The Strategy Story

Starbucks SWOT Analysis

starbucks swot analysis essay

Before we dive deep into the SWOT analysis, let’s get the business overview of Starbucks. Starbucks Corporation, founded in Seattle, Washington, in 1971, has grown to become the world’s largest coffeehouse chain and one of the most recognizable brands in the specialty coffee industry. Known for its iconic green mermaid logo, Starbucks has expanded its presence globally, with more than 35,700+ stores in over 80 countries as of 2022.

Business Model : Starbucks operates under a retail and franchise model, with most company-operated stores (51%). The company primarily generates revenue by selling premium coffee and other beverages, including espresso-based drinks, teas, and smoothies. Additionally, Starbucks offers a variety of food items such as sandwiches, salads, pastries, and snacks. The company also sells coffee beans, ground coffee, and single-serve products for at-home consumption.

Starbucks strongly focuses on providing a consistent and comfortable in-store experience, emphasizing customer service and an inviting atmosphere. Many stores offer free Wi-Fi and ample seating to encourage customers to spend time in the stores. The company has also developed a successful loyalty program called Starbucks Rewards, which offers exclusive deals and promotions to members.

Diversification and Expansion:  Over the years, Starbucks has diversified its product offerings by launching new lines of beverages, such as the Teavana range of teas, and acquiring other companies, including Evolution Fresh (a cold-pressed juice company) and La Boulange (a bakery chain). The company has also entered the ready-to-drink (RTD) market through partnerships with PepsiCo and Anheuser-Busch InBev.

Furthermore, Starbucks has expanded its operations beyond physical stores by introducing various digital initiatives, such as mobile ordering and payment through the Starbucks app. This has enabled the company to reach new customers and streamline the in-store experience.

Financial Performance :  Starbucks generated $32.5 billion in 2022, with a net operating income of $4.6 billion. Total net revenues increased $3.2 billion, or 11%, over fiscal 2021, primarily due to higher revenues from company-operated stores ($2.0 billion). The growth in company-operated store revenue was driven by an 8% increase in comparable store sales ($1.8 billion), attributed to a 5% increase in average ticket and a 2% increase in similar transactions.

Starbucks business model & supply chain analysis

Here is the SWOT analysis for Starbucks

A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture’s success or failure and analyzing them to develop a strategic plan. In this article, we do a SWOT Analysis of Starbucks.

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SWOT Analysis: Meaning, Importance, and Examples

  • Brand recognition and loyalty : Starbucks is one of the world’s most well-known and respected brands, with a loyal customer base. The green mermaid logo is instantly recognizable, and the company has consistently maintained its premium image through quality products and a unique customer experience. In 2021, the Starbucks brand was valued at approximately  13.01 billion U.S. dollars , up from 11.25 billion U.S. dollars the previous year. 
  • Extensive global presence : With over 35,700 stores (as of 2022) in more than 80 countries, Starbucks has a vast global footprint. This extensive reach allows the company to capitalize on international market opportunities and achieve economies of scale.
  • Diverse product offerings : Starbucks offers a wide range of products, including various coffee beverages, teas, smoothies, food items, and merchandise. This product diversity helps the company cater to different consumer preferences and adapt to changing market trends.  How does Starbucks’ unique promotion strategy aid in its massive success?
  • Innovation and digital initiatives : Starbucks strongly focuses on innovation, from creating new beverages to implementing technology-driven mobile ordering and payment solutions. These initiatives improve the customer experience and help the company stay ahead of its competitors.
  • Supply chain management : Starbucks has established a robust supply chain, including its Coffee and Farmer Equity (C.A.F.E.) Practices that ensure ethical and sustainable sourcing. This focus on responsible sourcing strengthens the company’s reputation and helps secure a consistent supply of high-quality coffee beans.
  • Strong financial performance : Starbucks has consistently reported solid financial results, with revenue growth and profitability. This financial strength allows the company to invest in expansion, product development, and other strategic initiatives.
  • Customer experience and store atmosphere : Starbucks provides a comfortable, inviting, consistent in-store experience. Many locations offer free Wi-Fi, ample seating, and friendly customer service, encouraging customers to spend time in the stores and fostering brand loyalty.
  • Successful loyalty program : Starbucks Rewards is a popular loyalty program incentivizes customers to make frequent purchases by offering exclusive deals, promotions, and personalized experiences. This program helps drive customer retention and increase average spending per visit.
  • Strategic acquisitions and partnerships : Starbucks has made several strategic acquisitions (e.g., Teavana, Evolution Fresh, and La Boulange) and formed partnerships (e.g., with PepsiCo and Anheuser-Busch InBev) to diversify its product offerings and expand into new markets.
  • Commitment to sustainability and corporate social responsibility : Starbucks has taken significant steps to address environmental and social issues, including promoting sustainable packaging, reducing its carbon footprint, and supporting fair trade practices. This commitment strengthens the company’s reputation and appeals to socially conscious consumers.

  • High prices : Starbucks is known for its premium pricing, which can be a barrier for some consumers, particularly in price-sensitive markets or during economic downturns. This may limit the company’s potential customer base and make it vulnerable to competition from lower-priced alternatives.  Starbucks prices products on value, not cost. Why?
  • Dependence on the U.S. market : Although Starbucks has a global presence, a significant portion of its revenue (75%) is generated from the U.S. market. This heavy reliance on one market can expose the company to regional economic fluctuations and create challenges in managing its diversified operations.
  • Market saturation : In some regions, particularly in the U.S., Starbucks may face market saturation due to many existing stores. This can limit the company’s growth potential in these markets and lead to cannibalization of sales among its own stores.
  • Standardized offerings : While Starbucks aims to provide a consistent experience across its stores, this standardization can sometimes lead to a lack of unique or localized products. Competitors, especially smaller, independent coffee shops, may be better positioned to offer a more diverse and customized range of products and experiences.
  • Intense competition : Starbucks faces strong competition from both global chains (such as Costa Coffee, Dunkin’, and McCafé) and independent coffee shops. This competition can lead to price wars, increased marketing costs, and a constant need for product innovation to differentiate itself.
  • Vulnerability to coffee price fluctuations : As a major purchaser of coffee beans, Starbucks is vulnerable to fluctuations in coffee prices due to weather, political instability, and global supply and demand. These fluctuations can impact the company’s profitability and force it to adjust its pricing strategy.
  • Labor issues and employee satisfaction : Starbucks relies on its employees to deliver the high-quality customer service it is known for. However, the company has faced criticism for its labor practices , including issues related to wages, benefits, and working conditions. These concerns can negatively impact employee satisfaction, retention, and brand reputation.
  • The potential negative impact of rapid expansion : Starbucks has pursued aggressive expansion plans in recent years, particularly in international markets. Rapid expansion can sometimes lead to operational challenges, such as supply chain disruptions, cultural differences, and difficulty maintaining consistent quality and customer experience across all locations.
  • Environmental concerns : The coffee industry as a whole faces scrutiny regarding its environmental impact, including deforestation and waste generated by single-use packaging. Although Starbucks has taken steps to address these issues, the company may still face criticism and pressure to do more to minimize its environmental footprint.
  • Data security and privacy risks : As Starbucks increasingly relies on digital initiatives, such as mobile ordering and its loyalty program, the company becomes more vulnerable to data breaches and privacy concerns. These risks can damage the company’s reputation and customer trust.

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Opportunities

  • Expansion in emerging markets : Starbucks can continue to grow by entering emerging markets such as India, Africa, and Latin America. These regions offer significant growth potential due to their large populations, growing middle class, and increasing demand for premium coffee products.
  • Product innovation and diversification : Starbucks can leverage its strong brand and expertise in product development to create new, innovative beverage and food offerings that cater to evolving consumer preferences, such as healthier options, plant-based alternatives, and locally inspired flavors.
  • Strengthening digital initiatives : Starbucks can continue to invest in its digital presence, including enhancing its mobile app, improving the online ordering experience, and integrating artificial intelligence and machine learning technologies to offer personalized recommendations and promotions.
  • Drive-thru and delivery expansion : As consumer preferences shift towards convenience and contactless experiences, Starbucks can expand its drive-thru locations and delivery services to meet this growing demand.
  • Sustainability initiatives : Starbucks can continue strengthening its commitment to sustainability by reducing waste, promoting eco-friendly packaging, and supporting renewable energy initiatives. These efforts can enhance the company’s reputation and appeal to environmentally conscious consumers.
  • Partnerships and acquisitions : Starbucks can explore strategic partnerships and acquisitions to broaden its product portfolio, enhance its supply chain, and gain access to new markets and technologies.
  • Strengthening the loyalty program : Starbucks can further enhance its Starbucks Rewards program by offering more personalized and exclusive benefits, gamifying the experience, and utilizing data analytics to understand customer preferences better and drive sales.
  • Focus on specialty coffee and premium experiences : Starbucks can tap into the growing demand for high-quality, artisanal coffee by highlighting its specialty coffee offerings and creating unique, premium in-store experiences, such as coffee tastings and workshops.
  • Expansion of ready-to-drink (RTD) products : Starbucks can continue to expand its RTD product offerings, such as bottled Frappuccinos, cold brew, and iced coffee, to capitalize on the growing popularity of these convenient beverages.
  • Community involvement and social impact : Starbucks can further engage with local communities through charitable initiatives, support for local artists, and partnerships with non-profit organizations. This involvement can enhance the company’s brand image and create a positive social impact.

  • Intense competition : Starbucks operates in a highly competitive market, with rivals ranging from global chains like Costa Coffee, Dunkin’, and McCafé to independent coffee shops and specialty roasters. This competition can lead to price wars, higher marketing costs, and the need for constant innovation to stay ahead.
  • Economic downturns : As a premium brand, Starbucks can be affected by economic downturns and reduced consumer spending. In times of financial hardship, consumers may opt for lower-priced alternatives, negatively impacting the company’s sales and profitability.
  • Fluctuating coffee prices : Starbucks is vulnerable to fluctuations in coffee prices, which can be affected by weather, political instability, and global supply and demand. These fluctuations can impact the company’s cost structure and force it to adjust its pricing strategy.
  • Changing consumer preferences : Consumer preferences and tastes constantly evolve, which may affect the demand for Starbucks’ products. The company must stay attuned to these changes and adapt its offerings accordingly to maintain its market position.
  • Regulatory and political risks : As a global company, Starbucks is subject to varying regulations and political risks in different markets. Changes in laws or political instability can impact the company’s operations, supply chain, and overall business performance.
  • Labor issues : Starbucks relies on its employees to deliver the high-quality customer service it is known for. The company may face challenges related to labor practices, including wage disputes, worker satisfaction, and employee turnover, which can negatively impact its brand reputation and customer experience.
  • Supply chain disruptions : Starbucks’ global supply chain exposes it to risks such as natural disasters, pandemics, and geopolitical tensions. These events can disrupt the supply of raw materials, particularly coffee beans, and impact the company’s operations and profitability.
  • Data security and privacy concerns : As Starbucks increasingly relies on digital initiatives, such as mobile ordering and its loyalty program, the company becomes more vulnerable to data breaches and privacy concerns. These risks can damage the company’s reputation and customer trust.
  • Environmental concerns : Like other companies in the coffee industry, Starbucks faces scrutiny regarding its environmental impact. The company must continue to address issues such as deforestation, single-use packaging waste, and its carbon footprint to maintain its reputation as a responsible corporate citizen.
  • Market saturation and cannibalization : Starbucks may face market saturation in some regions, particularly in the U.S., due to many existing stores. This can limit the company’s growth potential in these markets and lead to cannibalization of sales among its own stores.

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Strategic Management Insight

SWOT Analysis of Starbucks (6 Key Strengths in 2023)

Starbucks SWOT Analysis

This Starbucks SWOT analysis reveals how the largest coffee chain in the world uses its competitive advantages to continue growing so successfully all over the world.

It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. If you want to find out more about the SWOT of Starbucks, you’re in the right place.

learn how to do a SWOT analysis .

Company Overview

Business description.

Starbucks Corporation’s business overview from the company’s financial report:

“Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 81 markets. We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a variety of high-quality food items, including snack offerings, through company-operated stores.

We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, as well as grocery and foodservice through our Global Coffee Alliance with Nestlé S. A. (“Nestlé”). In addition to our flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve and Princi.

Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To achieve this, we are continuing the disciplined expansion of our global store base, adding stores in both existing, developed markets such as the U.S., and in newer, higher growth markets such as China, as well as optimizing the mix of company-operated and licensed stores around the world.

In addition, by leveraging the experience gained through our traditional store model, we continue to offer consumers new coffee and other products in a variety of forms, across new categories, diverse channels and alternative store formats. We also believe our Starbucks Global Social Impact strategy, commitments related to ethically sourcing high-quality coffee, contributing positively to the communities we do business in and being an employer of choice are contributors to our objective.

Starbucks® company-operated stores are typically located in high-traffic, high-visibility locations. Our ability to vary the size and format of our stores allows us to locate them in or near a variety of settings, including downtown and suburban retail centers, office buildings, university campuses and in select rural and off-highway locations. We are continuing the expansion of our stores, particularly Drive Thru formats that provide a higher degree of access and convenience, and alternative store formats, which are focused on an elevated Starbucks Experience for our customers.

Starbucks employed approximately 383,000 people worldwide as of September 29, 2019.” [1]

Starbucks SWOT Analysis

1. operating efficiency and strong growth leading to superior financial performance.

2019 marked continuing Starbucks growth both financially and physically. The company had yet another great financial year. The company’s revenue grew by 7.2% and 1,932 new stores were opened. Starbucks’ operating profit margin remained above 15% and its cash flow generated US$5.047 billion, despite the company’s enormous expansion.

Figure 1. Starbucks’ consolidated revenue 2013-2019

Starbucks revenue

Source: Starbucks’ financial report [1]

Figure 2. Starbucks’ operating profit margin 2012-2019

Starbucks profit margin

Figure 3. Starbucks’ consolidated store count

Starbucks store count

The company’s net profit stayed high at $3.594 billion and was actually higher than in 2018 if not including the US$1.4 billion one-time profit increase due to the acquisition of East China joint venture in the previous year.

On the other hand, Starbucks’ balance sheet weakened in 2018 and 2019. The company’s assets decreased, long-term debt increased, which also increased debt-to-asset ratio. Even if the balance sheet should be looked at with caution, the company’s financial position is still as strong as ever.

What does this mean for the company? Despite the fast expansion, company’s significant revenue growth, strong operating and net profits mean that Starbucks is managing its operations very efficiently. The company’s healthy financial numbers provide confidence for investors and allow the company to engage in speculative investments that wouldn’t be feasible otherwise.

