International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 48

Volume 5, No. 5, May 2016

A Comparative Analysis of Strategies and Business Models of

Starbucks Corporation and Dunkin Donuts Company
Sahar Falamarzi, MBA Student, University of Bahrain, Kingdom of Bahrain
Aysha Alfadhel, MBA Student, University of Bahrain, Kingdom of Bahrain
Dr. Shaju George, Assistant Professor, Department of Management & Marketing, College of Business Administration,
University of Bahrain, Kingdom of Bahrain

ABSTRACT sure that the strategies are rolled out across the
organization.
The aim of the report is to study two huge American
coffeehouse chain companies which are Starbucks and At its core, strategy refers to an entity’s intent to reach a
Dunkin Donuts and to present the result of an exploratory certain position. In other words, this entity is at a certain
research conducted for that aim. The competitive position and wishes to transform into a different position.
environment for each company was scanned to support the This position could be anything such as financial
research. The main objective of the study is to identify and performance, market position, company size, social
compare the strategy and business model adapted by each position, economic etc. or even all of them together.
company by illustrating the differences, similarities,
advantages and limitations and to investigate the source of Strategy consists of the business approaches and the
success for each company. A financial analysis has been competitive moves used to run the company to path by its
done referring to the latest annual reports of each managers. It is about accomplishing and achieving the
company supported by the findings and recommendations needs of their customers according to the competitive
at the end of this report. Dunkin' Donuts' tend to adopt a advantage of the company. Strategy as the organization's
low cost strategy to attract price sensitive customer by scope and direction over the long-term: which achieves the
providing same or better quality product or service offered organization's advantage by the management of resources
by other competitors, On the other hand Starbucks has to meet the markets needs and to fulfil the expectations of
implemented a product differentiation strategy in order to stakeholder within a challenging environment.(Johnson &
attract customers by assuring to serve the finest coffee and Scholes, 2008).
coffee beans and providing a holistic customer experience.
Both companies tend to adapt a franchise business model By emphasizes the need for strategy to define and
in order to capitalize by expansion and at the same time be communicate an organization's unique position, and to
able to control of its business through its major core determine how organizational resources, skills, and
strategy. Although Starbucks were established 20 years competencies should be combined to create an
after Dunkin' Donuts it became a generously bigger organization competitive advantage.(Porter, 1996)
organization with higher revenue and a bigger impression
extended in the U.S. and international markets. LITERATURE REVIEW

INTRODUCTION Michael Porter (1996) proposes a simple definition stating

that strategy is “the creation of a unique and valued
position, involving a different set of activities”. Alfred
A business strategy is considered to be a scope and a Chandler goes by a more comprehensive approach
direction employed by an organization over a long period defining strategy as the It is to determine the long-term
of time. The strategy has a primary objective of enabling goals and the allocation of resources to achieve these
an organization to attain effectively and efficiently its objectives. on other words, what it is in addition to the
goals and at the same time fulfilling stakeholder’s process of how it is created and how the desired end result
expectations. That is, it defines all the useful and is achieved. (Chandler, 1962). Strategy is “a pattern of
necessary steps that the business will take in order to purposes, policies, programs, actions, decisions, or
prosper in terms of all other weakness towards success. resource allocations that define what an organization is,
However, the business strategy should be improved for it what it does, and why it does it.” (Bryson, 1996).
to suit the current market structure (De Kluyver, 2010).
Strategic management involves setting objectives, Strategy is the implementation of the vision and mission in
analyzing the competitive environment, analyzing the the organization through the right processes to reach these
internal organization, evaluating strategies, and making goals that are placed by the top managers.(Steiner, 1979)

