Table Of Content
2.0 Application Of PEST/LE————————————————————-2
2.1 Political Factors Affecting Starbucks Corporation ——————————-2
2.2 Economic Factors Important to Starbucks Coffee’s Business ——————3
2.3 Social/Sociocultural Factors Influencing Starbucks Coffee’s External
2.4 Technological Factors in Starbucks Coffee’s Business ————————–4
2.5 Legal Factors—————————————————————————4
2.6 Ecological/Environmental Factors————————————————–4,5
3.0 Porter’s Five Forces Analysis———————————————————5
3.1 Competitive Rivalry Or Competition With Starbucks Corporation ————-5
3.2 Bargaining Power Of Starbucks’s Customers / Buyers —————————6
3.3 Bargaining Power of Starbucks Coffee’s Suppliers ——————————–6
3.4 Threat of Substitution or Substitutes to Starbucks Products ———————-7
3.5 Threat of New Entrants or New Entry————————————————7
4.0 Application of SWOT Analysis——————————————————-8
4.1 Strengths Of Starbucks Corporation————————————————–8
4.2 Weaknesses Of Starbucks Corporation———————————————–8
4.3 Opportunities For Starbucks Corporation——————————————–9
4.4 Threats Facing Starbucks Corporation————————————————9
5.0 Identification And Explanation On Area Of Commendation ——————–10
5.1 Discuss And Explanation On Area Of Weakness ———————————10,11
6.0 FIVE Recommendation For Improvement By Applying SMART Target
Appendix A : Observation Report——————————————————-14
Appendix B : Flow Chart—————————————————————–15
Starbucks Corporation is North America’s leading roaster and specialty coffee retailer. The corporation target to build Starbucks into the most popular coffee brand in the world. To attain that goal, the corporation will continue to enlarge its retail trade, its mail order and professional sales businesses rapidly. Employees are one of Starbucks’ most important resources. Employees must be treated well if the company is to prosper. All employees are entitled to all of Starbucks’ benefits and minimum wage. Starbucks’ unwavering commitment to the environment is guided by an environmental committee. Furthermore, they have made significant contributions to local charities concerned with child environmental homelessness and AIDS support.
Starbucks Corporation is a multinational coffee shop chain in United States and it was founded in Seattle,Washington in year 1971. Nowadays, the company operates over 28,000 around the world. ,Starbucks also has a wide range of new flavors and foods, such as La Boulange pastries, fresh juices, frappuccino beverages and snacks, including chips and cookies.
2.0 Application Of PEST/LE
The PESTLE analysis framework will impact Starbucks Corporation. While Starbucks must continue to control its remote or macro environment. The PESTLE analysis model can satisfy this need. Despite the negative impact on its business,Starbucks Corporation can continue to be successful in the macro environment.
2.1 Political Factors Affecting Starbucks Corporation
The government on business also will impact by PESTLE analysis. Starbucks has experienced the political external in its macro environment are local integration is the trend and external factors, providing Starbucks with the opportunity to increase globally. In addition, most governments worldwide are developing framework, which gives Starbucks access to more bazaar or suppliers.
2.2 Economic Factors Important to Starbucks Coffee’s Business
This component of the PESTLE analysis model refers to economic conditions and significant changes to the business. As the following economic external factors in its remote or macro-environment that Starbucks faces is the high economic growth and falling unemployment in developing countries have created opportunities for Starbucks to earn more revenue from various markets worldwide. However, the rising labor costs in the developing world is an external threat to Starbucks as it increases the company’s spending on ingredients. The company buys large quantities of coffee beans from developing countries. Therefore, the analysis model in this part provides an opportunity for Starbucks corporation.
2.3 Social/Sociocultural Factors Influencing Starbucks Coffee’s External Environment
The PESTEL analysis framework in this regard that shows the social conditions and trends affecting consumers and businesses. Starbucks must address the following social and cultural external factor in its remote or macro environment is the Starbucks has the opportunity to increase its revenue, based on the growing demand for specialty coffee, due to a growing coffee culture and a growing middle class around the world. Furthermore, the company has the opportunity to expand its healthier product line to attract health-conscious consumers to Starbucks. Therefore, in this component of the analysis model, all the identified external factors provide an opportunity for Starbucks coffee.
2.4 Technological Factors in Starbucks Coffee’s Business
In the PESTLE analysis model, technology and related trends were identified. The technological external factors of Starbucks experiences in its remote or macro environment is the Starbucks has the opportunities to improve its mobile apps and related services to generate more revenue through mobile purchases. The company also has an opportunity to improve supply chain efficiency based on new technologies that used by coffee farmers. However, the growing popularity of home-use coffee machines is a threat to Starbucks because it increase alternatives to its products. Therefore, the PESTLE analysis framework in this regard mainly provides an opportunity for Starbucks coffee.