2. Fast growing store network in China

Currently, Starbucks has 4,123 restaurants in China, which is more than Costa Coffee’s 449 restaurants (data only from 2018) [2] , McDonald’s 3,300 restaurants [3] and Luckin Coffee’s 3,680 restaurants. [4] The number of Starbucks locations has grown significantly over the past few years. In 2011, the company had only 570 coffeehouses in China. Since then it grew its presence to 4,123 locations or 723% in just 8 years.

Figure 4. Number of Starbucks locations in China 2012-2019

China will become the second major Starbucks market in the future and is the second fastest growing Starbucks market behind the U.S. already. Most importantly, Starbucks is well positioned to compete in China.

For years Starbucks has been strengthening its tea offerings, which is the favorite Chinese drink. The company currently owns Teavana tea brand and serves brewed tea, single-serve tea, packed tea and other related tea products. Therefore, unlike its rivals, Starbucks is better prepared to satisfy Chinese tastes and to attract Chinese customers to its coffeehouses. In addition to the tea demand, coffee demand is growing in China and Starbucks with its huge coffeehouse network in the country is well positioned to take advantage of this.

3. The combination of a premium menu, huge range of coffee and quality customer service provides the best customer experience in the industry

Unlike other coffee chains, Starbucks is well-known for its quality and excellent customer experience. That’s why the company can charge premium prices and still become the largest coffeehouse chain in the world. To provide the best customer experience Starbucks has to excel at many things, including:

  • quality of its coffee and tea;
  • menu choices;
  • quality of its customer service;
  • location and quality of its stores.

Starbucks has always been focused on the quality of its coffee. [5] The company applies strict standards to coffee purchasing, roasting, packaging and distribution. It buys only Arabica beans that are grown at high altitudes. The company tastes each batch of coffee beans at least 3 times before approval. Few of the company’s rivals go through such lengthy quality assurance checks for their coffee ingredients.

Starbucks also provides the most extensive coffee menu in the industry. The company offers more than 50 drinks in each coffeehouse and in total has more than 230 drinks in its product range. [6] By comparison, McDonald’s McCafé, Dunkin’ Donuts and Costa Coffee each offer only more than 20 different drinks.

Starbucks’ high level of customer service, the quality of its stores and their locations are also the pieces that help deliver a competitive advantage in terms of customer experience. The Customer Service Board rates Starbucks at 61 st place based on positive customer reviews, while McDonald’s is at 603 rd place only. [7]

In addition, Starbucks’ convenient store locations add to the coffee chain’s appeal as customers can seemingly find a Starbucks on almost every corner. In 2019, the company operated 15,049 stores in the U.S. and 16,207 stores internationally, making it the largest coffee chain in the world. Starbucks’ main competitors, McDonald’s, Dunkin’ Donuts and Costa Coffee operated a total of 37,855, 12,871 and 3,821 locations in 2018, respectively. Therefore, except McDonald’s, which actually is more of a fast food chain than coffee selling chain, all other major competitors operate considerably smaller store networks.

Figure 5. Number of stores operating in 2019 and growth over the previous year

Source: The respective companies’ financial reports [1][2][8][9] *McDonald’s, Dunkin’ Donuts and Costa Coffee data is for 2018

Starbucks ability to excel at all of the factors mentioned above allows the chain to provide the best customer experience in the industry and to charge premium prices – an advantage that no other rival can match.

4. Brand awareness and excellent reputation leading to very high customer loyalty

Interbrand, the leading brand evaluation agency, recognizes Starbucks as the 48 th most valuable brand in the world and values it at US$11.798 billion. [10] Forbes, which has its own list of the most valuable brands, lists Starbucks as the 35 th most valuable brand and values it at US$17 billion. [11] Both companies recognize it as a fast growing brand on their list.

This means that Starbucks brand is one of the most recognizable and reputable in the world. The company’s excellent customer service, premium store design, quality coffee, convenient store locations and best-in-class employment practices have led to a very good brand reputation. Starbucks has been named as one of the “World’s Most Ethical Companies” for 11 years in arrow from 2007 to 2017. [12] Both Starbucks’ brand awareness and reputation have resulted in a very loyal customer base.

Starbucks’s brand popularity and customer loyalty is demonstrated by its huge gift card sales. More than US$9.031 billion were loaded to Starbucks cards in 2019, proving the brand’s popularity among consumers in the U.S. and Canada. [13]

No other coffeehouse chain has such strong brand recognition and customer loyalty as Starbucks, and the company is able to use these factors to its competitive advantage.

5. Direct ownership of 51% of all Starbucks stores

There are a total 31,256 Starbucks locations worldwide, of which 15,834 or 51% are directly managed by the company. [1][3][9] This is considerably more than the direct ownership of both McDonald’s (7.3%) or Dunkin’ Donuts’ (0%) restaurants. The drawbacks of opening and managing directly-owned restaurants over using franchises are the lower operating profit margin and huge capital investments required for new store openings. Yet Starbucks is benefiting from this approach in three ways.

First, the company can tightly control the daily operations of its directly-owned stores and maintain the highest standards, which often get worse during periods of fast expansion. Second, Starbucks receives more revenue from directly-owned stores than from its franchisees. The company therefore receives larger cash flows, which allows further rapid expansion. Third, Starbucks always has the option of increasing its operating margins by selling off directly-owned restaurants to its franchisees.

Few other restaurant chains have this advantage.

6. Effective use of the Starbucks Card, store loyalty program and mobile ordering apps to encourage repeat purchases

The Starbucks Card is a stored value card that offers greater convenience when making a purchase at any Starbucks store. In addition to a faster checkout time, a customer also receives loyalty points, through a related Starbucks Rewards™ program, for every purchase he/she makes using the card.

Every Starbucks customer, who has a Starbucks Card, is automatically enrolled in Starbucks Rewards™ loyalty program, which provides loyalty points, called ‘stars’. Loyalty points can be redeemed for a free product.

To further improve the ordering and purchasing experience, the company has introduced Starbucks mobile app which allows customers to pay for drinks and other in-store purchases with their smartphones. Starbucks mobile app allows to order and pay for a drink or even tip a barista before entering the store. Users can check their Starbucks card balance or how many loyalty points they have just by using the app.

Currently, 46% of all transactions in the U.S. and Canada are made using Starbucks Card and 16% of all transactions in the U.S. are made using a mobile app. [13]

Figure 6. Active Starbucks Rewards Members in the U.S.

Starbucks rewards members

Source: Starbucks Card, Loyalty & Mobile Dashboard [13]

Figure 7. Starbucks Mobile Transactions as % of Total Transactions

Starbucks mobile transactions

No other company in the U.S. has used a combination of a loyalty program, store card and mobile payment system to attract and retain their customers so successfully.

1. Overdependence on revenue from the U.S.

Starbucks has been relying on the revenues from the domestic U.S. market significantly. In 2019, the company has earned US$18.623 billion in the U.S and US$7.886 billion internationally. The revenue from the U.S. accounted for 70.3% of the total company’s sales. The U.S. market was always the most important market for Starbucks and will continue to be so for the foreseeable future as no other country generates over 10% of the company’s revenue.

Figure 8. Starbucks’ sources of revenue by country

Starbucks revenue by country

In comparison, McDonald’s revenue from the U.S. accounted for only 36.5% of its total sales, indicating a much more geographically diversified sources of revenue. [4]

A high share of revenue coming from one country weakens Starbucks as changes in consumer tastes or political, economic, environmental and legal conditions may severely impact its revenue and operating profit margins.

2. Slow growth in Europe indicates poor positioning and wrong competitive strategy for those markets

In 2019, Starbucks added 1,932 store locations to its worldwide chain. In the UK, the net number of Starbucks’ coffeehouses increased only by 7 stores. While there is no exact number of how many restaurants were added in other European countries, we can guess that the number is around 100. In total, no more than 6% of the total Starbucks restaurants added worldwide were added in Europe in 2019.

Slow growth in Europe is evidence that Starbucks has chosen the wrong strategy to compete with its rivals in Europe. Currently Starbucks is only capable of growing and competing successfully in the U.K., whose culture is the most similar to the U.S. The company’s current strategy is not successful in the rest of Europe.

This weakens the company as it cannot easily grow in one of the largest regions in the world, while some of its competitors generate large shares of the revenues from the European markets. For example, McDonald’s generates around 40% of its revenue from Europe, and Costa Coffee receives over 50%. [2][8]

Starbucks inability to compete with the other large chains or small specialized coffeehouses in Europe results in huge lost sales and slower growth and poorer ability to geographically differentiate its sales.

3. High prices when compared to other major coffee-serving chains

In order to rent premium locations, provide the best quality products, customer service, and an overall excellent customer experience, Starbucks charges premium prices for its coffee. On average, coffee prices in McDonald’s and Dunkin’ Donuts are 35% and 10% lower, respectively, than in Starbucks. The following table compares average coffee prices between Starbucks, McDonald’s and Dunkin Donuts.

Figure 9. Medium size coffee prices in major coffee serving chains in California, the U.S. (in US$)

Source: Fast Food Menu Prices [14][15][16]

The high price of Starbucks’ coffee is a weakness that other chains could exploit, especially if the price of coffee beans is rising. Rising coffee bean prices would increase the overall coffee prices at Starbucks, which could make them too high to pay for even the most loyal Starbucks customers. Currently, Luckin Coffee Inc. is experiencing huge growth in China due to positioning itself as a high quality coffeehouse chain, but with lower coffee prices than at Starbucks.

4. Overdependence on coffee sales with little ability to influence the volatile price of coffee beans

Unlike most of its competitors, Starbucks heavily relies on coffee sales. According to the company’s financial report, beverages make up 74% of the total sales made in its directly-owned stores. This does not include sales of packaged and single-serve coffees and teas, which generate another 1% of the total revenue. While coffee isn’t the only beverage the company offers, it still generates over 50% of the company sales. [1]

Operating mainly the coffeehouse chains and generating most of the revenue by selling coffee isn’t a weakness on its own. The problem is that the price of coffee beans, the company’s main ingredient, is very volatile, often increasing more than 20%, 50% or even 100% in one year. This is a situation over which Starbucks has little control.

Figure 10. The price of coffee beans 2010-2020

Price of coffee beans

Source: Nasdaq [17]

While rising coffee bean prices affect every coffee retailer, the consequences for them are not as severe as for Starbucks, mainly because coffee sales make up only a small portion of their total revenue.

Opportunities

1. expansion of ready-to-drink (rtd) coffee products in the u.s. market.

According to the Beverage Marketing Corporation Reports, one the fastest growing liquid beverage segment in the U.S. during 2013-2018 was RTD coffees. [18][19][20][21][22][23] In 2018, RTD coffees was the 2 nd fastest growing beverage segment in the U.S. beverage industry, growing by an impressive 8.8%. [23] The RTD coffee segment grew 4 times faster than the entire U.S. liquid beverage market, which grew by 2.2% only in 2018.

Figure 11. RTD coffee growth compared to the growth of the whole liquid beverage market in the U.S.

beverage market

Source: Beverage Marketing Corporation [18][19][20][21][22][23]

Currently, Starbucks is one of the largest RTD coffee brands in the U.S. market. The company offers a variety of espresso, Frappuccino and iced coffee brands. The company’s sales exceed over US$1 billion from RTD beverages. Nonetheless, there’s more room for growth in such a fast growing beverage sector.

Starbucks could expand its cold brew coffee or nitro coffee portfolio to attract more specialty coffee and millennial consumers further strengthening its market position in RTD coffees.

The company could also acquire smaller RTD coffee brands such as Califia Farms, which also offer premium coffee products.

Starbucks has an opportunity to dominate the RTD coffee market in the U.S., while there are still relatively few dominant brands competing in it. The Coca-Cola Company and PepsiCo are strengthening their positions in RTD coffees and there are more brands, which will join soon because RTD coffee market offers lots of potential.

2. U.S. spending on food away-from-home is increasing vs. at-home spending

Starbucks is predominantly a coffeehouse and mainly serves coffee, tea, pastry and some snacks, but it doesn’t offer any meals so it’s not a prime destination for people who go out for a dinner.

Figure 12. Share of consumer dollars spent by daypart

food spending

Source: Starbucks’ Strategic Overview

On average, people spend most of their money at Starbucks when they buy their morning coffee, breakfast and some light lunch. Compared to an average U.S. spender, Starbucks doesn’t attract enough people during the evening, mainly because it doesn’t have suitable offerings on its menu.

That’s why Starbucks should expand its food offerings to accommodate diners. It offers quality pastries, sandwiches, yoghurt, fruits and now salads to satisfy lunch eaters. However, this is only a small step in the right direction and Starbucks still needs to transform its menu to become more suitable for casual diners, especially when the U.S. spending on food away-from-home is increasing.

Figure 13. The U.S. food spend at-home vs. away-from-home spending

food spending at home and away

Source: USDA [24]

Starbucks could also diversify its product portfolio by acquiring a small growing restaurant chain or by introducing its own restaurant chain where the primary product would be food. The company already has capabilities and competence in managing and growing a coffeehouse chain successfully.

3. Developing Starbucks’ Rewards system into a reward of choice for other retailers in the growing electronic payment world

Starbucks experienced huge success when it introduced its loyalty program, offering Starbucks Rewards as incentives for buying with Starbucks Cards or using their mobile app. According to the company, Starbucks Rewards (SR) members spend 3 times more than non-SR customers. Starbucks customers are attracted to the company’s loyalty program because it offers useful and convenient rewards for products that are consumed daily.

Figure 14. Active Starbucks Rewards Members in the U.S.

Starbucks rewards members in US

Currently, there are more than 17.6 million active SR members. If the same growth rate of SR members continues, the company will have 20 million SR members by 2022. This means that Starbucks Rewards will become an attractive choice of reward for other companies that use loyalty programs to attract customers.

Starbucks, which already has a well-functioning mobile payment system integrated with its SR, is well positioned to take advantage of the growth in electronic payment systems. Businesses which offer loyalty programs can easily integrate Starbucks Rewards system with their payment systems and offer Starbucks gifts as a reward for their own customers’ loyalty. That would greatly benefit both the businesses integrating SR into their system and Starbucks itself, allowing it to increase its SR member base faster and more easily.

4. Growing demand for specialty coffee, such as cold brew and nitro coffee

The demand for specialty coffee is on the rise in the U.S. The total value of the U.S. coffee market is estimated to be around US$47.5 billion with specialty coffee comprising 60% of the market. [25][26]

One of the areas that see specific fast growth are cold brew and nitro coffees. According to the research done by Grand View Research, the market for cold brew coffee was worth US$339.7 million in the U.S. in 2018. [27] It is expected to grow by 25.1% for the next 6 years and should be worth US$1.63 billion by 2025. [28]

Starbucks currently offers a variety of cold brew coffees in its menu, but should expand its variety of premium cold brew coffees and offer them in all of the stores.

Nitro coffee is a coffee drink infused with nitrogen. It is served from the tap and is a new generation coffee drink. Starbucks currently offers only a few variations of the drink and only in some of its stores.