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 49
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Generally, strategy may also be more specific, by getting the better of competitors, by dissuade, plotting
acknowledging specific goals (position) suitable for the to disrupt, discourage, or otherwise influence them, and
term. according to Bruce Henderson strategy is a plan that can be part of a strategy. Pattern is the effect of past
improve and develop the business which leads to build organizational behavior on an organization strategy.
competitive advantage between the competitors. Position helps in defining strategy in which how an
(Henderson, 1989) organization will position itself in the market place and
this will help an organization to develop a sustainable
Business Model competitive advantage and to discover the fit between the
The Business Model is the core component of what makes organization and its environment. Perspective are the
a business. If there is no functioning Business Model, choices an organization makes about its strategy in which
there is no real business. (Blank, 2012). Define strategy as it relies heavily on its culture – just as patterns of behavior
“a system of interdependent activities that transcends the can emerge as strategy, patterns of thinking will shape an
focal firm and spans its boundaries. The activity system organization's perspective, and the things that an
enables the firm, in concert with its partners, to create organization is able to do well.(Henry Mintzberg, 1998)
value and also to appropriate a share of that value.” (Zott
& Amit, 2010) A more human centered approach which is describing
strategy as three Perspectives which are: Practitioners,
A business model is considered to be a plan implemented Practice and Praxis. It looks at who does it, how do they
by a particular organization to enable it to generate do it and what they do to promote change .Having a
revenue as well as efficient returns from operations. The broader range of questions that takes the human factors
model in an organization might entail the functions, and softer aspects into account.(Whittington, 2006)
components of the business, and the revenues it gets as
well as the expenses it incurs. That is, it acts as a core The main element of strategic management involves
structure in any business since it identifies the trends on Organization adaption to its business environment; this
how it builds the relationships with the customers and also strategy perspective also reveals that strategy Affects the
enables the organization run as per the expectations of the whole organization by providing direction; Strategy also
management.(Osterwalder & Pigneur , 2010) Involves both strategy content implementation and
strategy formulation processes, furthermore strategy might
In addition, business model is a description of the May be emergent (unplanned) and intended
activities that a company performs to generate revenue or (planned);strategy is implemented at several levels: overall
other benefits, and the relationships, information, and corporate strategy, and individual business strategies; and
product flows a company has with its customers, suppliers, it includes both analytical and conceptual and thought
and complements.(Malone , et al., 2006) processes. Furthermore, there are three models of strategy
which are Linear strategy which includes initiatives,
Finally, there is no specific way of constructing correct allocation of resources and planned determination of
business models. Traditionally, companies relied on goals, Adaptive strategy which is more focused on means
building their business models through the delivery of (resource mobilization to address the environment) rather
high quality services and products. We can even find than ends (goals) and Interpretive strategy which is
businesses will change their business model at a concerned with "orienting metaphors constructed for the
fundamental level in order to maintain profitability.(Zook, purpose of conceptualizing and guiding individual
2011) attitudes or organizational participants." (Chaffee, 1985)

Perspective Furthermore, strategy is viewed and identified in three

Strategy Perspective can provide an organization with the principles: which is the creation of a “valuable and unique
tools to engage their employees in a change initiative position [market] ", choosing "what not to do", and
implementation. Whether it is to improve quality, decrease creating "fit" which is done by company activities
the development time of a product streamline or increase alignment with one another to support the chosen
the satisfaction of customers.(strategy perspective, 2012). strategy.(Porter, Wikipedia, 1996)
Also strategic perspective in business determines how
important issues of a company are solved according to the Another assumption for strategy is the “Theory of the
company views.(Malinda Zellman, 2016) Business,” which represents the main assumptions
underlying a firm's strategy which are: a) the organization
Perspective of a strategy has been also described as five mission; b) the core competencies needed for the mission
perspectives which are: plan, ploy, pattern, position and accomplishment; c) the external environment, including
perspective. Starting with Plan which is a satisfied thing market ,society, technology, and customer.(Drucker, 1994)
for many managers in which brainstorming options are Perspective of Business Model can be presented as the
adopted and planned how to be delivered. Secondly Ploy Business Model Diamond which is a visual checklist that

