MBA 5101 CSU Starbucks Corporation Strategic Managent & Business Policy Paper Complete a project topic in which you present your company and give a brief introduction to the company. Present some basic information about the size of the company, its history, and how it is organized. In addition, present some information about the corporate social responsibility (CSR) of the company. Does the company follow Friedman’s or Carroll’s view of social responsibility? The company is Starbucks. (See attachment for information)Your project topic should be at least one page in length, double-spaced, and in 12 pt. Times New Roman font. To complete this assignment, a minimum of two reputable sources must be used, cited, and referenced. Use APA style guidelines. Running head: SWOT ANALYSIS
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Starbucks’ SWOT Analysis
Stephanie Rivera
Columbia Southern University
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Introduction
Strategic planning is an integral component of contemporary organizations, as it enhances
overall productivity and guides resource allocation. Technically, the function is part of the
broader concept of strategic management, which entails creating, enforcing, and evaluating
decisions, towards achieving organizational objectives. Indeed, the ideology helps corporates to
become more proactive in securing future business life. The SWOT analysis framework is a vital
component of strategic management that entails conducting an external and internal analysis of
an organization. Conducting an external evaluation enables firms to acknowledge various
opportunities and threats in the respective competitive environment, as well as forecasting
critical future changes. On the other hand, an internal review helps in identifying corporate
strengths and weaknesses, along with acknowledging vital sources of competitive advantage
(Gurel, 2017). This paper encapsulates a SWOT analysis on Starbucks Corporation that provides
insight into the critical issues in the firm’s internal and external environment.
Company Overview
Starbucks is an American retailer and marketer of beverages and snacks that provides
services across international borders. The corporation’s product line consists of premium coffee
and tea products, food items, and other beverages. In the 2019 financial year, Starbucks realized
a revenue of $26.5 billion, typifying an annual growth pattern in the last decade. Despite owning
a considerable market share of approximately 40%, over 30,000 outlets, the corporation faces
stiff competition from other brands like McDonald’s (Lock, 2019). Additionally, the beverage
and snacks industry is prone to suffer the extreme effects of economic disruptions, which have
historically affected Starbucks’ performance. Therefore, a SWOT analysis is essential for
Starbucks to help in identifying the competencies that can build a competitive advantage in the
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market. Likewise, the evaluation will give an insight into potential external risks or opportunities
that could affect Starbucks in the long term.
SWOT Analysis Framework
Strengths
Weaknesses
➢ Significant market dominance
➢ Expensive services
➢ Globally recognized brand
➢ Market saturation
➢ Quality assurance
➢ Over-dependence on developed economies
➢ Strategic location and exemplary design of
➢ Cultural discrepancies in foreign markets
outlets
➢ Proper human resource management
➢ Social and environmental responsibility
➢ Diverse product mix
➢ Integration of technology
➢ Customer loyalty
Opportunities
Threats
➢ Investing in emerging markets
➢ Competition
➢ Broadening the product mix
➢ Brand imitation
➢ Diversifying the retail function
➢ Unpredictability in the coffee market
➢ Expanding technological investments
➢ Market saturation in industrialized nations
➢ Streamlining distribution channels
➢ Economic catastrophes in developed countries
➢ Improving the corporate brand
➢ Shifting customer preferences and needs
➢ Rampant growth in developing nations
➢ Changing business dynamics
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➢ Growing middle class
➢ Bureaucracy in developing nations
➢ Global Health consciousness
➢ Intensifying employment regulations
➢ Integration with environmentally sustainable
➢ Increasing labor costs in foreign markets
products
Strengths
Starbucks’ most significant strength is its differentiation strategy, which has enabled the
corporation to maintain the sale of premium beverages and foods. Over the years, the approach
has been supported by Starbucks’ global popularity and its significant market position. Besides
the 40% share in the American market, the firm extends its operations to over 30 nations around
the globe. Indeed, its outlets in foreign states exhibit top-notch quality and enhance the
“Starbucks experience.” Therefore, Starbucks’ global brand name creates a significant
competitive edge that enable both domestic and international expansion.
Second, Starbucks’ catalog entails high-quality products, and the corporation doesn’t
allow room for standardization. Customers enjoy quality beverages and snacks all year round,
which typifies the “Starbucks experience.” Third, most of Starbucks’ outlets are supreme and
strategically located, and consequently, attract high traffic and prime population segments of the
global market. Indeed, the strategy is an incentive for Starbucks to penetrate international
markets and to satisfy the specific needs of different cultures.
Fourth, Starbucks is also famed for its integrated employment strategy, which builds a
reliable human resource. Indeed, the corporations’ employees are vital assets, and they are often
rewarded for their input through benefits like retirement funds. Consequently, Starbucks
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provides exemplary customer service, which is attached to its brand name. Fifth, the corporation
also champions environmentally friendly practices like recycling of packaging material, that
promote societal goodwill. Sixth, Starbucks’ diverse product line caters to different cultures and
demographics, thereby enabling a global business strategy. Finally, the corporation has
significant customer loyalty, which has been built by years of innovation and putting the
customer first.
Weaknesses
Starbucks’ premium pricing is both a competitive advantage and a potential threat to
business life. Technically, the corporation attracts high-end markets, and customers have to pay
relatively more to purchase beverages and snacks. Indeed, the high pricing is a risk, particularly
during periods of economic hardships when customers have to regulate their expenditure
patterns. In such situations, Starbucks can lose part of its market share to competitors who charge
lower prices. Additionally, the high-end pricing strategy may not be compatible with the culture
of developing nations, where consumers demand more products at the least cost possible.