Starbucks, which is a mainstream coffee shop, could expand its specialty coffee menu that would focus more on quality of the coffee and would attract artisan coffee drinkers. The company could also offer a wider variety of cold brew coffee drinks to be sold in supermarkets.

1. The price of coffee beans could significantly rise due to major weather disasters

Coffee generates about 74% of the company’s total sales and coffee beans are the major raw material used in its production. Therefore, Starbucks profit margins are dependent, to some extent, on the price of coffee beans, which have been very volatile in the past.

Coffee bean prices topped US$3 per pound in 2011, which was the highest price in 34 years. In 2019, coffee prices dropped below US$0.91 per pound and were the lowest in over 10 years, but this trend is unlikely to be sustained.

Figure 15. The price of coffee beans 2010-2020

Price of coffee beans

The major reasons for such price volatility are droughts, unusually high or low temperatures and many other weather disasters in Brazil and other coffee-growing countries. In addition to those factors, growing demand for coffee in China has increased competition for the best quality coffee beans and has pushed the prices up significantly.

Starbucks uses many agreements with its suppliers in order to buy coffee on a fixed-price basis, however such agreements only prevent price increases for a short-time. Every few years the price of coffee beans generally rises and companies like Starbucks have to find ways to pass that increase on to customers or accept a lower profit margin. So far, Starbucks has been successful in coping with high coffee prices, but there’s no guarantee this won’t affect the company in the long-term.

2. Social trend towards eating healthier food

The trend towards healthier eating has hit the largest fast food restaurant chains, such as McDonald’s, Burger King, KFC and Subway, hard. These companies have received much criticism for contributing to obesity. According to Calorie King, the McDonald’s Cheeseburger, which contains around 300 calories, [29] equates to Starbucks Pumpkin Spice Latte with Soy Milk, without whipped cream, grande size drink, which contains 310 calories. [30] While, Starbucks has not received any criticism for its contribution to the obesity of the U.S. citizens, the company recognizes this threat in its financial report:

“Particularly in the U.S., there is increasing consumer awareness of health risks, including obesity, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food and beverage products. While we have a variety of beverage and food items, including items that are coffee-free and have reduced calories, an unfavorable report on the health effects of caffeine or other compounds present in our products, whether accurate or not, imposition of additional taxes on certain types of food and beverage components, or negative publicity or litigation arising from certain health risks could significantly reduce the demand for our beverages and food products and could materially harm our business and results of operations.” [1]

This might change in the future and Starbucks could suffer from the healthy eating trend like other restaurant chains serving calorie rich food.

3. Slowing China’s growth and intensifying competition could affect the chain’s expansion in these country

China is the fastest growing and the second largest Starbucks market. The company is increasingly dependent on the success and growth of its coffeehouse network in China. The company has 4,123 coffeehouses in the country. In 2019, a third of all the restaurants opened by Starbucks were in China. [1]

Currently, China’s economic growth is the lowest in 29 years. [31] In 2019, China’s economy grew only by 6.1% and the forecast projects that the economy will grow at an even slower pace in 2020. This means that consumer’s disposable income will not grow as fast and they will have less money to spend on an already high priced Starbucks’ drinks.

Rivalry in China’s coffee serving restaurant market is also intensifying. Despite the international rivals, like McDonald’s, which either grow fast in the country already or introduce plans to expand their growth in China, domestic competitors are attempting to establish themselves as serious competitors to Starbucks as well. One of the main domestic competitors is Luckin Coffee Inc. As of Q3 2019, the company had 3,680 coffeehouses in China, a growth of 209.5% from 1,189 stores in Q3 2018. [32] Just in one year, the company opened 2,491 stores and that growth in China is much faster than what Starbucks could ever achieve. In 2020, the company will outgrow Starbucks restaurant chain in China’s market and could pose a serious threat to Starbucks’ growth prospects as the coffee quality is comparable and the prices are lower than at Starbucks’ stores. [33] Luckin Coffee is only one of the several growing domestic coffeehouse chains in China.

The increasing competition from the local and international rivals and slowing growth of China’s economy will negatively affect Starbucks’ expansion in the country.

4. Changes in executive officers’ positions could weaken the company’s management

Every company’s success strongly depends on how it is managed. Starbucks is no exception. Since Starbucks Corporation’s inception in 1985, the company has relied upon CEO Howard Schultz, who has managed to grow the corporation into becoming one of the largest restaurant chains in the world. Many other top executives have been with the company for more than 10 years and have helped the company to reach its current level of success.

Figure 16. Top Executive Officers of Starbucks

The threat is that many of their top executives may retire sooner rather than later due to their age and this could weaken the company’s management capabilities. Starbucks will have to fill vacant positions with new executives, whose skills and abilities may not meet the expectations. This already happened when Howard Schultz left the Starbucks CEO position in 2000. He returned in 2008, because Starbucks’ financial position and its culture weakened due to poor management.

In April 2017, Starbucks’ CEO Howard Schultz retired again. Kevin R. Johnson, Starbucks previous chief operating officer assumed CEO duties. This and many other impending retirements could negatively affect Starbucks’ management capabilities in the future.

Starbucks has experienced a significant growth over the last few years and this trend should continue in the near future.

The company still has lots of growth potential in new and current markets. The combination of all Starbucks’ strengths will allow the company to successfully compete with rivals and grow fast.

Starbucks should further strengthen its digital capabilities, operating efficiency and maintain the current quality of ‘Starbucks experience’. All of these strengths will help the company in the future.

As for the weaknesses, few of them can significantly damage company or its sales. Starbucks should diversify geographically and expand in Europe. Product diversification would also help to increase the revenue and eliminate strong dependence on coffee sales.

Opportunities are well-known for Starbucks and the company already pursues some of them. Starbucks should really put efforts in becoming more of a dining place than just a coffee shop. That would open new opportunities and growth for the company.

Threats do not pose immediate danger for Starbucks. The company uses various contracts and other agreements to shield against the volatile prices of coffee beans. Other threats can be easily eliminated in the future.

  • Starbucks Corporation (2021) annual report. Available at: https://s22.q4cdn.com/869488222/files/doc_financials/2021/ar/Starbucks-Fiscal-2021-Annual-Report.pdf Accessed July 14, 2022
  • Whitbread PLC (2018). Annual Report and Accounts 2017/18. Available at: https://www.whitbread.co.uk/~/media/Files/W/Whitbread/report-and%20presentations/2018/Whitbread%20Interactive%202018.pdf Accessed January 27, 2020
  • McDonald’s Corporation (2019). McDonald’s in China. Available at: https://www.mcdonalds.com.cn/index/McD/mcdonalds-china/MCD-in-China-2 Accessed January 27, 2020
  • Luckin Coffee Inc. (2019). Luckin Coffee Inc. Announces Unaudited Third Quarter 2019 Financial Results. Available at: http://investor.luckincoffee.com/static-files/e228e5f9-e47f-47e4-b8dd-f1cabe870ebb Accessed January 27, 2020
  • Starbucks (2020). Quality. Available at: https://www.starbucks.ca/coffee/ethical-sourcing/coffee-quality Accessed January 27, 2020
  • Starbucks (2020). Explore Our Menu. Available at: https://www.starbucks.com/menu Accessed January 27, 2020
  • Customer Service Scoreboard (2020). The Leaderboard. Available at: http://www.customerservicescoreboard.com/ Accessed January 27, 2020
  • McDonald’s Corporation (2019). Form 10-K For the fiscal year ended December 31, 2018. Available at http://d18rn0p25nwr6d.cloudfront.net/CIK-0000063908/94ad07bd-66c3-433c-a81e-94f1587b0ed8.pdf Accessed January 27, 2020
  • Dunkin Brands (2018). Annual Report 2018. Available at: http://investor.dunkinbrands.com/static-files/7a1e2ad8-3f4e-49d1-9126-1e2b7c43b012 Accessed January 27, 2020
  • Interbrand (2020). Best Global Brands 2019. Rankings. Available at: http://interbrand.com/best-brands/best-global-brands/2019/ranking/ Accessed January 27, 2020
  • Forbes (2020). The World’s Most Valuable Brands. Available at: http://www.forbes.com/powerful-brands/list/ Accessed January 27, 2020
  • Starbucks (2020). Starbucks Company Recognition. Available at: https://www.starbucks.com/about-us/company-information/starbucks-company-recognition Accessed January 27, 2020
  • Starbucks (2018). Starbucks Card, Loyalty & Mobile Dashboard. Available at: https://s22.q4cdn.com/869488222/files/doc_financials/quarterly/2019/q4/FY19_Q4_Digital-Dashboard_Final.pdf Accessed January 27, 2020
  • Fast Food Menu Prices (2020). Starbucks Prices. Available at: http://www.fastfoodmenuprices.com/starbucks-prices/ Accessed January 27, 2020
  • Fast Food Menu Prices (2020). McDonald’s Prices. Available at: http://www.fastfoodmenuprices.com/mcdonalds-prices/ Accessed January 27, 2020
  • Fast Food Menu Prices (2020). Dunkin’ Donuts Prices. Available at: http://www.fastfoodmenuprices.com/dunkin-donuts-prices/ Accessed January 27, 2020
  • NASDAQ (2020). Coffee. Available at: https://www.nasdaq.com/market-activity/commodities/kt%3Anmx?timeframe=10y Accessed January 27, 2020
  • Beverage Marketing Corporation (2014). Press Release: The U.S. Liquid Refreshment Beverage Market Remained Flat in 2013. Available at: http://www.beveragemarketing.com/news-detail.asp?id=299 Accessed January 27, 2020
  • Beverage Marketing Corporation (2015). Press Release: The U.S. Liquid Refreshment Beverage Marketing Enlarged in 2014, Reports Beverage Marketing Corporation. Available at: http://www.beveragemarketing.com/news-detail.asp?id=335 Accessed January 27, 2020
  • Beverage Marketing Corporation (2016). Press Release: The U.S. Liquid Refreshment Beverage Market Accelerated in 2015, Reports Beverage Marketing Corporation. Available at: http://www.beveragemarketing.com/news-detail.asp?id=382 Accessed January 27, 2020
  • Beverage Marketing Corporation (2017). Press Release: The U.S. Liquid Refreshment Beverage Market Accelerated Again in 2016. Available at: http://www.beveragemarketing.com/news-detail.asp?id=439 Accessed January 27, 2020
  • Beverage Marketing Corporation (2018). Press Release: U.S. Liquid Refreshment Beverage Market Retail Dollars and Volume Both Grew in 2017, Reports Beverage Marketing Corporation. Available at: https://www.beveragemarketing.com/news-detail.asp?id=485 Accessed January 27, 2020
  • Beverage Marketing Corporation (2019). Press Release: U.S. Liquid Refreshment Beverage Market Retail Dollars and Volume Growth Accelerated in 2018. Available at: https://www.beveragemarketing.com/news-detail.asp?id=554 Accessed January 27, 2020
  • United Stated Department of Agriculture (2018). America’s Eating Habits: Food Away From Home. Available at: https://www.ers.usda.gov/webdocs/publications/90228/eib-196_ch3.pdf?v=8116.5 Accessed January 27, 2020
  • Lock, S. at Statista (2019). Size of the coffee shop market in the United States in 2018 and 2019. Available at: https://www.statista.com/statistics/1032200/coffee-shop-industry-market-size-us/ Accessed January 27, 2020
  • Brown, N. at Daily Coffee News (2019). 2019 Coffee and Beverage Trends: Inside the NCA’s Annual Report. Available at: https://dailycoffeenews.com/2019/03/11/2019-coffee-and-beverage-trends-inside-the-ncas-annual-report/ Accessed January 27, 2020
  • Grand View Research (2019). Cold Brew Coffee Market Size, Share & Trends Analysis Report. Available at: https://www.grandviewresearch.com/industry-analysis/cold-brew-coffee-market Accessed January 27, 2020
  • Grand View Research (2019). Cold Brew Coffee Market Worth $1.63 Billion By 2025 Available at: https://www.grandviewresearch.com/press-release/global-cold-brew-coffee-market Accessed January 27, 2020
  • Calorie King (2020). McDonald’s Cheeseburger. Available at: http://www.calorieking.com/foods/calories-in-sandwiches-burgers-burger-cheeseburger_f-ZmlkPTEwMDk0Ng.html Accessed January 27, 2020
  • Calorie King (2020). Starbucks Pumpkin Spice Latte with Soy Milk, without whipped cream. Available at: https://www.calorieking.com/us/en/foods/f/calories-in-beverages-pumpkin-spice-latte-with-soy-milk-without-whipped-cream/–37HK4kTx6OEqb0LEkZXA Accessed January 27, 2020
  • Trading Economics (2020). China GDP Growth Rate. Available at: http://www.tradingeconomics.com/china/gdp-growth-annual Accessed January 27, 2020
  • Bai, T. at Pan daily (2019). The Coffee Chain that Came Out of Nowhere with the Potential to Beat Starbucks in China. Available at: https://pandaily.com/the-coffee-chain-that-came-out-of-nowhere-with-the-potential-to-beat-starbucks-in-china/ Accessed January 27, 2020
  • Starbucks Mission Statement
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  • SWOT Analysis of PepsiCo (5 Key Strengths in 2023)

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Business Strategy Hub

Starbucks SWOT 2024 | SWOT Analysis of Starbucks

Written by S. K Gupta | Last updated: Jan 13, 2024

  Company:  Starbucks  CEO:  Laxman Narasimhan Year founded :  1971   Headquarter :  Seattle, USA Number  of Employees (FY2022):  402,000 Type:  Public Ticker Symbol:   SBUX Market Cap (Feb 2023):  $116.77 Billion Annual Revenue (FY2022):  $32.25 Billion  Profit (Net income) (FY2022):  $3.28 Billion

Products & Services:   Coffee | Handcrafted Beverages | Fresh food | Non-food items | Packaged goods | Mugs and accessories | Gifts |  Competitors: Costa Coffee | McDonalds McCafe | Dunkin Donuts | Café Coffee Day | Tim Hortons | Costa | Panera Bread |   

Did you know? There are 87,000 possible drink combinations at Starbucks.

Table of Contents

An Overview of Starbucks

Starbucks is the world’s largest American coffeehouse chain that operates 18,253 company operated and 17,295 licensed stores  worldwide. It was founded in Seattle, Washington in 1971.

With the invigorating vision of Howard Schultz (current Executive Chairman), it became more than a coffeehouse, a third place between work and home. Laxman Narasimhan  is the new CEO of Starbucks.

SWOT analysis of Starbucks

The SWOT analysis of Starbucks is as follows:

Starbucks Strengths – Internal Strategic Factors

1. Strong brand image

Starbucks Corporation is the most popular and strongest brand in the food and beverage industry . Its size, volume, and the number of loyal customers have kept growing over time. It has  a brand value of $14.05 Billion  as per 2022  Interbrand ranking. 