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can be used with its four (ICES) perspectives: Investor, Dunkin' Donuts is an American global doughnut
Customer, Enterprise, and Strategist Perspectives. These company and coffeehouse chain(Dunkindonuts, 2016).
perspectives are used in projects involving business model The company’s history goes back more than 55 years
documentation, improvement, innovation, and storytelling. when the founder of the company Bill Rosenberg opened
Successful businesses constantly keep trying to find a the first store in 1950 in Quincy, Massachusetts. Dunkin’
positive dynamic balance between these four perspectives. Donuts grew to be the largest coffee and baked goods
Businesses fail for either fragmented or misaligned of chain in the world by holding back to its founder
these four perspectives.(King, 2015) philosophy which is: “Make and serve the freshest, most
delicious coffee and donuts quickly and courteously in
OBJECTIVES OF THE STUDY modern, well-merchandised stores.” (brands,
2016).Dunkin’ Donuts offers more than a dozen coffee
1. To scan the Competitive environment of Starbucks beverages, donuts, bagels, muffins, breakfast sandwiches,
Corporation and Dunkin donuts company and other baked goods. Currently, Dunkin’ Donuts has
2. To identify the Strategies of Starbucks Corporation more than 19,000 points of distribution in more than 60
and Dunkin donuts company. countries worldwide.(brands, 2016)(dunkinbrands, 2015)
3. To identify the Business Model of Starbucks
Corporation and Dunkin donuts company. Dunkin’ Donuts is distinguished for brewing a superior
4. To compare and analyze the strategies of Starbucks guest experience in the high competitive U.S. coffee
Corporation and Dunkin donuts company. market. It has earned the No. 1 ranking by Brand Keys
5. To compare and analyze the Business Model of for nine years running for customer loyalty in the coffee
Starbucks Corporation and Dunkin donuts category. The company is still using the original
company. proprietary coffee blend recipe established by its
founder.(dunkinwebsite, 2014)

METHODOLOGY Starbucks Corporation, an American company founded

in 1971 based in Seattle, Washington, United States.
The data related to the Information, Background and Starbucks has grown into the largest coffee company in
Financial Data of Starbucks Corporation and Dunkin the world with more than 24,000 stores in 70 countries
donuts Company were collected from several sources such around the world such as Tokyo, Russia, United Kingdom,
as books, websites, case studies, Academic Journals and Canada, etc. Starbucks has about 182,000 employees sells
annual reports. These utilized materials were used to everything from freshly brewed coffees, bakery, tea and
provide and collect the basic principles for the coffee consumer products and merchandises such as mugs
recommendations on the needs for a strategic change in and accessories Over the years Starbucks has acquired
management and business operations. Based on that the brands Tazo Tea, Seattle Coffee Company, Ethos Water,
theories applied were both used in the analysis and Coffee Equipment Company, Tevana, Evolution Fresh and
comparison to compare the strategies and business models La Boulange. These acquisitions offer future growth as
of Starbucks Corporation and Dunkin’ Donuts Company. well as compliment their existing products. The
Company's objective is to establish Starbucks as the most
BACKGROUND OF THE DUNKIN recognized and respected brand in the world.(Starbucks
DONUTS AND STARBUCKS Corporation, 2016)

COMPETITIVE ENVIRONMENT OF THE COMPANIES

Dunkin Donuts Competitive Environment

Strengths Weaknesses
 Strong well recognized reputation and Brand  Not much is spent for marketing and
name around the world. media advertising for its products while
 Known for its high quality products and other competitors do.
customer service which resulted in a high  prices of the raw materials and
customer loyalty and high brand recognition. ingredients are increasing specially for
 It is considered the most experienced in the the high quality coffee beans are
industry. increasing
 Having many varieties of donuts and bakery
and hot beverages.
 Has an Effective advertising and marketing