2.5 Legal Factors
The legal factors is the law and regulations on a business based on the PESTLE analysis model. The product safety regulations is the legal external factors of Starbucks Corporation. Starbucks has the opportunity to improve its performance by satisfying product safety regulations and regulating on the ingredients from genetically modified organism. Starbucks has done well in these areas. However, the regulations of increasing employment,especially the developing countries, threaten the access of Starbucks coffee into the labor market.
2.6 Ecological/Environmental Factors
The components of this PESTLE analysis model determine the impact of ecological or environmental conditions and changes to business. The ecological and environment external factors that Starbucks faces in its remote or macro environment is the business sustainability trends focus on business processes that ensure minimal impact on the environment. In relation, responsible sourcing emphasizes corporate social responsibility in the supply chain. Starbucks has an opportunity to improve its performance in these areas. Note that the company already has a responsible procurement policy. Moreover, Starbucks has an opportunity to offer more products on recyclable packaging. Thus, Starbucks Corporation has the major opportunities in this part of PESTLE analysis model.
3.0 Porter’s Five Forces Analysis
The Porter’s Five Forces analysis model provides information for strategic management to address five forces, such as competitive rivalry, the bargaining power of customers or buyers, the bargaining power of suppliers, the threat of substitution, and the threat of new entrants.
3.1 Competitive Rivalry Or Competition With Starbucks Corporation
Starbucks faces intense competitive rivalry or competition in the food service and coffeehouse industry. In the five forces model, this force is related to the influence of competitors on each other and the industry environment. In this case of Starbucks Coffee Company, the following external factors contribute to the strong force of competition is the large number of firms. It is an external factor that intensifies competitive rivalry. Starbucks has many competitors of different sizes in terms of professionalism and strategy, and the number of competitors varies. In an analysis of five forces at Starbucks, this modest diversity further strengthens the level of competition in the industry.
3.2 Bargaining Power Of Starbucks’s Customers / Buyers
The Starbucks coffee company experiences the power or bargaining power of a buyer or customer. In porter’s five forces model, this power is based on the impact of individual customers and customer groups on the international business environment. Among the force analysis model, the bargaining power of buyers is one of the most important factors that influencing companies. With low switching costs, customers can easily shift from Starbucks to other brands. In addition, the availability of high alternatives means customers can stay away from Starbucks if they want, as there are many alternatives, such as instant drinks in vending machines. These strong factors mask the overshadow that individual purchases are small compared to the company’s total revenue.
3.3 Bargaining Power of Starbucks Coffee’s Suppliers
Starbucks Corporation faces the weak force or bargaining power of suppliers. Porter’s five forces model considers that this force is the influence of suppliers on the company and its industry environment. The external factors that contribute to the weak bargaining power of Starbucks’ suppliers is moderate size of individual suppliers. It is an external factor that imposes a moderate force on Starbucks. However, the various suppliers have weakens their bargaining power. The bargaining power of suppliers has further weakened due to the huge overall supply. For example, there are many coffee and tea suppliers around the world. This external factor limits the impact of individual suppliers. In these five force analyses, the overall impact of external factors is the weak or bargaining power of the company’s suppliers. Moreover, another consideration is the company’s use of supply chain diversification as a way of responding to trends.
3.4 Threat of Substitution or Substitutes to Starbucks Products
Starbucks Corporation experiences the strong force or threat of substitution. In the five force analysis model, this force is related to the impact of alternative products or services on the business and external environment. The external factors that contribute to the strong threat of substitution against Starbucks Corporation is the components of this five-force analysis suggest that alternatives have a lot of potential to negatively impact the business of Starbucks Corporation. The high availability of alternatives makes it easier for consumers to buy these alternatives instead of Starbucks products.
3.5 Threat of New Entrants or New Entry
Starbucks Corporation faces the moderate force or threat of new entry. This refers to the influence of new participants or new entrants in the industry. In the business case, the external factors contribute to the moderate threat of new entrants against Starbucks is the modest cost of doing business is related the variability of the actual cost of building and maintaining operations in the coffeehouse industry. For instance, a cost of operating a small coffeehouse is less than the cost of operating the coffeehouse chain. These external factors enable small companies to do business and compete with Starbucks Corporation. On the other hand, brand development is costly. Under the background of the five forces analysis model, this condition reduces the threat of substitutes.
4.0 Application of SWOT Analysis
In this business analysis case, the SWOT analysis of Starbucks Corporation considers the strengths and weaknesses of coffee shops and related businesses. The analysis also considers opportunities and threats related to the competitive landscape, which is partly based on the powerful forces of competition.