2. Strong financial performance

With an annual revenue of $32.25 billion and profit of $3.28 Billion in fiscal year 2022, Starbucks has a strong financial position in the market.

3. Growth in stores

It increased its number of stores from 1,886 to 35,711  between 1998 and 2022. Currently, Starbucks operates two types of stores i.e. company operated and licensed stores. It has  18,253 company operated stores  and 17,458 licensed stores  globally. Company operated stores generate ~82% of the total revenue. 

4. Extensive international supply chain

Starbucks is known to have an extensive global network of suppliers. Starbucks sources its coffee beans from three coffee producing regions, Latin-America , Africa , and Asia-Pacific . 

5. Acquisitions

Company has acquired top 6 companies including Seattle’s Best Coffee , Teavana , Tazo , Evolution Fresh , Torrefazione Italia Coffee , and Ethos Water . These acquisitions have proven quite successful for Starbucks.

6. Moderate diversification

Starbucks has also diversified its business operations by introducing innovative merchandises and food items. One such example is the addition of ice cubes made of Coffee which results in a stronger Coffee flavor.

7. Quality, Taste and Standardization

Due to its premium blends and delicious coffees, Starbucks has extended globally. It offers excellent quality and consistently standardized products in all the locations.

8. Efficiency, Strategic Planning, and Reinvestment Strategy

Starbucks reinvests its profits in expanding its business in different locations. Its efficient operations and well-planned strategic decisions have produced many advantages for the company.

9. Employee treatment

It treats its employees very well which eventually translates into happier employees serving customers well. Starbucks has been consistently listed as one of the Fortune’s Top 100 Places to Work for.

10. Strong Loyalty Program

Starbucks has a great reward program that keeps customers addicted to its coffee. For every $1, you get 3 stars ($1 = 3 stars). When you collect 150 stars, you get a free drink (150 stars = 1 free drink). In addition, reward members get the convenience of mobile payment , pre-order, free birthday drinks, etc.

11. Increase starting wage for baristas

The coffee giant has increased the minimum starting wages of all its baristas to $15/hour in 2022.  Moreover, Starbucks plans to have an average salary wage of $17/ hour for its baristas, according to a company statement. Starbucks’ tenured workers will receive up to a 5% wage increase with two or more years of service. The hourly wages were increased throughout the pandemic due to labor shortages. 

12. Gender Neutral Restrooms

Starbucks has introduced gender-neutral restrooms to protect Lesbian, gay, bisexual, and transgender (LGBT) community against discrimination. It is in response to Anti-LGBTQ bills that discriminate against specially transgender people. 

Starbucks SWOT analysis shows that starbucks has introduced gender neutral restrooms

Starbucks Weaknesses – Internal Strategic Factors

1. High prices

For many middle tiers and working consumers, Starbucks’ offerings are more costly than McDonald’s and other coffee outlets. Its high prices reduce affordability for the consumers.

2. Imitability of products

Starbucks doesn’t own the most unique products in the market. This makes the imitability of products quite easy for other companies. Other coffee shops and food chains like McDonalds McCafe   and Dunkin Donuts offer almost the same products.

3. Generalized standards for most products

Some of its product offerings are not aligned with the cultural standards of other markets. For example, in some areas, its crafted beverages do not associate with the consumer preferences.

4. European Tax avoidance

Due to its tax avoidance in the UK, it faced several controversies and criticisms. Reuters’ investigation found out that it didn’t pay tax on its £1.3 billion of sales in three years prior to 2012.

5. Procurement Practices

Many social and environmental activists criticized the company for their unethical procurement practices. They claimed that it procures coffee beans from impoverished third world farmers. It has also been accused of violating “ Fair Coffee Trade ” principles.

6. Recall of Products

Over the years Starbucks has recalled a lot of in-demand products. This can negatively affect the brand image of the company and lead to the loss of customer base .

In March 2016, Starbucks recalled two products . One was the sausage, egg, and cheddar breakfast sandwich and the other was cheese and fruit bistro box. The reason for recalling these products was the threat of contamination and allergens .

During routine testing, it was revealed that the facility that manufactured the breakfast sandwiches had the presence of Listeria Monocytogenes on the contact surface.

The 250 stores in Arkansas, Texas, and Oklahoma that showcased these sandwiches had to remove them. The cheese and fruit bistro box was recalled because it contained the almonds found in the box contained traces of undeclared cashew nuts .

There was no warning label that highlighted the presence of cashew nuts. This could be potentially life-threatening for people with cashew allergies.

7. Worst holiday drink

According to a poll carried out by Mashed , more than 21% of coffee lovers absolutely hate Starbucks’ “ Iced Latte .” Starbucks premiered it as a festive Christmas holiday drink. But sadly, the drink turned out to be a downer. A lot of people said that Starbucks’ iced latte leaned too much on the sweet side, absolutely not worth the steep price .

Starbucks Opportunities – External Strategic Factors

1. Expansion in developing markets

Starbucks has coffeehouses mainly in the US. Global expansion in emerging economies such as India, China and few regions of Africa can give a great opportunity to the company.

2. Business diversification and Products Specifications

It can further diversify its business operations to improve overall revenue growth opportunities. Besides, developing products as per the customer preferences in the specific target market is also a profitable opportunity.

3. Introducing new products

As the company is quite popular, introducing new products and holiday flavors (Peppermint Mocha, Eggnog Latte, Gingerbread Loaf) under its name would be profitable and welcomed in the markets.

4. Partnerships or alliances with other firms

Co-branding always benefits. Starbucks has the opportunity to develop partnerships and alliances with major firms. This would strengthen its presence and market share .

5. Exploit Latest Coffee Trends and Technologies

Although Starbucks is at the forefront of cutting-edge coffee technology, there is still room for expansion. From best foam technology to snap-chilling, back to black, and RSI-reducing gizmos, there are endless possibilities offered by the latest coffee trends and technologies.

6. Adopt Price Differentiation

Some coffee houses are growing their customer base rapidly by offering regular and premium coffee to cater to different classes. Starbucks can offer regular coffee that is priced lower to capture the middle-class while serving its expensive variety as premium. 

7. Strengthen Online Channels

The pandemic has discouraged in-store consumption with more coffee drinkers opting for take-away. Starbucks can strengthen its online sales channels to attract more customers to pick their coffee curbside or in pickup locations.  

8. Coffee Delivery Service

Currently, customers rely on Uber Eats , Grubhub , Doordash and Postmates for its Starbucks coffee delivery. Starbucks can start its own coffee delivery service for better customer experience.

9. Coffee Subscription

Panera bread has already started coffee subscription service. Starbucks can also try new coffee subscription business model  to expand its customer base.  

Starbucks Threats – External Strategic Factors

1. Competition with low-cost coffee sellers

Many coffeehouses offer products at an affordable rate. This can threaten the future’s stability of Starbucks which offers higher prices.

2. Competition with big outlets

Aggressive competition with multinational companies like Dunkin Donuts and McDonald’s can also pose a threat to its market position .

3. Imitation

Products can be imitated by both new and old rivals.

4. Third-party Delivery Suppliers (union) Strike

Starbucks’ supply chain consists of many third-party contractors and stakeholders, which makes it difficult to manage the entire chain effectively. In 2019, Starbucks coffee houses in the Mid-West grappled with shortages after employees of a major supplier went on strike.

5. Independent coffeehouse movements

There are many sociocultural threats for Starbucks. These sociocultural movements support small independent and local coffeehouse and oppose the expansion of large multinational chains.

6. Controversy on California warning rule

A California judge ruled Starbucks and other companies in March 2018 to provide warning labels on all their coffee products. This was about preventing a violation from chemical use that may cause cancer.

7. Philadelphia arrests

April 2018, two African-American men were arrested at Starbucks that caused quite a controversy on social media against Starbucks. Starbucks employees refused them to use the restroom because they didn’t purchase anything. The CEO Kevin Johnson issued an apology to both men eventually.

8. Coronavirus

It is expected that pandemic will continue to have significant impact on Starbucks financials performance due to reduced customer traffic and store hours .

For example, Starbucks had to temporarily close estimated 2000 stores in China due to the outbreak of coronavirus. Considering Starbucks has 4123 stores in China, and almost half the stores were closed during the peak of the pandemic.  

9. Change in customer behavior

Experts predict the pandemic will continue changing customer behavior and tightening discretionary spending . In addition, the decline in the restaurant industry and other macroeconomic factors can adversely affect Starbucks’ development plans and operations.

10. Rising Prices of Raw Coffee Beans

The  price of raw coffee beans  – Arabica , the world’s most-produced coffee (representing over 60% of the world’s production), has increased drastically during the pandemic due to concerns over its availability, hoarding, and supply chain disruption. Any additional dollar channeled to purchase raw coffee beans at an increased price reduces Starbucks’ profitability.  

11. Negotiation with Buffalo workers in favor of unionizing

In December 2021, Starbucks set meetings to negotiate with its Buffalo workers that voted for unionizing . The company stated that they would talk things out with the voters in good faith , reaching a mutual understanding. However, Starbucks made its stance clear in a letter sent to its US workers that it will not back the idea of unionizing. 

12. Starbucks put on the spot for dietary racism

Dietary racism involves compelling BIPOC communities (Black, Indigenous, and People of Color) to eat unhealthy foods, offering limited food options at cheaper costs. According to a publicity stunt by Switch4Good , the prank effectively called out Starbucks on its tactics.

Starbucks SWOT | SWOT analysis of Starbucks

Recommendations

Starbucks needs to bring some improvements and advancements in the company to keep its market position stable and strong.

For this, few recommendations are given below:

  • Introduce diversification in products and services offerings. This will help strengthen their position.
  • Bring innovation and technological advancements in the company to deal with the rising competition and imitation.
  • Resolve the issues with the social activists that oppose international market players.
  • Reduce prices of the products to attract more customers and increase the affordability for all classes of consumers.
  • Implement creative marketing campaigns , promotional activities, and branding strategies .
  • Contribute to community development , participate in Corporate Social Responsibility (CSR), and sustainability practices .

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S.K. Gupta

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starbucks swot analysis essay

This SWOT analysis is so professional , knowledgeable and helpful for the readers . A worth reading write up . Respect !

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Thank you !!!

starbucks swot analysis essay

Thank you! Very detailed and thorough.

Thank you Shauna for the word of appreciation, glad you liked our analysis.

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This is very good

Thank you !

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It was quite interesting to read the SWOT analysis of Start Buck

Glad you liked it Shekhar. Happy Reading 🙂

starbucks swot analysis essay

I think the new labor cuts are going to work the crew more to a breaking point in high sales stores, only having 3 total workers in the afternoon and having high sales, will make lines long, wait times will be long, and customers pulling off an walking out. Also the stress level for workers will make them stressed and customers stressed also. It’s a know fact that increase sales you need more labor, cutting hours will not help you build sales, it only helps your bottom line and at a large cost to crew and customer base.

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Marketing Research “Starbucks”

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“Starbucks”

The contemporary business environment includes a myriad of companies, which have successfully obtained leading positions in the fields of their performance. One of the companies which became world-famous is Starbucks. Howard Schultz, the Starbucks CEO, believes that the secret of the company’s success lies in its openness, transparency, and readiness to fulfill customers’ needs according to their changeable tastes. High quality is one of the major terms describing the performance of Starbucks. Nevertheless, its marketing campaign deserves significant attention in order to show the company’s advantages and disadvantages in the field of the coffeehouse. Hundreds of companies strive to imitate the Starbucks business platform and marketing approach in order to have a chance to improve their market positions. However, Starbucks very well knows the price of success generated through the years of the company’s performance. Starbucks ‘ advantages, areas of improvement, major success factors, marketing mix, and SWOT analysis show the company’s strong market position, and sustainability of financial resources brought by wisely developed management.

Starbucks Advantages

It would be impossible to develop a successful marketing campaign without making high-quality products. Thus, the major advantage of Starbucks lies in the company’s selectiveness of coffee beans. At the beginning of the manufacturing process at Starbucks, the company manages all production stages, which start from growing coffee plants, selecting the best coffee beans, roasting coffee beans inappropriate manner, and ending with grinding coffee beans and mixing them with other ingredients of a delicious coffee drink. It shows the company’s responsibility for every process in the delivery of high-quality drinks to every customer. Besides, Starbucks has worked on removing unnecessary manufacturing processes, which helped to save costs and avoid careless spending of financial resources. What is more, the company has invested in training sessions of its personnel, who willingly support the reputation, image, and brand of Starbucks. In this way, the company has gained financial sustainability that helps it to develop unique competitive advantages in the development of its marketing campaign.

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starbucks swot analysis essay

Starbucks ‘ remarkable attitude to responsibility has also helped it to build a sustainable environment for both employees and customers. For example, ethical trading is one of the terms that characterize the company’s performance. Starbucks works on making its performance as transparent and justified as possible (Haskova, 2015). The company is engaged in trading relations with farmers all over the world and has signed long-term contracts with them in order to provide customers with high-quality coffee beans, which other companies do not have.

Another peculiarity of Starbucks is its environmental awareness, which encourages others to participate in the initiatives aimed to save the surrounding environment. Reusable cups are the main advantage of Starbucks, which has made it easier for the company to protect nature by reducing the pollution rate coming from its production. Moreover, Starbucks continuously works on the engagement of employees and customers in environmentally friendly activities, including planting trees or collecting garbage (Atzori, Shapoval, & Murphy, 2016). All these initiatives intensify the beneficial influence of Starbucks on the surrounding environment, as well as an appreciation of the company’s performance in society. Starbucks, in its turn, has gained success owing to emphasizing personal uniqueness and importance to others. Every activity generated by Starbucks has a special meaning to the company’s strategic success, which finds its emphasis in the willingness of the company to reach excellence in every process (Atzori et al., 2016). In this reference, perfectionism is one of the advantages, which inspires Starbucks to work on continuous improvement of its products, services, and strategic plans aimed to lead the company to another level of success.

Starbucks Areas of Improvement

In terms of marketing development, certain drawbacks existing in the performance of Starbucks should be outlined. It is estimated that Starbucks welcomes approximately 9 million visitors every day. The company still does not have an Internet network, which could unite all customers in the best traditions of the digital era. It could become one of the most beneficial aspects of extending the influence of Starbucks in a global way. The company has already earned its competitive position owing to the development of unique character traits of business (Haskova, 2015). The company should also work on capturing the attention of all existing and potential customers simultaneously. It would become another benefit, which would have a positive influence on the development of Starbucks ‘ competitive advantages.