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strategies.
 Issuing coupons and discounts and an Ideal
place for having breakfast and coffee to attract
the customers.
 Have a very acceptable pricing.
 Quick service.
Opportunities Threats
 Increasing its existence in other countries and
 People are moving to healthier ways of
places such as in Asia.
eating where they try to avoid the high
 The growing of influence and acceptance of calorie or sugary food, this may
western trend among the youth resulted in negatively affect revenues.
greater opportunity for market share of the
 Entry barriers are low.
company.
 Competition from local cafes and
 With the healthy life style trend that people has
bakeries are a threat for the company.
the opportunity to attract this category of
 Increase in the cost of raw materials
people through providing low calorie snacks.
 Difficulty to change the snacking habits
 Increase its reach through effective online
in certain countries like India and China.
marketing .
Source:-(mbaskool, 2016)(NICOLE HOLSTED, 2012)(jubahib, 2012)(jones a. , 2015)

Starbucks Competitive Environment

Strengths Weaknesses
 Leveraging technology to build a robust
 Product recalls.
distribution channel strategy.
 Tax evasion and lawsuits.
 Strong financial position.
Opportunities Threats
 Entry into the health and wellness space.
 Intense competition.
 Growing presence in key Asian markets.
 Compliance costs associated with
 Growing m-commerce market.
government regulations.
 The growing office coffee marketplace.
Source: Starbucks Corporation SWOT Analysis; Jun2015, p1-11, 11p

STRATEGIES OF COMPANIES number of units and by offering a high volume of

standardized products which assures the standardization of
Dunkin Donuts strategy service in all Dunkin branches and by the control of its
The original Mission statement (referred to as the supply chain to assure low costs and this is Dunkin
“philosophy”) of Dunkin’ Donuts came straight from the strategy to be leading franchise over its other competitors.
founder:"Make and serve the freshest, most delicious (Mr.Dunkin, 2010)
coffee and donuts quickly and courteously in modern,
well-merchandised stores.” The growth strategy Dunkin’ focused at the beginning on
expanding into contiguous and existing U.S. markets
Vision:“To be always the desired place for great coffee before addressing opportunities in the fastest-growing
beverages and delicious complementary donuts & bakery international markets. This was implemented by opening
products to enjoy with family and friends”(dunkindonuts, domestic Dunkin’ Donuts stores most were in new
2016) markets, validating the opportunity for Dunkin’ outside its
core geographies. This resulted in 2,800 net new openings
Dunkin’ Donuts strategy is a multiple-segment strategy in markets such as China, India and Latin America and
where both donuts and coffee each runs fifty percent of the strengthening the store-level unit economics for
business(Sher, 2012).Dunkin has defined its core strategic franchisees. The company also implemented lowering
as providing fresh, fast and affordable drinks and food for food costs by streamlining the menu and migrating to
busy people with leading busy life. The generic business standardized build In order to optimize franchisee returns
strategy which is used is (cost leadership strategy) Low on new store development. (Carlyle, 2016)
cost to attract price-sensitive customers the same or better
quality product or service than other competitors. This can The Marketing strategy of Dunkin’ Donuts brand had
be done by using low fixed cost and spreading over a large always been well-recognized. With its iconic marketing