4.1 Strengths Of Starbucks Corporation
This component of the SWOT analysis model involves internal factors that companies can use to address weaknesses and protect against competition. In this case, Starbucks Corporation has the most strongest and popular brand image in the world. The company has an increasing number of loyal customers, which adds stability to the coffeehouse business.
4.2 Weaknesses Of Starbucks Corporation
Business weaknesses are identified in this component of the SWOT analysis. The weaknesses are internal factors that reduce or limit business capabilities. Starbucks has high prices, maximizes profits, but reduces the affordability of its products. This internal strategic factor is a weakness because it limits the company’s market share, especially in areas where disposable income is relatively low. Moreover, the SWOT analysis suggests that broad standards are also a weakness that limiting the business flexibility of coffee and coffee chains.
4.3 Opportunities For Starbucks Corporation
The part of the SWOT analysis model focuses on external factors that provide opportunities for business growth and development. In this case, the main opportunities available to Starbucks Corporation are it can increase its revenues through expansion in developing markets. In addition, the significance of the SWOT analysis lies in business diversification, which can improve the long-term stability of Starbucks Corporation. The industry environment also provides opportunities to strengthen the company’s presence and market share through partnerships with or alliances with other companies.
4.4 Threats Facing Starbucks Corporation
Threats against the business are identified in this part of the SWOT analysis. Threats are external factors that reduce or limit business performance. In the company’s case analysis, the major threats that related to Starbucks Corporation are it competes with a wide variety of companies in the international market. This external strategic factor threatens Starbucks because such rivals can reduce the company’s market share by competing based on low prices. The SWOT analysis suggests that imitation is the main threat to the coffeehouse business. Given the company’s weaknesses, the threat of imitation involves companies trying to mimic the taste, appearance and feel of Starbucks products. Moreover, this social and cultural trend influences consumers’ cognition and buying behavior. Successful marketing campaigns and brand strategies are needed to offset these trends.
5.0 Identification And Explanation On Area Of Commendation
From the very beginning, Starbucks has become a different kind of company a person who is committed to inspiring and nurturing the human spirit committed to providing the best coffee, creating excellent customer experiences, and becoming a good place to work. Humanity and love is one of the commendation of Starbucks. Starbucks Corporation gives opportunities for values to be translated into action. With strong emphasis on human connection, Starbucks has a series of initiatives to offer partners a way to express their humanitarian instincts.
Moreover, the Starbucks partner offers a structured career pathway. Expectations are set from the start so that partners can build their own path and manage their success. While emphasizing internal promotions, partners also have opportunities for career development. Impressively, 100 percent of the leaders the company currently operates are promoted internally, while 52 percent of the department heads at Starbucks headquarters are promoted from the retail division.
5.1 Discuss And Explanation On Area Of Weakness
Starbucks’ operating structure is hampering its decision-making process because top executives are decision makers. This leads to inefficiency in situations where business departments need to make quick decisions. Before decision makers make daunting decisions, the situation could worsen further, leading to a loss of business opportunities and customers. Finally, it results in a loss of business entities.
Furthermore, the another weakness is the internal strategic factor of Starbucks high price and profit maximization, while reducing the affordability of its products. This internal strategic factor is a weakness because it limits the company’s market share, especially in areas where disposable income is relatively low.
6.0 FIVE Recommendation For Improvement
– 24 Hours Stores
If Starbucks has 24 hours operating, it can let several hospitals’ medical workers, police on duty, medical vans’ workers and other civic workers that working through the night can have some supper or drink some coffee to let themselves have a better spirit to work on.
– Starbucks Passport
Starbucks have over 24,000 stores in 70 countries, a Starbucks passport can let every Starbucks lover enjoy the Starbucks food, drink or discount while travelling. The Starbucks passport can make such like a stamp book to be used in different branches of Starbucks around the world.
– Branded T-Shirt
Starbucks can send out their t-shirt on their anniversary every year. The t-shirt can print out the history of Starbucks to let more people know the story behind them. The t-shirt also can let Starbucks lover have a good collection.
– Private Lounges
Starbucks is also about business deals or personal dates, so having some individual comfort space is also a good complement to Starbucks.
– App to Find Open Seats
The app lets users know which Starbucks in the area has the most free seats. The users can check the app to see which Starbucks is closer and which is the least crowded at that time if looking for a place to discuss with friends or colleagues.
Starbucks’ success has been achieved through a unique marketing strategy.Starbucks has encountered fierce competition in all areas of its business activities. The market characteristics of each of their business units are the fierce competition among large companies with long permanent positions and a large number of new companies and fast-growing companies. In any case, Starbucks has good financial ability and good strategy. It can beat all the competition and become a top coffee supplier.