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Personalization is another aspect, which should have a better representation in the company. Writing names on coffee cups is only a small idea, which the company could implement in order to become more successful. For example, the company may offer a myriad of stylistic cups according to the season of the year. It means that customers should have more freedom in choosing cups and other appliances in order to emphasize their individualism while attending the company’s coffee houses. In addition, online application existing at Starbucks should incorporate another option, which could lie in the design of coffee cups (Atzori et al., 2016). It would attract customers’ attention and engage them in the process of improving the company’s improvements (Hossain & Islam, 2015). In this way, the customers will express more loyalty and dedication to the company that respects the opinion of every visitor.

Finally, Starbucks could work on the engagement of its customers in marketing campaigns. Advertising can be effective not only with celebrities and sports figures but also with customers. It would be interesting to introduce contests for customers to compete with each other to become a part of the company’s advertising campaign (Hossain & Islam, 2015). In addition, this could show potential customers the opportunities provided by Starbucks for all visitors regardless of their financial capacities (Haskova, 2015). In this way, Starbucks may build another competitive advantage, which will support its expansion initiatives owing to the active engagement of visitors in the development of the company. It would be useful to see the effect of customers’ participation in the achievement of the company’s success regardless of the size of obtained revenues and profits.

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Starbucks Success

The company’s success lies in its remarkable ability to address customers’ needs above the company’s aspirations. It became clear to Starbucks that customers are willing to receive excellent service and high-quality coffee regardless of the pace of their business activity. In particular, Starbucks became the market leader in addressing customers’ needs in their morning routine, namely, in enjoying their cup of coffee that helps to wake up and approach the planned activities for the day. Starbucks employees come half an hour earlier before the stores open in order to service hurrying customers willing to enjoy their coffee on the way to their jobs (Haskova, 2015). In fact, Starbucks has managed to create a place for customers with different tastes. To be more specific, the company has diversified its menu not only with coffee drinks but also with smoothies, tea, and various snacks, which meet the needs of both adults and children. Does Starbucks also have some options for vegetarians who enjoy visiting the caf? likewise. In addition, Starbucks offers caffeine-free drinks, which allow visitors to enjoy any beverage according to their taste (Hennessey, 2012). The deep respect of customers’ needs has helped Starbucks gain strong loyalty from its customers that willingly purchase various products at the company.

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Its reliability helps Starbucks to serve customers with full responsibility. Baristas undergo continuous training sessions in order to prepare high-quality drinks without any delays. The company also provides guidelines for locating coffee machines, fridges, and other necessary utensils of every store inappropriate manner. It reduces the time baristas spend on making orders of the customers. Starbucks provides its customers with not only speedy service but also an appropriate environment for rest, work with free Wi-Fi connection, or heart-to-heart communication with friends. Regardless of the highly competitive environment, Starbucks rivals, such as Dunkin Donuts, The Coffee Bean & Tea Leaf, and Peet’s Coffee, cannot expand their businesses to the same degree as Starbucks (Hennessey, 2012). It happens because of Starbucks ‘ unique environment and specific atmosphere, which supports the company’s competitive advantages, as well as its marketing campaigns. In fact, the marketing mix of Starbucks should be taken into consideration in order to understand its marketing approach to managing a business.

Marketing Mix

Companies tend to use a marketing mix in order to perform a full-scale analysis of customers’ expectations, which allows understanding their needs, tastes, and requirements for products and services offered by the companies. The probability of success in the development of effective marketing mix components depends on the company’s target audience, market penetration with competitors, and goals of the marketing campaign in general. Starbucks has always been following an aggressive marketing strategy in order to remain competitive in the market full of companies engaged in coffeehouse business (Haskova, 2015). This approach penetrates every decision of Starbucks, including its logo, which has been changing constantly in order to be more attractive to the company’s customers. A common marketing mix consists of products, places, promotions, and pricing strategies. Every component in the marketing strategy of Starbucks should be deeply analyzed in order to see its effectiveness and influence on the company’s competitive position.

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Continuous innovation of products and services offered by Starbucks indicates the company’s sophisticated approach to making personal performance unique. The purpose of Starbuck’s work on innovation of the elements of its marketing mix lies in the company’s desire to obtain unique competitive advantages. Today, Starbucks offers its customers a myriad of products, including coffee, tea, pastries, coffee beverages, smoothies, and merchandise (instant coffee, mugs, souvenirs, etc.) (Hennessey, 2012). The composition of the current product mix is a result of historical transformations, which have occurred at Starbucks. The company has worked on making its products not only unique by adding different coffee flavors but also making the environment of every store comforting and peaceful. It favored the effective distribution of the company’s products, as well as its outstanding service (Atzori et al., 2016). In general, acquisitions, as an element of a policy, have helped Starbucks to add new products. For example, in 1994 Starbucks purchase the Coffee Connection, which added a Frappuccino coffee line to the common list of Starbucks products (Haskova, 2015). Innovation helps Starbucks to develop new products and attract customers’ attention by new delicious tastes.

Places also represent a significant part of the marketing mix of Starbucks; they deserve particular attention. Places incorporate the areas of distribution, where customers may gain substantial benefits from enjoying their coffee drinks. The company is critical about the location of its stores and the distribution of products in general. The main places of distribution include cafes, online stores, Starbucks application, and retailers (Haskova, 2015). The earliest years of the company’s development have shown considerable success from selling Starbucks products in cafes. Nevertheless, the sustainable development of the coffee house market and the company’s competitors have made it difficult to succeed in this growing business. As a result, Starbucks has quickly developed new areas of distribution. For example, Starbuck’s application became one of the company’s latest innovations, which not only follows the fashion of the digital era but also creates new opportunities for selling products. Owing to the application, customers do not have to wait in a queue in order to receive their drinks. Instead, customers pay for their drinks via the application and come to the nearest store to receive their purchase. Market conditions, technologies, and changing fashion effect the transformation of distribution spots, which prove the company’s aspiration to remain a primary leader in the field.

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Promotions occupy another valuable place in the company’s performance, which is mainly achieved by means of advertising. This component of the company’s marketing mix creates additional communication strategies aimed to spread information about the company’s products. In particular, advertising, public relations, and sales promotions represent the highest value in the marketing mix of Starbucks. Internet, television, and media help Starbucks to remain competitive. For example, celebrities help to spread the popularity of Starbucks. Hundreds of candid photos with celebrities show that Starbucks is worth tasting, which inspires fans to enjoy the company’s coffee drinks as if they were drinking them with their idols. In addition, Starbucks takes the benefits of the Starbucks Card, which allows customers to purchase their favorite drinks at discount prices (Haskova, 2015). Sales promotions also find support from the company’s public relations. The company works on continuous engagement in various social events, which attracts the attention of customers. In addition, Starbucks is considered as one of the most responsible companies in terms of corporate social responsibility (CSR), which makes it a reliable employer and manufacturer.

Finally, the pricing strategy obtains another significant position in the marketing mix of Starbucks. The company enjoys the benefits of a premium pricing strategy, which follows the tendencies in customers’ tastes. The strategy allows accommodating the readiness of customers to purchase expensive products based on the existing correlation between high value and high prices. Regardless of the fact that Starbucks coffee drinks are more expensive than those of their competitors, customers are willing to make purchases at Starbucks owing to the company’s top market position. Starbucks supports its image of a premium brand by offering its customers high-quality drinks. The company does not strive to attract customers by low prices and low quality. Instead, the company recognizes the high level of its prices, which reflects the company’s efforts to making high-quality drinks that bring a unique experience to its customers. In this reference, the Starbucks pricing strategy finds its justification. The company aims to support this strategy regardless of the influence coming from the external environment full of competition and market pressure.

SWOT Analysis

Due to the fact that Starbucks occupies a leading position in the segment of companies working in the coffeehouse industry, particular consideration should be given to the company’s strengths, weaknesses, opportunities, and threats. A detailed SWOT analysis will show the company’s benefits and drawbacks caused by the influence of the external environment. Nevertheless, internal factors should also be carefully studied in order to see their essence in the analysis of the company’s performance. The company aims to consider all elements of SWOT analysis in order to expand its opportunities and eliminate threats by supporting strengths and reducing weaknesses.

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The company’s strength lies in the perspective of internal factors, which form the basis of its business platform. First, the role of a strong brand image should be outlined, for it helps to build a reputation for high-quality business. The brand represents the company’s position in the market based on internal factors of the company’s performance. Starbucks attended to making its performance outstanding owing to the continuous improvement of its reputation, particularly customers’ service and relations with suppliers (Haskova, 2015). The growing number of loyal customers helps Starbucks maintain its competitive position and declare the implementation of its strategic plans. The company’s extensive global supply chain is another strength, which builds the competitive advantages of Starbucks. The company seeks for suppliers with the best quality of coffee beans. It makes the performance of Starbucks unique and outstanding. Finally, diversified business by means of subsidiaries supports the company’s strengths and extends the opportunities in the growing market of coffeehouses.

Regardless of Starbuck’s strong position in the market and its responsibility, there are significant weaknesses, which create tension over the company’s sustainability. Unfortunately, rising product prices prevent the company from meeting the needs of all customers. The pricing strategy, in its turn, depends on the cost of raw materials provided by suppliers. In this reference, the company struggles to find a sense of balance in cost-effective prices, which would meet the needs of a broader range of customers and the requirements of business performance. Generalized products also create significant tension in certain aspects of the culturally based distribution of products. For example, the company does not change the design of its cups depending on the area of distribution (Haskova, 2015). On the one hand, it supports the company’s brand by means of globalization. On the other hand, the company loses an opportunity of spreading its global presence based on cultural transformation. In this connection, the company should work on eliminating the negative influence of imitable products, which make Starbucks too similar to its competitors.

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Regardless of the success, Starbucks has already achieved, there exist many opportunities, which can make business more sophisticated and unique. First, the company has an opportunity of spreading its performance to the Middle East, Africa, and East Asia. It has a minimal presence in this area, which means that there is a vast segment of customers not involved in the company’s revenue generation strategy. In addition, the company has not addressed the issue of diversification of its product line to the full extent. Further diversifications would contribute to increasing the company’s influence on customers’ tastes and their purchasing readiness. Finally, the company should practice alliances with other firms in order to generate significant benefits in its performance.

The company’s biggest threats are posed by the external environment, which has a potential danger to reduce the company’s productivity and sustainability. In particular, low-cost coffee sellers represent the biggest threat to Starbucks (Haskova, 2015). These companies offer their customers coffee drinks at lower prices, which may discourage some Starbucks visitors from buying their favorite drinks. Even most loyal customers may feel the desire to try cheaper drinks in order to save personal costs. Imitation of Starbuck’s performance may become another threat. Companies tend to benchmark Starbuck’s activity in order to experience the same success. As a result, Starbucks may find it hard to compete with companies that are striving to replace it. All these aspects characterize Starbucks as a world-famous company, which has managed to become a leader in the coffeehouse market.

A thorough analysis of Starbucks ‘ performance has shown the company’s legendary way to success, which has created a space for further internalization and global expansion of Starbucks. The company has learned how to address customers’ needs and tastes in a unique way, which does not have any alternatives among the performance of its competitors. The primary advantage of Starbucks is the fact that it provides its visitors with a comfortable environment full of care and understanding. A diversified product mix also meets the needs of most demanding customers, which reflects the diversity of contemporary lifestyles. Adults and children can find their favorite drinks and snacks, busy entrepreneurs can come before the store’s opening hours and purchase coffee while hurrying to their workplaces, and vegetarians can enjoy their vegan foods and drinks without fear of eating something not belonging to their diet. This is the way, in which Starbucks establishes its competitive advantages by satisfying customers’ needs.

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Starbucks Company Analysis

Company synopsis.

The company’s synopsis makes it clear that it only sold drinks when it was started when Howard Schultz bought it and made it sell coffee as a bar. This development to a coffee bar made it shift and have new consumers as the product changed from the original product the company used to manufacture. This led to more companies that also offered coffee emerging, but this did not affect Starbuck company much as it continued to grow much more in terms of revenue, the opening of new stores to increase the scale of operation and serve more customers, and also increase in the profit for the sales in the company, as the consumers and the market for the company were still increasing.

As discussed by Howard Schultz, this company was a victim of its overexpansion as it used its growth as a competitive strategy and edge in operation rather than considering other business operation tactics, which led to the company having difficulties in financial issues. The company then considered closing the stores that were not performing well and operating internationally as initiatives to ensure that the company was doing well in terms of customer service delivery and profit-making (Geereddy, 2017). This led to the company returning to its original operation goal and increasing its brand value.

SWOT analysis

Starbucks has many strengths that can make it move forward, including its big brand name and a growing capability that withstands and outweighs its new invading competitors from the market Sarsby (Sarsby, 2016). The company ensures that there is customer satisfaction and that there is quality assurance in the company.

The company used its fast-growing capability and ability as an operational strategy rather than majoring in the tactics that will enable it to grow further to operate in the international market. This led to the company’s underperforming branches (Benzaghta et al., 2021). This pulled the company back and made the competitors use it as a competitive edge.

Opportunities

The company has a big brand name that can work as security in financial institutions. This can lead to the company being able to obtain more finances for operation and also lead to the company increasing the scale of operation to operate at the international level (Aiello, G., & Dickinson, 2019). Having a good brand name makes the company more competitive in the market as it can lead to more customers, leading to the company making more profits.

There are threats from the competitors as new companies are also making similar products in the same market that the Starbucks Company serves. This is a threat to the company because it can be outweighed in the market by a small mistake happening in the market.

Situational analysis

Situational analysis majors on the 5c analysis: our company, customers, and climate. Collaborators and competitors.

Majoring on the company has a brand name that enables it to have a large market to serve, as the customers are attracted to purchase its products (Clarke et al., 2019). The company also used advanced technology in production and also customer service, which has improved the quality of production in the company.

Looking at the customers, the company serves a large base of customers as the product sold by the company is not specified on gender or sex. This makes the company have unspecified customers to serve, which makes the company serve a large number of customers to serve. The company also ensures it sustains its customers by operating fairly on them and maintaining affordable prices.

Competitors

The company has highly developing competitors as new companies evolve and produce the same product as Starbucks. This makes the company improve on how it serves the customers and the quality of products it offers in the market, as the competitors can easily throw it away in case of poor performance in the market.

The company requires the climate to be sustainable because the company produces a commodity that is best consumed in a cold environment. The climate plays a critical role in the consumption of the company products.

The company has ensured that the product is affordable to the customers by considering the welfare of the customers and the economic factors affecting the customers. It has lowered the products for the commodities to suit every class of customers, making it have a large base market for the products.

Target customers

The target customers for the company include people who consume coffee drinks and related products. The company also serves many travelers and tourists who visit the area because its operation hours give it adequate time to meet its target customers (Haskova, 2020). The company has attracted many customers from different social classes due to the lower and more affordable prices, leading to more sales in the market.

How can the company improve on the success in the marketing strategy?