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 52
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campaigns, the company increasingly focused on its reputation. Starbucks initiated its internationalization
beverages business to drive customer frequency. efforts in 1996, opening their first international
Marketing strategy of the company also introduced a value coffeehouse in Tokyo, Japan. The business then expanded
menu with limited time offers and menu innovations to to around 5,500 coffeehouses in more than 50 countries
drive additional store traffic. All of these initiatives led to worldwide. Starbucks is also selective when it comes to
improved brand awareness, significant growth in the choosing its partners. In order to maintain its unique
business and expansion in margins.(Carlyle, 2016) experience, the company partners with organizations
which share their leadership style, values and culture.
Starbucks Strategy Howard Schultz, Chairman of Starbucks “We remain
Similarly, to most corporations, Starbucks adopts an highly respectful of the culture and traditions of the
Analyzer Strategy which is an Aggressiveness Strategy countries in which we do business, can summarize the
between Prospector and Defender strategies. It depends on company’s internationalization strategy in a quote. We
operating in less risky, stable markets, but also introducing recognize that our success is not an entitlement, and we
new product lines and services which are close to their must continue to earn the trust and respect of customers
core competencies. Hence, Starbucks focuses on the every day.” (Starbucks Corporation, 2016)
efficiency of delivering its Starbucks experience which
relies on great customer service, the coffeehouse Starbucks also implements loyalty programs which
atmosphere and good quality coffee in addition to encourage their customers to keep coming to their
developing innovative product lines and new coffeehouses and increase the company’s retention rate.
modifications to their customer experience. The Analyzer Starbucks customers can acquire loyalty cards which
strategy typically adopted by multidivisional firms, such provide their members reward points with each purchase.
as IBM and Procter & Gamble, which operate in multiple The reward points can then be redeemed in order to gain
economic sectors and market.(Wheelen & Hunger, 2012) free beverages. The company pushes their customers to
register for their loyalty programs as the rewards increase
Since its establishment, Starbucks has been investing its in value the more they visit their coffeehouses. Plus, the
money and recourse in building its brand. Starbucks’ company facilitates the use of its loyalty program by
strategy relies on highlighting the unique Starbucks introducing virtual membership cards which can be
experience and reputation which differentiate the company installed in the customers’ mobile devices(Alreck &
from its competitors such as Dunkin Donuts, The Coffee Settle, 1999)
Bean and Tea Leaf, other franchises and independent
coffee shops. Not only has Starbucks been building its BUSINESS MODEL OF COMPANIES
brand in the United States, but internationally as well.
Starbucks currently operates more than 40 countries
Dunkin Donuts Business Model
worldwide with more than 13,600 outlets. With its global
Dunkin’ Brand runs almost 100% franchise model.
operation, Starbucks would adjust their products and
Dunkin uses a combination of two business models:
experience to serve local taste. At the same time, the
company-owned stores and franchises. The respective of
company keeps the core of its customer experience and
these models are grown in regional as well as international
maintains a high quality level of its coffee and customer
markets. (jones a. , 2015)
service.(Perera, Kerr, Kimura, & Lima, 2009)
The Dunkin' Donuts concept was historically operated on
Through the company’s efforts of expanding
the basis that doughnuts are manufactured and sold on the
internationally while maintaining its customer experience,
franchised premises. Six week training is given to
Starbucks has been able to build its brand, where its
Prospective franchisees at the Dunkin' Donuts University,
currently ranked the 52nd most valuable brand globally and
where they learn all the skills related to business (Schmidt
only second after McDonalds in the restaurant
& Oldfield, 1998). Dunkin primary revenue driver is a
industry.(Forbes.com, 2015)
percentage of sales and not a percentage of income from
franchisees, any downturn in consumer initiatives to buy
Starbucks has built a holistic customer experience which
from the stores will affect Dunkin earnings as the
starts from entering the coffeehouse until leaving the
percentage of sales. Dunkin handles all advertising and
premise. The coffeehouse atmosphere, the material used
public relations , rather than store owners run promotions
by the company and type of coffee served to customers all
Dunkin is having advertising professionals to lowers the
pour into building the Starbucks brand and unique
likelihood of a blunder at the store level adversely
experience.(Starbucks Corporation, 2016)
affecting consumers. As long as the individual franchisees
can stay in business Dunkin's revenue will remain fairly
In addition to building its unique customer experience,
stable. (fool.com, 2014)
Starbucks’ strategy relies on extensive internationalization
efforts, which also falls into strengthening its brand and

