One of the important strategy components, as identified by Porter, is the concentration on
core competencies. Starbucks learned this the hard way when it tried unsuccessfully to
extend its brand as a wider consumer lifestyle product by making several minority
investments in internet startups during 1999 and 2000. The investments, in living.com,
kozmo.com, and Talk City Inc., like many other internet startups, never lived up to the
hype. Apparently, Starbucks learned from this mistake and concluded: “…we remain
focused on our core business… Going forward, we will pursue only those opportunities
that we feel will complement our core operations”.
Although the Starbucks Experience can include coffee, music CD’s, and brewing
equipment, the brand could not be leveraged to compete against other lifestyle brands like
Martha Stewart, Ralph Lauren and IKEA.