The company can consider serving the customers more effectively and first major on the domestic customers by ensuring that the customers are satisfied at the domestic level. This ensures that the customers in the domestic market popularise the product and have a wide knowledge of the products from the company (Chang, 2017). The company can also consider improving the technology in the production of coffee drinks to ensure improved product quality which will lead to the company building its brand name. After building this brand name, the company can successfully venture into the international market and still have a large market to serve.

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Starbucks: Strategic Management Essay

Introduction.

The study concerned with preparing strategic management procedure of “Starbucks”. This analysis would focus on a number of key points regarding the external and internal environments, strategic missions, business, corporate and global strategies, corporate governance programs, organizational structures, innovative features and many other issues of related to the strategic competitiveness to earning more than average income.

“Starbucks” at a glance

The companies was established in 1985 aimed to buy and roast better quality coffee beans and sell them as fresh as Italian style. Several accessories and machines were included to prepare coffees as ready to drink beverages. Starbucks also sells the trademarks and licenses by using a number of channels and retail stores are regarded with specialty. However, the vital goal of the company is gain international recognition with operational specialty and selective distribution channels. Annual report-2008 shows that Starbuck earns total 85% of its revenue from the own operated retail, 11% from licensing and 15% from specialty.

Strategic management process

Starbuck’s overall strategic management process could be designed as following:

Strategic management process of Starbuck

Environmental analysis

Starbuck’s environmental factors could be examined by PEST analysis as following:

  • Political factors: Starbuck has ‘gained ground’ regarding the ethics and supplier relation while it is also in a risk of imposition of greater control by China government regarding a minimum level of risks of interpretation, intellectual property enforcement and related laws while there is a chance of being penalized and restriction of launching new stores. David, F., (2008) argued that target markets of developing countries political conditions are causing the similar problems.
  • Economic factors: Starbuck scored a high net income of $9.4 billon in 2007. In 2006 it gained $7.8 billion as net revenue. At the same time licensing revenue was $1.0 billion results from the high sales growth rate and the CPG business. The company has also proved its economic excellence by a global revenue of $1.3 billion, sales growth by 8% with others income of $29 million by the year 2006.
  • Socio-cultural factors: Kotler, P. (2006) said CSR enables the company to providing social, economic and environmental satisfaction to public with 172000 competent employees.
  • Technological factors: Modern technological supported Starbucks card for customer service, convenient central management of products and pricing for international distribution are very significant with technical expertise for production line.

Environmental concern

It includes a number of factors, like- resources, capabilities and core competencies. Those are as following:

  • Resources: David, F., (2008) argued that under resource based theory, a company has 6 types of resources. Thus, Starbucks resources are:

Resources of Starbucks (Self generated)

  • Financial resources: The comparative financial possession of the company could be presented as:

Financial resources

Starbucks is capable to gain high revenue and sales growth and a better EPS all that augmented to meet up the sales target in restaurant and retail sector of USA.

  • Organizational resources: Regarding the organizational structure, Starbucks expanded in the field of retailing and situated with high traffic and visibility areas involving suburban centers, university campuses and situated outside of retails houses with various channels.
  • Physical resources: It includes land, buildings, store equipments, leasehold improvements, equipments for roasting, and furniture, fixtures and others resulting total value of $28904330 by the year 2007.
  • Technological resources: Starbucks is in top to performing its task by adopting modern technologies. For this purpose, it has implemented card system for customer service with entire process of maintaining restaurant service, retailing and global operations with innovative supports.
  • Intellectual and human resources: Starbucks R&D is enriched with scientists, chemists and culinarians who are active for technical installation of foods, beverages and other machineries. It incurs about $7.0 million, $6.5 million and $6.2 for the year 2007, 2006 and 2005 for the R&D costs relative to testing process improvements of products and corporation.
  • Reputation resources: Starbucks affords a high brand value and keeps continuous effort develop in future in North America. This reputation is the outcome of consumer perceptions about the quality, trust and ethical factors in every market segment. The generated goodwill for the year 2007 was $127636 in United States, $78289 around the world, $9700 in CPG and a total of $215625 in total.

SWOT analysis Starbucks Corporation

  • Starbucks has outstanding brand awareness and quality image which helps to.
  • It has websites to cover spread its business all over the world.
  • It has skill and efficient employees and administration.
  • It has make huge profit from capital lease, in last three years it has made $12.8 million from lease capital.

Weaknesses:

  • Pricing and availability for all sorts of customers.

Opportunities:

  • Starbucks has strong capital and resources for further expansion.
  • Increased consumer interest on new products.
  • Competitors are the main threats for Starbucks Corporation
  • Last year it had failed to meet market expectation

Capabilities

Capabilities enable the company for creation and exploitation of opportunities for the development of sustainable advantages while a utilization of adroitness and insights. The flow of capabilities of the company can be shown as:

Capabilities of Starbucks

  • Building of heart relationships with customers by the products.
  • Maintenance of community services and strong supply chain with the distributors.
  • Sourcing, roasting and improvement in making worldwide famous coffees.
  • Committing to the acts of environmental leadership.
  • Sharing possible and related information with stakeholders and partners.
  • Innovative and diversified adaptive tendency.
  • Controlling and evaluating the performance of every project.
  • Initiating for co- branding as well as marketing performances.
  • Operational swiftness at in store selling.
  • Effectiveness in infrastructure of administration.

Core competencies: It indicates Starbucks resources and capabilities which are providing as a modem of competitive advantage, like quality, taste, flavor and diversification that distinguish it competitive and glorify its image and personality.

Formulation of strategies

Thompson, A., argued that strategic options are coordinated and interrelated set of actions that has been designed for exploiting the core capacities and competencies for achieving competitive advantage. So, according to the standard model, Starbucks generate several strategic options through some systematic phases from business- level to co- operative strategy:

Primary phases of formulating strategy

Thus, a number of strategies at this level are as:

Business- level strategy

Starbucks can generate this type of strategy by using Porter’s generic strategy as below:

Porter’s generic strategy for Starbucks Strategy

  • By following the cost leadership strategy, Starbucks will be able to provide coffee beverages at the lowest costs in relation to other competitors’ like- McDonald’s, KFC, and Pizza Hut.
  • Dibb, S. et al (2001) argued that by following the differentiation strategy, the company can deliver unique attributes and features to the target customers. Here, Starbucks can offer the finest whole bean coffees, quality green coffees and other unique items. At the same time providing an effort to catch the customers according to their working, traveling, dinning places as a symbol of offering values at a distinctive way. The formulation of differentiation strategy can be shown as following:

The formulation of differentiation strategy

But before running with these options, the company should consider a number of factors as bargaining power of suppliers and customers and suppliers, potential entrants, substitutes etc.

  • Griffin, R. W. (2006) mentioned that the company can also adopt focused cost leadership strategy for the purpose of providing the customers with “affordable solutions for better living” by offering the products at a lower price for the particular segment of the market 9 .
  • Focused differentiation strategy will enable the company of offering unique differences to match the significant needs of a small segment of the target market.

Competitive dynamics

At this phase Starbucks can attempt to create competitive dynamics that comes from a series of competitive actions and responses among the competitors within the ready- to- drink beverage industry which may be affected by a number of factors, like- resource similarity, relative size of the firm, innovation, quality etc.

Corporate-level strategy

This concept focuses on diversification that involves the company’s retail segment offers the diversified sales mix of items for the year 2007 as:

The diversified sales mix

Acquisition and restructuring strategies

Through the acquisition strategy, Starbucks will be able to buy a control or 100% interests in other company by using the core competency more effectively through the making of the bought firm a subsidiary in the sole portfolio. So, it can consider that strategy to gain:

  • Increasing market power by horizontal, vertical or related acquisition.
  • Overcoming entry barriers in newer or less- repudiated segment, like- North America.
  • Increasing the speed to market.
  • Increasing diversification.
  • Reshaping own competitive scope etc.

For such purposes, Starbucks has bought a 90% stake in the licensed operations located in Beijing- China in the first quarter of last year. Because of the lion ownership from that acquisition, it has used the consolidation approach for the relevant data.

Another important aspect of acquisition is licensing of retail stores. Here, it leverages the zonal partners and stocks for the operational and store improvement expertise. Annual report-2008 demonstrated that by the year 2007, there were 3891 licensed stores existed in United States. Additionally, it also has this sort of relationship with Craft Foods, Inc., coffee partnership in North America with a joint partnership with Pepsi in while Starbucks has an equal investment of 50% for the bottled Frappuccino, Double Shot and espresso beverages.

Through restructuring, Starbucks will be able to sustain the fall in acquisition with others by changing the operating sets or financial structure. It can take many forms, like:

  • Downsizing for reducing the number of employees and operating units with no changing in business portfolio.
  • Downscoping for spinning off or offsetting business which are not related with its core business objectives.
  • A leveraged buyout (LBO) for purchasing all the company’s assets for the purpose of privatization.

International strategy

Since Starbucks is operating and distributing services over 15000 stores in 43 countries, to become a successful player in the international market it should consider the following factors:

  • Factors of production.
  • Demand conditions.
  • Related and supporting industries.
  • Firm’s strategy, structure and rivalry.

Hill, C., (2007) argued that its global store base is growing vastly while the company is obtaining contribution of renowned global segments by the investment and the emerging that segment. For example- China, Russia, Brazil. The current segments demand a vast support company regarding the present revenues and operating profits. In 2006, the company earned total net revenues of $1302914 from its international market because of high sales volume of goods as well as lower costs of sales involving vast distribution of fixed costs and low dairy costs which are contributing greatly for the compensation based on stocks.

Co-operative strategies

In the light of the existing plans and situations, Starbuck can develop various types of co- operative strategies as following:

  • By composition of strategic alliances, it can combine the resources, capabilities and core competencies with other firms for gaining the mutual interest in designing, distributing and producing goods.
  • By joint- ventures it can enjoy benefits by the combination of assets as it is doing now.

Implementation of strategies

The company can implement the above projected and proposed strategies by the following dimensions:

Corporate governance

It dictates the co- relation of all the stakeholders in terms of control and directive performance of Starbucks. These ruling bodies are committed for maintaining the straight and powerful principles of growth. For that issue, Starbucks board of directors has taken rules of governance and committee for charters for directing the activities. This board consists of 9 directors, minimum majorities that face all the flexible demands of NASDAQ as well as the SEC (Securities & Exchange Commission) of United States. Additionally, it has installed an ethical code in respect to the CO, CF, controller and leaders of finance for a “code of ethics” indicated by the SEC rules.

Thus, the corporate governance structure can be presented as following:

  • Board of directors: This group is responsible for performing at the owner’s profits by the systematic monitoring and controlling the business. Starbucks board of directors include Howard Schultz, Barbara Bass, Howard Behar, Mellody Hobson, Javier G. Teruel and many others as chairman, president, director, retired vice chairman etc.
  • Senior officers: It includes CEO, CFO, president, executive vice president, senior vice president for marketing, global manufacturing operations, partner resources, global logistics, Asia- pacific, global procurement and coffee, Latin America, global coffee of Starbucks, business solution etc.
  • Compensation program: The Company’s compensation schedule based on stock has been established according to the SFAS No. 123(R) or “Share- Based Payment Schedule” provision. The Black- School- Merton Model is used for pricing policy according to the subjective guesses that entitles time period for partners and stock price volatility.

Organizational structure and control

The organizational structure of Starbucks is as following:

The organizational structure of Starbucks

Since Starbucks is highly differentiated in its own industry, it basically follows the following functional structure:

Functional structure for implementing differentiation of Starbucks

Additionally, the company operates the controlling function for assurance of material data according to the SEC’s references for the timely decision making.

Strategic leadership

Starbucks maintains such issue for anticipation, envision and flexibility of the entire planning as:

Strategic leadership & management process of Starbucks

Corporate entrepreneurship and innovation: It includes about 170000 committed employees, efficient operating team, management capability and experienced R&D of which all are responsible for the company’s handsome revenues, net income and global goodwill. The company proves its environmental concern by utilizing and selling environmentally healthy goods, taking the social concern as value of the company, and other affairs.

Recommendations

To become more effective and efficient, Starbucks should concentrate on the following issues:

  • It should be alert about the expectation of market since there exist a chance of reducing the stock price at an extensive and sharp rate.
  • Should be concerned about war, terrorism or political fluctuation.
  • At present the company has to compete against the qualified restaurants in U.S.A and the established companies are offering a great threat for Starbucks.

Since the company’s another lion revenues come for international sector, it should take in mind about some risk factors:

  • Fluctuated rate of currencies.
  • Uncertain economic, social and political factors.
  • Interception of rigidity of laws etc.
  • Richer prospect and flexible contract with China government as there the company is facing a major entry barrier for laws and regulations.
  • Conducting campaigns and other efforts to remove public thoughts about the negative effects of coffee on health by illness and other fatal impacts.

Though the company typically faces all of those challenges, it is somewhat possible to handle it with an exact strategic and appropriate strategic planning and a proper management of it.

Starbucks, a core coffee company is managing the strategic process in a quite well structured way with adequate amount of resources, capabilities, core competencies, social responsibilities, innovative approach, worldwide distribution network, and many other factors for which in the previous year it has experienced targeted opening of new centers, in- store sales growth and consumers pressure in retail and restaurant business which converted into 21% of net revenues and 16% increase in earnings during that year although the company faced a number of major challenges.

Bibliography

Chernev, A., (2007), Strategic Marketing Analysis, 2nd edition, Brightstar Media, ISBN: 978-0979003912.

David, F., (2008), Strategic Management: Concepts and Cases, 12th edition, Prentice Hall, ISBN: 978-0136015703.

Dess, G., and Lumpkin, G.T. (2008), Strategic Management: Text and Cases, 4th edition, McGraw-Hill, ISBN: 978-0073404981.

Doyle P. D, (2004), Adding value to marketing: the role of marketing in today’s profit-driven organization, 2nd Editions, London: Kogan Page, ISBN: 9780749421755.

Dibb, S. Simkin, L. Pride, W. M. & Ferrell, O.C. (2001), Marketing Concepts and Strategies, 4th ed., Boston, USA: Houghton Mifflin.

Griffin, R. W. (2006), Management, 8 th Edition, Houghton Mifflin Company, Boston New York, ISBN: 0-618-35459x.

Hitt, M. A., Ireland, R. D., Hoskisson, R. E. (2001), Strategic Management, 4 th Edition, South- Western Thosmson Learning, Singapore.

Hill, C., and Jones, G., (2007) Strategic Management: An Integrated Approach, 8 th edition, South-Western College, ISBN: 978-0618894697.

Johnson, G. Seholes, K. & Whittington, R. (2006), Exporing Corporate Strategy: Text & Cases, 8th edition, London: FT Prentrice Hall.

Kotler, P., Armstrong, G. (2006), Principles of Marketing, 11th Edition, Prentice-Hall of IndiaPrivate Limited, New Delhi, ISBN: 81-203-2825-6.