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 53
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Dunkin's business model works on using coffee to bring optimize sources of operational efficiency, with the most
customers into its stores, and eventually ends up selling important departments, - supply and manufacturing,
them both coffee and donuts. Consumers who are Health capable of serving 22,000 stores and 70,000 deliveries per
conscious may steer away from donuts. But they will stop week consecutively. To manage its operations better,
at a Dunkin to get a cup of coffee and Some may end up Starbucks created a global logistic system for monitoring
getting a donuts.(Mourdoukoutas, 2013) its operations entirely. The supply chain comprises of
distribution centers across Africa, Asia, South America,
The franchisor model allows Dunkin to operate a more United States and Europe. While some shipping stores are
profitable business model than other competitors who company-owned, others are managed by outsourced
focus on direct management of stores. Franchisor model partners, and Starbucks uses a scorecard mechanism to
allows franchisees and Dunkin to execute at greater levels measure partner performance (Cooke, 2010).
of efficiency as it work on the Separation of core
competencies between marketing, strategy, brand The operational model adopted by Starbucks is efficient
management, food preparation, distribution, product and aligns with the organizational objective of creating
innovation and customer service. In a highly competitive value for customers. The strategy is working well for
market, this is a great strength that allows Dunkin Donuts Starbucks’ home and foreign stores, but the company
to capture significant value.(Sawyer, 2015) needs to continuously monitor the tradeoffs of controlling
its internal functions as well as serving an extended
Dunkin's business models has focus on low costs, clientele (Hanna, 2014).
franchisee-owned location network, high-quality site
selection process, franchisee training, supply chain COMPARISON OF STARBUCKS AND
management, menu innovation, standardization of product DUNKIN STRATEGY
offerings and quality and continued focus on brand
management and marketing. This model has increased the
ability of the Company to execute its low-cost, consistent Dunkin growth strategy and focusing on expanding into
quality, fast and consistent service model within the quick the existing U.S. markets before addressing opportunities
service restaurant (QSR) market.(Sawyer, 2015) in the fastest-growing international markets. Where the
company is taking care and moving towards this step to
Starbucks Business Model expand and aim for their high goals and trying to build its
Starbucks has packaged itself into a “third place” for every own market for coffee. This strategy comprises of keeping
customer, after work and home. An experience at focus on the objectives of the business by expanding, but
Starbucks is differentiated from the rest as it affords every not completely shifting their focus from donut to coffee
customer their anticipated luxury through customized .While Starbucks brand has been building itself in the US
drinks and tranquil environment (Hanna, 2014). and internationally. Starbucks overall is a strong and
sound coffee company with weaknesses that don’t
Starbucks is a conventional coffee retail store that owns overweigh its strengths. Starbucks global operations would
and operate its stores. However, it has digressed from its adjust their products and experience to serve local taste.
standard business model and seek franchisees in favorable This lets the company to keep the core of its customer
emerging markets. Even with the franchise deals, it experience and maintains a high quality level of its coffee
controls the core business strategies (Downie, n.d.). and customer service.
Starbucks capitalizes on the value proposition for its
customers by enhancing its product offerings instead of Dunkin Donuts strategy is cost leadership where there
relying on common strategies as advertising (Williams, strategy is low cost to attract price-sensitive customers
2015). According to Alkhaldi, (2015), the average with the same or better quality product or service offered
customer makes six visits to the store every month with by other competitors. The company also executed several
the most loyal customer’s making up to 15 visits. initiatives including lowering food costs by streamlining
the menu and migrating to standardized build In order to
Starbucks operating model serves more than 50 million optimize franchisee returns on new store development.
customers a week, and the process commences from
procuring coffee to service in the store(Alkhaldi, 2015). While on other hand Starbucks focused on adapting
The expansion strategies saw Starbucks operating product differentiation strategy where it has selected
expenses surged with increasing sales since 2008, accessing it's raw materials from different and many
prompting the company to employ a new approach to suppliers all over the world to have a quality coffee beans.
transportation delays (Cooke, 2010). The beans that Starbucks uses have uniqueness and are
The new operational model segregates functions into four costly for its competitors. They assure their customers that
distinct units; planning, sourcing, manufacturing, and the served coffee and coffee beans are the finest. This Cost
delivery. Every function was analyzed to identify and disadvantage of Starbucks is exploited by their

