Monday, November 25, 2019

Starbucks SWOT Analysis

Starbucks SWOT Analysis Introduction The Starbucks Corporation has expanded its operational capacity by establishing its business across all regions of the world since it began its operations in 1971 in Seattle.Advertising We will write a custom essay sample on Starbucks SWOT Analysis specifically for you for only $16.05 $11/page Learn More The company’s revenue has expanded greatly with direct operations in more than 60 countries across the world currently. As at the end of 2012, the revenue of the company stood at $13.29 billion, with the company’s profits crossing the billion dollar mark to reach $1.38 billion. The paper presents a SWOT analysis of the Starbucks Corporation by focusing on the internal environment of the corporation and the external environment. In the analysis, the paper presents an assessment of the operational conditions within and without the organizations. The paper also assesses the possible impacts of these operating conditions or strategies on the competitive positioning of the company in the industry in which it operates. Strengths Research ascertains that the corporation has managed to establish itself as a brand that is highly respected in the industry across the entire world. The basis for brand positioning in the company began with the managements decisions to concentrate and dominate the North American Market, which is one of the wealthiest markets in the world. This has been followed by the aggressive opening of new stores across the world, especially in the first decade of the 20th century. At a certain stage in 2005, the company managed to open stores at the rate of 32 per week. This depicts the aggressiveness of the top management of the company. It denotes the desire of the management to expand the brand across the world (Shah, Thompson, Hawk, 2006). Therefore, it can be noted that the company sought to increase its presence in the markets in which it had penetrated, increasing the corporation’s chan ce to establish a larger customer base in its operating regions (Shah, Thompson, Hawk, 2006).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More As of today, the Starbucks Corporation enjoys the largest market share in the global coffee chain industry, having been rated as the largest coffee chain store across the globe. The ability of the company to attain this position is attributed to the aggressive expansion strategy in the management of the company. Under its Chief Executive, Howard Schultz, the company is planning to open more stores. This is bound to help the company to cement its position not only as the largest, but also the most widespread brand in the coffee chain industry across the world. This is an indicator of strategic and visionary leadership, which is critical in the substance of business operations in a competitive business environment. However, the company needs to learn how to moderate its pace of expansion by assessing the economic conditions (Mangold, 2012). The company has also been able to build its capacity around the production of different coffee brands. Among these coffee brands is specialty coffee. Patterning the strong coffee brands in the company is the fact that the company has created a customer friendly environment in all its stores, which is depicted by the friendly employees and premium music. This is a marketing strategy that enhances customer experience and satisfaction. The sound financial record is another important thing to note as far as the competitiveness of Starbucks is concerned. The company has been witnessing an incremental growth in profits due to sound management policies. The increment in profits had risen to 14% as at the end of 2012 (Shah, Thompson, Hawk, 2006). This is a remarkable performance considering the recent economic crisis that affected its major markets. This enables the company to maintain a hi gher percentage of return on investments. This puts the company far much higher than its competitors (Mangold, 2012).Advertising We will write a custom essay sample on Starbucks SWOT Analysis specifically for you for only $16.05 $11/page Learn More The deployment of strategic human resource management practices in the company enables the company to record a higher level of employee satisfaction. Starbucks gives its values a lot of benefits such that they are not easily poached by competitors. This implies a low rate of employee turnover and a higher rate of employee efficiency and quality delivery (Mangold, 2012). Weakness In as much as the brands of the company are highly rated, one of the main undoing for the company is that most of its brands are offered at higher prices than the competitor brands. Therefore, an economic evaluation of the coffee brands in the market ends up resulting in higher ratings for competitor brands. The company should reconsider the fair adjustment of the pricing rate for its products, although it is bound to have a negative effect on return on investments (Mangold, 2012). The company has a poor record of embracing sustainable practices. Starbucks still appears in the news for embracing unethical practices like tax evasion and exploitation of its suppliers in the modern economic environment where most companies are striving to gain the ‘green’ tag. The company is bound to lose touch with its customers if such practices continue to be witnessed. The company needs to hasten the rate at which it is embracing ethics and corporate social responsibility. This begins with the establishment of mutually beneficial relationships with its suppliers for the sake of sustainability in supplies (Mangold, 2012). The operation of the company depends on products, whose prices keeps fluctuating. The company has no capacity to control the prices of coffee beans. Therefore, frequent rises in the prices of coffee ar e caused by natural and economic forces in the international market. Therefore, the estimation of coffee prices as the major product used by the company is quite challenging. However, the fact that the company has operated in the industry for an extended period of time means that it can use its records to project on the future prices of the coffee beans. This enables the company to adjust its operations for the sake of sustaining its profitability (Mangold, 2012).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Opportunities The emerging markets offer a great opportunity for the company. In the recent times, the company has been seen extending its operations in the Asian region, Eastern Europe, South America, and the Middle East region where most economies are experiencing a transition from low to middle and from middle to large income economies (Shah, Thompson, Hawk, 2006). The concentration of the company in producing coffee brands has aided the company to attain a commanding position in the market. However, there are opportunities for growth and expansion through broadening the range of products that are offered by the company. This strategy has been under implementation in Starbucks’s mother market. Some of the products that can be introduced by the company include energy drinks, fast food offerings, alcohol, and juices (Shah, Thompson, Hawk, 2006) Starbucks does not only focus on operating its coffee houses, but it also develops business partnerships with other retailers who help the company sell its products. The development of such strategic partnerships with more retailers like supermarkets and restaurants should be embraced (Curtis Williams, 2008). Threats There is immense competition in the coffee chain market. Starbucks faces immense competitive pressure from other world’s renowned restaurants and chain stores. These include McDonalds, Caribou Coffee Company, Dunkin Brands Group, Costa Coffee, Nestlà © S.A, and Green Mountain Coffee Roasters. These companies offer a wide variety of coffee, thereby causing a good level of competition for customers. Most of them, like Macdonald’s, are at a higher advantage because coffee is not their main product offering. Competition is worsened when it comes to the other local competitors who offer coffee at a relatively lower price. Moreover, customers seem to be more familiar with the menus in local cafes. There is a high probability of significant loss in market share without diversification of the range of products and product offering to the customers (Mangold, 2012). According to Mangold (2012), the inability of the company to predict and control prices of dairy products and coffee products is another possible impediment to the successful operation of Starbucks. The prices of these products are often externally controlled, implying that the company is only left with the option of responding to price changes. Venturing in other product offerings can serve as a key strategy for cushioning the company from this threat. This impediment can be related to constant political and economic challenges that are witnessed in the developing market economies from which the company gets most of its supplies, especially coffee. The fact that the company has established a strong brand across the world implies that it has many admirers. This has resulted in cases of copyright infringement that involve the illegal use of the Starbucks trademark by other businessmen in the industry. This a lso translates to a possible loss in market share if the company does not enhance a crackdown on such businessmen (Mangold, 2012). Conclusion From the analysis conducted in the paper, it can be concluded that the establishment of stronger brands and expansion of the company into other markets has been key in maintaining Starbucks’s market share. This has sustained the competitiveness of the company. References Curtis, T., Williams, J. (2008). CIM coursebook 08/09 marketing management in practice. Burlington: Elsevier Ltd. Mangold, C. (2012). Starbucks: Success strategy and expansion problems. Berlin: GRIN Verlag. Shah, A. J., Thompson, A. A., Hawk, T. F. (2006). Case 29: Starbucks’ global quest in 2006: Is the best yet to come? In Thompson, A. A., Strickland, A. J., Gamble, J. E. Crafting strategy executing: The quest for competitive advantage- concepts and cases. New York, NY: McGraw-Hill/Irwin

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