serve any beverages (Hub Pages, 2013). Starbucks can produce more than 80,000 different drinks (Hub Pages, 2013). The most important competitive advantage that Starbucks has that sustains the value of the company is brand loyalty. Starbucks offers superior customer service that consumers are wanting again which will make them loyal to the brand. Starbucks has also started to

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