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 54
Volume 5, No. 5, May 2016

competitors, such as Dunkin’ Donuts. While Dunkin’ primary benefits of a franchise model include the low need
Donuts targets the lower end of the market this keeps the for capital, more attention on the brand by way of
high-end bracket which are attracted to Starbucks. marketing as well as menu innovation. In addition, the
model enables the organization to penetrate easily faster
Competitors such as Dunkin are pressuring Starbucks to into both local and international market. On the other
changes and lower their prices. But still Starbucks is an hand, Starbucks business model is considered to be highly
outlet that is becoming and transforming to be as a fast focused on differentiating its business operations from that
food chain, even with its overpriced selling and different of its competitors by ensuring that they create a unique
market segments. The experience that Starbucks offers is value proposition of being the “third place” for clients,
being challenged by Dunkin & other competitors and these after home as well as the workplace. which is the model of
companies are taking Starbucks customers because they the company ensured that acquiring a cup of coffee was
are offering the same posh style coffee but with less made to be an affordable luxury and an experience of its
prices. own. Therefore, the clients were in a position to order
Starbucks tried socially responsible investments as a customized drinks as well as being able to enjoy the
marketing strategy but this didn’t offer them any gain beverage in a relaxed as well as the upscale environment.
except for loses. Where Dunkin tried a renewed marketing
strategy where the company introduced a value menu with Dunkin' Donuts markets itself fundamentally as an
limited time offers and menu innovations to drive espresso merchant that likewise offers doughnuts and
additional store traffic. Focusing on the brand’s core nourishments, a certainty made evident by an espresso
products as well as new, related offerings, Dunkin’ Donuts mug conspicuously highlighted on the organization's logo
also expanded into breakfast and lunch sandwiches and and official administration's unequivocal attestation that
launched the popular Dunkin’ Donuts K-cups nationwide. Dunkin' Donuts is a refreshment organization (Cadle, et
al., 2014). In spite of building a way of life as an espresso
Both Dunkin and Starbucks tried communication using merchant, sustenance is still a critical component of
social media strategy to attract customers. Though Dunkin Dunkin' Donuts' putting forth. Lately, Dunkin' Donuts has
was not the winner in all the social media channels concentrated progressively on nontraditional nourishment
anywhere some of the channels where it was under choices with the trusts of pulling in clients outside of
developed and loved. (Ratcliff, 2014) breakfast hours. The acquaintance of steak with its menu
in 2014 was a stage toward joining heartier sustenance
Dunkin also constantly introduces new and unique things close by a developing number of sandwich
promotions via social media channels in order to alternatives. Dunkin' Donuts' insides are outlined uniquely
distinguish the brand and to connect their consumers more in contrast to Starbucks stores, with the previous regularly
and increase their loyalty. Starbucks also implements taking after fast food stores in decorations and stylistic
loyalty programs, which encourage their customers to layout.
keep coming to their coffeehouses and increase the
company’s retention rate. Starbucks customers can acquire Starbucks brands itself principally as a drink supplier that
loyalty cards which provide their members reward points offers a more run of the mill café eating background.
with each purchase. The reward points can then be Starbucks areas are planned because of the solace of their
redeemed in order to gain free beverages. clients (Choi, 2004). Free Internet gets to and welcoming
stylistic layout offer an all the more luring choice for those
COMPARISON OF STARBUCKS AND searching for a spot to peruse, unwind or talk with
DUNKIN BUSINESS MODEL companions. This additionally makes going to Starbucks a
potential social action, transforming the stores into a
destination as opposed to a basic dispersion area. This
Starbucks Corporation and Dunkin's Donuts Company are speaks to clients looking for a premium affair(Coskun,
the two biggest diner chains in the United States that have Basligil, & Baracli, 2008). Normally, these clients have
practical experience in coffee. Both organizations keep up higher dispensable livelihoods and are all the readier to
comparable menus and general strategies. However, there pay additional for higher quality materials. In monetary
are key contrasts in their plans of action identified with downturns, individuals with lower expendable wages will
scale, store proprietorship and marking. probably modify their utilization propensities than
individuals with bigger budgetary pads (Costantini, 2006).
In the point of view, Dunkin’ Brand is considered to While Starbucks is obviously affected by the
operate almost 100% franchise model. which employs the macroeconomic environment, it is solidly settled with a
combination of two business models in its daily stronger and less value delicate client base, which houses
operations. Dunkin’ owned stores as well as franchises. the passes up financial cycles. Like Dunkin' Donuts,
The respective of the above business models are grown in Starbucks has likewise moved the center to incorporate
both regional and international markets. Therefore, the more items went for evening and night clients. These