Kotler, P. (2006), Marketing Management, 11th edition., Prentice Hall, NJ, ISBN: 0-13-0336297.

Kotler Marketing Group (2008), Dr. Philip Kotler Answers Your Questions on Marketing , Web.

Porter, M. E. (2004), Competitive Strategy, Export Edition, New York: The Free Press, ISBN-10: 0743260880.

Stoner, J. A. F., Freeman, R. E., Gilbert, D. R. (2006), Management, 6 th Edition, Prentice-Hall of India Private Limited, ISBN: 81-203-0981-2.

Starbucks Corporation (2008), Corporate Governance Principles and Practices for the Board of Directors, Web.

Starbucks Corporation (2008), Code of Ethics for CEO and Finance Leaders, Web.

Saloner, G., Shepard, A., and Podolny, J., (2001), Strategic Management, 2 nd edition, John Wiley, ISBN: 9780471380719.

United States Securities and Exchange Commission (2008), Form 10-K, Starbucks Corp – SBUX, Annual Report. Web.

United States Securities and Exchange Commission (2007), Starbucks Corporation – SBUX, Annual Report. Web.

Thompson, A. et al (2007), Strategic Management, 13th edition, Tata McGraw- Hill Publishing Company limited, New Delhi, India.

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Essay: Starbucks evaluation, SWOT & PESTEL

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Introduction: Starbucks Corporation is an American coffee company and coffeehouse chain. The chain was founded in Seattle,Washington in 1971, it operates 23,450 locations worldwide, including 12,937 in the United States, 2,118 in China, 1,430 in Canada, 1,158 in Japan and 869 in the United Kingdom (Differences reflect growth since December 17, 2015) Starbucks locations serve hot and cold drinks, whole-bean coffee, micro ground instant coffee known as VIA, espresso, caffe latte, full-leaf teas, Evolution Fresh juices, Frappuccino beverages,pastries, and snacks; some offerings (including their Pumpkin Spice Latte) are seasonal or specific to the locality of the store. Many stores sell pre-packaged food items, hot and cold sandwiches, and drink ware including mugs and tumblers; select “Starbucks Evenings” locations offer beer, wine, and appetizers. Starbucks-brand coffee, ice cream and bottled cold coffee drinks are also sold at grocery stores. Starbucks first became profitable in Seattle in the early 1980s, and despite an initial economic downturn with its expansion into the Midwest and British Columbia in the late 1980s, the company experienced revitalized prosperity with its entry into California in the early 1990s. The first Starbucks location outside North America opened in Tokyo in 1996; overseas properties now constitute almost one third of its stores. The company had opened an average of two new locations daily between 1987 and 2007. Founding: The first Starbucks opened in Seattle, Washington, on March 30, 1971, by three partners who met while they were students at the University of San Francisco: English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker. The three were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneurAlfred Peet after he taught them his style of roasting beans. The company took the name of the chief mate in the book Moby-Dick: Starbuck, after considering “Cargo House” and “Pequod”. Bowker recalls that Terry Heckler, with whom Bowker owned an advertising agency, thought words beginning with were powerful. The founders brainstormed a list of words beginning. Someone pulled out an old mining map of the Cascade Range and saw a mining town named “Starbo,”which immediately put Bowker in mind of the character “Starbuck.” Bowker said, ” Moby-Dick didn’t have anything to do with Starbucks directly; it was only coincidental that the sound seemed to make sense.” The Starbucks store at 1912 Pike Place. This is the second location of the original Starbucks, which was at 2000 Western Avenue from 1971 to 1976. The first Starbucks cafe was located at 2000 Western Avenue from 1971–1976. This cafe was later moved to 1912 Pike Place Market; never to be relocated again. During this time, the company only sold roasted whole coffee beans and did not yet brew coffee to sell. The only brewed coffee served in the store were free samples. During their first year of operation, they purchased green coffee beans from Peet’s, then began buying directly from growers. Sale and Expansion: →In 1984, the original owners of Starbucks, led by Jerry Baldwin, purchased Peet’s. During the 1980s, total sales of coffee in the US were falling, but sales of specialty coffee increased, forming 10% of the market in 1989, compared with 3% in 1983. By 1986 the company operated six stores in Seattle[19] and had only just begun to sell espresso coffee. →In 1987, the original owners sold the Starbucks chain to former employee Howard Schultz, who rebranded his Il Giornale coffee outlets as Starbucks and quickly began to expand. In the same year, Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois. By 1989, 46 stores existed across the Northwest and Midwest and annually, Starbucks was roasting over 2,000,000 pounds (907,185 kg) of coffee. →At the time of its initial public offering (IPO) on the stock market in June 1992, Starbucks had 140 outlets, with a revenue of US$73.5 million, up from US$1.3 million in 1987. The company’s market value was US$271 million by this time. The 12% portion of the company that was sold raised around US$25 million for the company, which facilitated a doubling of the number of stores over the next two years. By September 1992, Starbucks’ share price had risen by 70% to over 100 times the earnings per share of the previous year. →In July 2013, over 10% of in-store purchases were made on customer’s mobile devices using the Starbucks app.[23] The company once again utilized the mobile platform when it launched the “Tweet-a-Coffee” promotion in October 2013. On this occasion, the promotion also involved Twitter and customers were able to purchase a US$5 gift card for a friend by entering both “@tweetacoffee” and the friend’s handle in a tweet. Research firm Keyhole monitored the progress of the campaign and a December 6, 2013 media article reported that the firm had found that 27,000 people had participated and US$180,000 of purchases were made to date. Expansion to New Markets and Products The first Starbucks location outside North America opened in Tokyo, Japan, in 1996. Starbucks entered the U.K. market in 1998 with the $83 million USD acquisition of the then 56-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks. In September 2002, Starbucks opened its first store in Latin America, at Mexico City. Currently there are over 500 locations in Mexico. In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia. These restaurants were soon “outed” as Starbucks establishments and converted to Starbucks cafes. →In October 2002, Starbucks established a coffee trading company in Lausanne, Switzerland to handle purchases of green coffee. All other coffee-related business continued to be managed from Seattle. →In April 2003, Starbucks completed the purchase of Seattle’s Best Coffee and Torrefazione Italia from AFC Enterprises for $72m. The deal only gained 150 stores for Starbucks, but according to the Seattle Post-Intelligencer the wholesale business was more significant. In September 2006, rival Diedrich Coffeeannounced that it would sell most of its company-owned retail stores to Starbucks. This sale included the company-owned locations of the Oregon-based Coffee People chain. →In 2007, the company opened its first store in Russia, ten years after first registering a trademark there. →In March 2008 they purchased the manufacturer of the Clover Brewing System. They began testing the “fresh-pressed” coffee system at several Starbucks locations in Seattle, California, New York and Boston. →In May 2008, a loyalty program was introduced for registered users of the Starbucks Card (previously simply a gift card) offering perks such as free Wi-Fi Internet access, no charge for soy milk & flavored syrups, and free refills on brewed drip coffee, iced coffee or tea. In 2009, Starbucks began beta testing its mobile app for the Starbucks card, a stored value system in which consumers access pre-paid funds to purchase products at Starbucks. Starbucks released its complete mobile platform on January 11, 2011. →On November 14, 2012, Starbucks announced the purchase of Teavana for US$620 million in cash and the deal was formally closed on December 31, 2012. →On February 1, 2013, Starbucks opened its first store in Ho Chi Minh City, Vietnam, and this was followed by an announcement in late August 2013 that the retailer will be opening its inaugural store inColombia. The Colombian announcement was delivered at a press conference in Bogota, where the company’s CEO explained, “Starbucks has always admired and respected Colombia’s distinguished coffee tradition.” →In August 2014, Starbucks opened their first store in Williamsburg, Brooklyn. This location will be one of 30 Starbucks stores that will serve beer and wine. →In September 2014, it was revealed that Starbucks would acquire the remaining 60.5 percent stake in Starbuck Coffee Japan that it does not already own, at a price of $913.5 million. →In August 2015, Starbucks announced that it will enter Cambodia, its 16th market in the China/Asia Pacific region. The first location will open in the capital city of Phnom Penh by the end of 2015. Graph showing the growth in the number of Starbucks stores between 1971 and 2011 In early 2008, Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. Other users comment and vote on suggestions. Journalist Jack Schofield noted that “My Starbucks seems to be all sweetness and light at the moment, which I don’t think is possible without quite a lot of censorship”. The website is powered by Salesforce.com software. Corporate governance Howard Schultz, CEO of Starbucks Starbucks’ chairman, Howard Schultz, has talked about making sure growth does not dilute the company’s culture and the common goal of the company’s leadership to act like a small company. Howard Schultz served as the company’s CEO until 2000. Orin C. Smithwas President and CEO of Starbucks from 2001 to 2005. In January 2008, Schultz resumed his roles as President and CEO after an eight-year hiatus, replacing Jim Donald, who took the posts in 2005 but was asked to step down after sales slowed in 2007. Schultz aims to restore what he calls the “distinctive Starbucks experience” in the face of rapid expansion. Analysts believe that Schultz must determine how to contend with higher materials prices and enhanced competition from lower-price fast food chains, including McDonald’s and Dunkin’ Donuts. Starbucks announced it would discontinue the warm breakfast sandwich products they originally intended to launch nationwide in 2008 and refocus on coffee, but they reformulated the sandwiches to deal with complaints and kept the product line. As of January 2015, the chief operating officer of Starbucks was Troy Alstead, though at that time he announced he was taking an extended leave of absence of undetermined length. Subsequently, Kevin Johnson was appointed to succeed Alstead as president and COO. In October 2015, Starbucks hired its first Chief Technology Officer, Gerri Martin – Flickinger, to lead their technology team. Starbucks maintains control of production processes by communicating with farmers to secure beans, roasting its own beans, and managing distribution to all retail locations. Additionally, Starbucks’ Coffee and Farmer Equity Practices require suppliers to inform Starbucks what portion of wholesale prices paid reaches farmers. SWOT Analysis STRENGTHS AND WEAKNESSES →Starbucks Corporation owns an extensive brand portfolio. At the same time, all brands belonging to Starbucks portfolio including Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange and Ethos are popular non-alcoholic drinks and beverages of premium class. →Starbucks is able to apply its competitive advantage and extensive experience in the promotion and sales towards each product within its portfolio thanks to the shared features of these products associated with high quality for a premium price. →Starbucks revenues and consolidated operating income amounted to USD 16.4 and USD 3.1 billion respectively during the fiscal year of 2014. The company’s current solid financial position can play an instrumental role in terms of engaging in R&D and withstanding the periods of economic difficulties such as the global economic and financial crisis of 2007 – 2009. →Despite the presence of the business in 65 countries, revenues generated from Americas operating segment accounted for approximately 73% of total revenues for the fiscal year 2014. →Such an extensive dependence of the business on home market marks a point of vulnerability in a way that recessions and economic difficulties in the US is going to have negative effects on the overall performance of the business to a significant extent. →There is a consensus among customers and industry analysists that Starbucks coffees and other beverages and foods are more expensive compared to the products the majority of other coffee house chains. OPPORTUNITIES AND THREAT →The company has an opportunity to expand its supplier network and expand the range of suppliers from whom it sources in order to diversify its sources of inputs and not be at the mercy of whimsical suppliers. →The company has a huge opportunity waiting for it as far as its expansion into the emerging markets is concerned. With a billion consumers likely to join the pool of those who want instant coffee and breakfast in China and India, the company can expand into these countries and other emerging markets, which represents a lucrative opportunity for the taking. →Starbucks also has the opportunity to expand its product offerings to take on the full spectrum food and beverage retailers like McDonald’s and Burger King as the consumer segment which these retailers target is expanding leading to more business opportunities for Starbucks to take advantage of. →The company can significantly expand its network of retail stores in the United States as part of its push towards greater market share and more consumer segments. →This opportunity ties in with the other opportunities described above related to the expansion into newer markets, diversifying into newer consumer segments, and increasing its footprint across the US and globally. →The company faces threats from the rising prices of coffee beans and is subject to supply chain risks related to fluctuations in the prices of this key input. Further, the increase in the prices of dairy products impacts the company adversely leading to another threat to its profitability. →The company is beset with trademark and copyright infringements from lesser-known rivals who wish to piggyback on its success. As with other multinational retailers in the emerging markets, Starbucks has fought litigation against those misusing its brand and famous logo. →The company faces intense competition from local coffeehouses and specialty stores that give the company a run for its money as far as niche consumer segments are concerned. In other words, the company faces a tough challenge from local stores that are patronized by a loyal clientele, which is not enamored of big brands. →Starbucks has to expand into emerging markets as a necessity as the developed markets that it has traditionally relied on are saturated and given the fact that the ongoing recession has made the going tough for many retailers, it faces significant threats from this aspect. PESTEL Analysis Political Economic →The main political factor is about sourcing the raw materials. This has gathered a lot of the attention from politicians in the West and from the source countries. For this reason, the company wants to adhere to social and environmental norms. It is willing to follow the sourcing strategies. It gives importance to fair trade practices. →Another impact is the need to follow the laws and regulations in the countries from where Starbucks buys the raw materials. Activism and increased political awareness in developing countries have made his essential. →The regulatory pressures within the home market in the US are also a factor. Multinationals based in the US are now subject to greater scrutiny of the business processes. The company must monitor political stability within the country as well. Some of the factors to consider are including Tax policy and Employment law. →This has convinced buyers to shift to cheaper alternatives. As they did not quit buying coffee, Starbucks should seek an opportunity here. →The ongoing global economic recession is the prime external economic driver for Starbucks. As I already mentioned, this factor dented the profitability of Starbucks. →The company has to deal with rising labor and operational costs. The inflationary environment and falling profitability is causing a lot of stress. →Some other economic factors which can affect Starbucks are local currency exchange rates and local economic environment in different markets. Social-Cultural Technological →As already stated, Starbucks can offer cheaper products but it might have to sacrifice the quality. This is the main socio-cultural challenge that the start-up faces. →It will expand consumer base to include the buyers from the lower and the middle-income tiers. →The “green” and “ethical chic” consumers are also concerning. They fret about social and environmental costs of the brands. Starbucks has to be aware of this trend. →The baby boomer generation is retiring. This means spending by older consumers will decrease. Now, Starbucks will have to tap the Gen X and the Millennials as customers. →Starbucks is in a good position to enjoy benefits of the emerging mobile wave. Its partnership with Apple to bring app based discount coupons is helping it ride the mobile wave easily. →The company introduced Wi-Fi capabilities in its outlets already.  Internet is important to the consumers. They can now surf the web and do work while sipping Starbucks coffee. This is an added value to the brand. It enhances the overall consumer experience. →Starbucks is also enabling mobile payments. They are testing this in pilot locations in the US. →Some other technological factors to keep in mind are emergence of innovative technology, biotechnological developments and evelopments in agriculture. Environment Legal →Many Starbucks business practices concern activists and international advocacy groups. Even the consumers have expressed issues. →The company should take these into account to continue holding consumers’ trust. →Some of the other environmental factors Starbucks should worry about are: i.Environmental rules and regulations ii.Environmental disasters in countries which produce coffee beans iii.Global warming and other environmental issues in a global level Starbucks must ensure that it does not violate any laws and regulations in the home market and countries from where they buy raw materials. It should also stay alert about introduction of caffeine production and consumption related policies and regulations by health authorities. Others factors that might affect the company are: a.Introduction of stricter customs and trade regulations b.Licensing regulations related to the industry. BCG Matrix

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Starbucks Australia Strategy – SWOT Analysis & Market Share

Introduction.