Furthermore, Starbucks also relies heavily on markets in developed nations, like the
U.S, which has resulted in market saturation. In America, for instance, the corporation runs over
30,000 outlets, that inhibiting long-term growth in the market (Lock, 2019). Further, the overreliance on one market segment makes Starbucks prone to the detrimental effects of nation-based
economic catastrophes. Finally, Starbucks’ global expansion is inhibited by cultural
discrepancies, in the acceptability of the coffee culture among various communities.
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Opportunities
Starbucks acknowledges the market saturation in the United States, and the most
practical solution is to capitalize on emerging markets. Currently, the corporation is faring
relatively well in international markets, with new branches being set up in developing nations
like India. However, the potential for success in the segment is significant, and Starbucks needs
to invest more in third-world states. Currently, most developing economies are growing at
unprecedented rates (Lin & Rosenblatt, 2012), which is an opportunity for Starbucks to source
more revenues from the markets.
Additionally, the coffee culture is also gaining momentum in foreign markets due to
the notable growth of the middle class in most developing countries. Indeed, the firm can
leverage its famous brand and financial muscles to gain a more significant global market share.
Likewise, Starbucks should also improve its product line to fit the cultural requirements of
various populations. They can implement a sound acquisition strategy for a new product line,
which can also increase the opportunities for the corporation.
Currently, Starbucks distributes packed beverages and snacks across big-box stores.
Indeed, the segment is relatively under-explored, and there are different opportunities that
Starbucks can target. Starbucks’ executive management can focus on expanding retail operations
to secure the future value of the brand. Technology is also another integral component of
Starbucks’ operations, typical of contemporary business dynamics. Over the years, the company
has provided several mobile applications that have enhanced customer experience. In the U.S
market, in particular, a significant portion of customers depend on software to access Starbucks’
services. Therefore, the corporation should invest more in the technology sector, especially in
developing nations, where consumer behavior is evolving unprecedently.
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Furthermore, Starbucks should also create new distribution channels and streamline
current ones to offset the growing demand for online orders. Delivery systems, particularly in
developing nations, will be vital for Starbucks’ success in the next decade. Likewise, the
expansion can also be extended to the brand name by offering multiple products for international
markets. For instance, the corporation can capitalize on the global wave of healthy eating and
provide products that fit specific nutrition criteria. Likewise, Starbucks can also satisfy the
demand for environmentally friendly products, with items like recyclable packaging. However,
the strategy requires proper strategic planning to maintain the credentials of Starbucks’ brand.
Threats
In the last decade, firms like McDonald and Caffe Nero, have gained a notable market
share in the industry, consequently threatening Starbucks’ dominance. Further, the corporations
are also implementing the global business model gradually, with a firm like McDonald’s
targeting developing nations. There are also patterns of brand imitation in the industry, in the
context of Starbucks business model and elements like the taste and aesthetic appearance of
products. Therefore, competition is the most significant threat facing Starbucks’ dominance and
future profitability. Similarly, price volatility in the coffee market also presents a similar
magnitude of risk for Starbucks and the entire industry. Over the years, the prices of quality
coffee beans have been fluctuating unprecedently, out of Starbucks’ control (Silveira, Mattos, &
Saes, 2017).
Currently, most of Starbucks’ revenues are generated from developed nations. The
United States, in particular, accounts for a significant proportion, owing to the 30,000 Starbucks
outlets in its soil. Indeed, the corporation relies a lot on the markets in industrialized countries,
which has resulted in saturation. Consequently, Starbucks is bound to face detrimental
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consequences if the economies of developed nations faced a catastrophe. Additionally, global
customer tastes and preferences are changing gradually, with most consumers opting for
“healthier” products. The shift in customer needs is attributed to the prevalence of lifestylerelated diseases, which can lead people to abandon the coffee culture.
Indeed, the entire industry is being affected by external factors like innovation. For
instance, the popularity of home-use coffee machines is a significant threat, as it increases the
options for substitute products. Indeed, such ideas could affect Starbucks’ profitability in the
long term. Furthermore, Starbucks’ globalization strategy is challenged by rising patterns of
bureaucracy in developing nations. Indeed, red tape practices are a universal norm amongst state
governments, and they utterly affect Starbucks’ expansion, specifically in third-world countries.
Likewise, the nations have also strengthened employment regulations over the years, which has
seen a significant rise in labor costs. Consequently, Starbucks is forced to improve its wages and
employee benefits, which translates into higher operating costs.
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References
Gurel, E. (2017). SWOT analysis: A theoretical review. The Journal of International Social
Research, 10(51), 994-1006.
Lin, J., & Rosenblatt, D. (2012). Shifting patterns of economic growth and rethinking
development. Journal of Economic Policy Reform, 15(3), 1-24.
Lock, S. (2019, November 19). Starbucks stores: U.S. and international 2005 to 2019. Retrieved
from Statista: https://www.statista.com/statistics/218366/number-of-international-and-usstarbucks-stores/
Silveira, R. L., Mattos, F., & Saes, M. S. (2017). The reaction of coffee futures price volatility to
crop reports. Emerging Markets Finance and Trade, 53(10) , 2361-2376.
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