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 55
Volume 5, No. 5, May 2016

incorporate little plates and sandwiches and also wine and Asset Management effectiveness
brew.
Current Ratio
Starbucks has assembled a more premium brand than
Dunkin' Donuts. Starbucks offers a broader menu and 2.00
more item customization, which is strengthened by 1.50
composing every client's name in favor of his glass.
1.00
Starbucks offers an agreeable and calm environment with
free remote Internet access, urging clients to stay to 0.50
mingle, work, study, search media or listen to music while
0.00
devouring their Starbucks item. Therefore, taking all this
into consideration, these components frame a more 2012 2013 2014 2015
premium ordeal and order a higher value point. Dunkin'
Donuts has more aggressive valuing, concentrating on the Dunkin Starbucks
white collar class. Dunkin' Donuts' administration has
portrayed its expectation to be the most minimal cost Starbucks and Dunkin Donuts both have healthy Current
supplier in the business sector while keeping up quality Ratios fluctuating between 1.00 and 1.50.
over a worthy least.
Capital Structure
FINANCIAL ANALYSIS leverage
Profitability
( Debt to Equity )
20.00
Net Margin 15.00
10.00
25.0%
20.0% 5.00
15.0% 0.00
10.0% 2012 2013 2014 2015
5.0%
0.0% Dunkin Starbucks
2012 2013 2014 2015
Dunkin Donuts’ debt to equity ratio is equity far higher
Dunkin Starbucks than Starbucks as is relies primarily on debt to finance its
operations.
Dunkin Donuts has had higher net margin over the past the
4 years. Dunkin Donuts high net margin can attribute RESEARCH FINDINGS & COMMENTS
towards low operating expense a 100% franchise were as
Strategy is the organization's scope and direction over the
Starbucks directly runs most of its stores.
long-term which achieves the organization's advantage
while a business model is considered to be a plan
Return On Assets implemented by a particular organization to enable it to
generate revenue as well as efficient returns from
25.0% operations. Both expressions are considered to be
20.0% fundamental to any organization to attain effectively and
15.0% efficiently its goals and at the same time fulfilling
10.0% Customer expectations. In this research the Strategy and
5.0% Business Model of both Starbucks and Dunkin Donuts
0.0% Companies have been analyzed and compared accordingly
2012 2013 2014 2015 in order to find the strategies and business model behind
the success of the two successful companies.
Dunkin Starbucks
Dunkin' Donuts' tend to adopt a low cost strategy to attract
price sensitive customer by providing same or better
Starbucks on average exhibits more efficient use of its
quality product or service offered by other competitors, On
assets yielding a higher return on assets. ROA reached
the other Starbucks has implemented a product
over 22% in 2015.
differentiation strategy in order to attract customers by

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 56
Volume 5, No. 5, May 2016

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