  • Situation Analysis
  • Target Market
  • SWOT Analysis
  • Key to Success

Recommendation

Starbucks is the largest coffee company in the world that since its foundation in 1971 in Seattle, the United States, has expanded into more than sixty countries. In North America, Starbucks is a phenomenon: it is a universally recognizable and beloved brand. Outside the North American market, however, Starbucks’ success was not as stable and predictable. Ever since its entrance to the Australian market in 2000, the Seattle-based company has been struggling to build a solid customer base. What followed was an embarrassing retreat when the corporation had to close many underperforming locations. The present paper provides a new perspective at Starbucks’ Australian failure and offers a new marketing strategy that could help the company regain its position.

Starbucks Australia Situation Analysis

As of now, Starbucks is trying to conquer the Australian market, where it was once shunned. The Seattle-based company opened its first coffee shop in the country down under in 2000. By 2008, the number of stores had grown to 90 locations (Statista 2019). However, the rapid expansion was not precisely aligned with Australian customers’ appetites. The most feasible explanation is that Starbucks was growing too fast and did not consider customers’ interests. They did not have a chance to warm up to the idea of the new player on the coffee market and ignored the newcomer en masse. Besides, Starbucks might have failed to accommodate the new customer’s tastes and preferences: Australians refused to pay more for the drinks that they found too artificial and sugary.

In the same year, the coffee company announced the closure of more than 70% of the stores. The losses were tremendous: in the first seven years, the company had accumulated more than $105 million in deficits (Statista 2019). Since then, Starbucks has been attempting to regain its positions and find a good market fit. So far, it has only resonated with tourists in big cities – Melbourne and Sydney. The number of locations has slowly grown to 39, but the coffee company has yet to strike a chord with the natives.

Starbucks Australia Target Market

Market demographics.

Half of the revenue generated by Starbucks comes from customers within the 25-40 age range. 40% of the said annual revenue comes from young adults in the 18-24 age group (Gaille 2016). The core demographic grows economically at an average of 3% per year. Interestingly enough, Starbucks is popular with underage consumers: teenagers under the age of 18 generate up to 2% of the yearly revenue of the coffee company. More than half (52%) of Starbucks are not parents or grandparents yet. Every fifth (18%) Starbucks customer still lives with their parents, another one-third rents an apartment or a house.

Market Need

To say that coffee is a popular product in Australia is an understatement. While the country does not have a long history of coffee production and consumption, nowadays, it has become an indispensable part of everyday life and even cultural identity for many Australians. As Statista (2019) reports, the Australian coffee market is among the largest in the world, generating a revenue of more than 1.4 billion annually. An average Australian consumes 1.9 kilograms of coffee per year: 1.4 kilograms of roasted coffee and 0.5 kilograms of instant coffee (Granwal 2019). Based on the per capita consumption metrics, Australians fall behind Finland, Scandinavian, and Western European countries. However, globally, the continent ranks among the top-30 countries with the highest coffee consumption. Two facts mainly justify the market need for coffee companies: the popularity of the product explained above and low domestic coffee bean production.

Market Trends

It appears that Australian coffee market trends are consistent with global trends. Square (2018) presents a report that reveals that Australians show a strong preference for milk substitutes: oat, soy, and almond milk. The trend may be explained by consumers’ growing awareness of animal cruelty and the desire to cut on animal products. Another possible explanation is consumers’ openness to the new alternatives as well as health concerns. Aside from their own health, Australians are worried about the environment: coffee companies, are looking for sustainable, environment-friendly solutions. Some examples of initiatives that Australians support are recyclable cups, swap programs, reusable straws, and coffee bag recycling.

One more trend that shows a significant potential is iced coffee: 7.3% growth as compared to 4.6% growth for regular coffee. The cold brewing method is on the rise with unsweetened variants taking the front stage. In the context of the Australian market, the trend may be explained by the hot climate that pushes many people to buy iced drinks. Lastly, the Australian market demonstrates the need for more precision when it comes to coffee grinding. The consistency of grinding machines has long been a problem for baristas. Still, with the introduction of new technology, the dosing will become more comfortable and account for better taste and quality.

Market Growth

Research and Markets (2019) reports that the Australian coffee market is projected to grow at 5% annually during the forecast period from 2019 through 2024. The factors that fuel the market are its steady growth and sophistication, customers’ willingness to pay more for quality goods and services, and the affordability of home-grown production. However, there are also significant counterforces playing against the observable positive tendencies. The Australian market faces certain limitations due to the high degree of market fragmentation and low production volumes.

Customer Analysis

Starbucks considers urban and affluent people who work in white-collar office jobs and are often on the go to be its target demographic. This stance is reflected in Starbucks’ business strategy: the company usually opens stores in upscale neighborhoods and prioritizes quality over quantity. Besides, the pricing policies are such that the prices often surpass those for similar drinks at other coffee shops, which also hints at the expected purchasing power of the average customer. The company is working on improving the two core types of customer experience: ordering coffee for here and to go. In alignment with these two types, the customers who like to order the product here are looking for the right vibe and ambiance. For them, going to a coffee shop is not only about enjoying the taste and smell properties of the goods offered: they want a wholesome emotional experience. The other group of customers does not care that much about the interior design, zonation, and comfortable washrooms: they prioritize the convenience of the takeaway option.

A survey exploring Starbucks’ customers’ preferences has also led to some curious results. Half of the respondents stated that they have no religious affiliations and do not see faith as an essential part of their life. 25% of customers are committed to clean eating: they make an effort to purchase organic foods and coffee (Bowman 2018). Starbucks customers are avid social media users: 80% of them have an active SM presence on Facebook, Twitter, Pinterest, and Linkedin (Bowman 2018). They also prefer modern gadgets and technologies: 66% of the respondents own a smartphone, and half of them prefer streaming services to over-the-air broadcasts, satellite, or cable.

SWOT Analysis of Starbucks in Australia

One of Starbucks’ apparent strengths is its presence and market position. Over the last decades, the American company has gained substantial domestic and global brand recognition: it maintains its market share at a healthy 36.7% in the United States and operates in more than 60 countries (Trefis Team 2016). Starbucks is the largest coffee company in the world and ranks among the most recognizable brands in the coffeehouse segment. Such a strong position at home and overseas provides an inarguable competitive advantage. If Starbucks wishes to penetrate a foreign market, it does not have to put as much effort into raising its brand awareness. It should be noted that Starbucks owes its popularity to high-quality products. McArdle (2010) writes that the US company gained customers’ trust by adopting a strategy that seemed counterintuitive at first: it ordered its baristas to slow down. Employees were trained to prioritize quality over quantity and handle only two drinks at a time. In general, human resources development is Starbucks’ forte: not only does it train its employees comprehensively, but it also offers various benefits, which account for better talent retention.

One more element that contributes to a positive consumer experience is the vibe and the ambiance that Starbucks offers. On its official website, the company expresses its commitment to sustainable design and collaborating with local designers (Starbucks n.d.). Starbucks avoids standardization: instead, it strives to make the Starbucks cafe experience steep in the local culture. Sustainable design is not the only trend that the US coffee company is making the best of: as of late, it has been capitalizing on technology and online presence.

The widely recognized coffee quality at Starbucks literally comes at a price. The company is known for its high prices, and in times of economic instability, consumers might find it more favorable to switch to a coffee chain that offers similar products at a lower price. Besides, the current pricing policies might prove to be problematic in developing countries where customers do not have as much purchasing power. Further, the Western coffee-drinking culture might come off as too outlandish in the countries where coffee is seen as something exotic and not part of daily consumption. Another weakness is Starbucks’ aggressive expansion that can lead to self-cannibalization. When a company oversaturates a market, it might as well end up competing against itself and diminish long-term growth targets. Further, given that the majority of Starbucks stores are concentrated in the US, the company is sensitive to the country’s economic situation. The lack of portfolio diversification that might hurt the company was a critical situation to arise.

Opportunities

The oversaturation of the US market and the threat of self-cannibalization may lead to Starbucks’ further expansion into developing markets. The company has already made a successful case for penetration of Asian, North American, and European markets. At present, the following countries have the largest number of locations (excluding the US): China – 3,684. Canada – 1,542. Japan – 1,415. South Korea – 1,260, United Kingdom – 1,002, Mexico – 715, and Turkey – 457 (Trefis Team 2016). South Asia and Australia are promising but underdeveloped destinations that might be converted if Starbucks finds the right approach. Another opportunity that Starbucks might want to make use of is expanding its product mix and offerings, and by doing so, the Seattle-based corporation might tackle one of its major weaknesses: a homogeneous business portfolio. As of now, Starbucks has been adding tea and fresh juice with a smart acquisition strategy. The existing and new products may be distributed through new channels if Starbucks introduces a delivery system Mobile Pour.

On the topic of technology, of a particular note is Starbucks’ advancements in adjusting to customers’ new mobile use habits. The company has already launched a mobile application that has an integrated payment system for users’ convenience, but that is not the only exciting feature that it has to offer. As Sokolowski (2019) reports, Starbucks has recently started using reinforcement machine learning algorithms that customize user recommendations based on previous choices and external feedback. If the system proves to be efficient, the company will be able to provide the same level of care that baristas do online.

Starbucks is operating on a market characterized by a high level of competition. It contends with major players such as Tim Hortons and Costa Coffee. The adverse effects of the competition might become especially prominent, given the oversaturation of the North American markets. The situation overseas might put Starbucks at risk of financial losses as well: developed countries have seen an inflow of newcomers as well as the growth of local producers. Lastly, the US company might be sensitive to social trends: consumers might start giving up on coffee as part of their commitment to healthy living.

Competition

One of the defining characteristics of the Australian coffee market is its high fragmentation. It is represented by both prominent global players, regional market leaders, and small businesses. Robb (2015) reports that as of now, there are around 6,700 coffee businesses in Australia, with not a single one of them having leverage over more than 5% of the market. The most significant market shares belong to the following businesses: the Coffee Club (4%), Gloria Jeans (3%), and Michel’s Patisserie (3%) (Lock 2018). Robb (2015) explains that the Australian coffee culture is quite unique, and it does not welcome externally operated businesses. At the same time, within the country, the barriers to entry are low, which allows independent coffee shops to set up their business quickly, minimize establishments, and stay afloat past the first year. These small businesses are able to gain more trust from customers, partly because they have a less commercialized, “impersonal” approach to coffee-making. Local companies such as Barista made manually ground coffee and manually steamed milk a standard. Taking all these facts into account, it is safe to say that global companies need to be careful with aggressive expansion because of the well-established coffee consumption traditions in Australia.

Key to Success of Starbucks Australia Strategy

The key to success in the Australian coffee market lies in the understanding of and respect for the local coffee culture. In the United States, coffee consumption is intrinsically tied to the concepts of work and productivity. Milkman (2016) explains that in North America, prominent coffee chain locations such as Starbucks have become not the third place to be aside from home and work but the second place. If one enters a coffee shop in a medium or big American city, they will observe people wearing headsets and staring at the screens. For them, coffee is a “drug” that keeps them going; they do not associate the beverage with relaxation. Australians take a different approach to coffee consumption: as Milkman (2016) rightfully notes, for them, it is “not fuel for work but a way of life.”

In the country down under, the coffee culture is first and foremost associated with leisure and beach-centric lifestyle. Stenback (2017) adds that Australians are hedonists when it comes to coffee: for them, it is more about the entire experience than a simple grab-and-go. The writer points out that in the 1950s and 1960s, European settlers established rich cafe culture in Australia, which is why local customers are accustomed to sitting down and having a meal or a snack with their coffee. Aside from that, Australians are appreciative of uniqueness; in fact, it is something that they are quite used to. Given that 95% of coffee shops in Australia are independently owned, one can only imagine the variety in interior design, graphic design, and architecture. This diversity adds more flavor to the sophisticated experience of coffee consumption. For this reason, big, commercialized coffee brands with staple design solutions rarely make the cut.

Lastly, because of the overwhelming supply and diverse offerings, Australians have learned the difference between bad and good quality. The local customer refuses to put up with subpar taste and service and will quickly switch to alternatives that are widely available in any town. Quality flavors and aromas are the key factors driving customers’ decisions; they demand quality roasting and brewing, as well as excellent customer care. Stenback (2017) provides a simple example that showcases the difference between Australians’ and North Americans’ preferences. The writer points out that Australians are sensitive to slight changes in taste and flavor: if a grinding machine is not readjusted on a particular day, they may quickly notice and become dissatisfied. In those countries where coffee is seen as something that is merely instrumentation to productivity and upbeat mood, taste variations might not be as critical or even noticed.

Critical Issues

Below are the issues that stifled Starbucks’ success in Australia:

  • Lack of adaptation. Starbucks took a bold but miscalculated step when it relied on its usual expansion strategy that worked in Canada and Europe. It did not take the differences between North American and Australian coffee consumption cultures into account and, therefore, failed to deliver. In comparison, other global food companies would typically localize their products and services to achieve success overseas. For instance, McDonald’s, despite being a household name across the world, changed its menu to appease Indian customers. Apparently, Starbucks was wrong when it expected its popularity and worldwide recognition to be enough for attracting customers on the new market;
  • Aggressive growth. Starbucks attempted to grow an empire by opening multiple locations at once instead of slow and thoughtful integration into the Australian coffee market. Therefore, Starbucks became too readily available and merely one more option in the oversaturated environment. Australians did not have a chance to really understand the difference and need the new product, so they easily disregarded the newcomer;
  • Market misfit and oversaturation. Australians are spoiled for choice: as has been mentioned earlier, they have a plethora of options to choose from. Besides, they have unique coffee consumption habits that date all the way back to the 1950s when Greek and Italian immigrants started setting up their coffee businesses. They laid the foundation for modern coffee culture and turned coffee shops into a place where one meets their friends, chats with a trusted barista, and enjoys their time. Apart from that, over the last decades, local producers have come up with specialties unique to Australia, such as flat white and Australian macchiato. Taking these facts into account, it is no longer surprising as to why Starbucks failed miserably in the country down under. It overcharged for the sugary drinks that Australians did not like nor took pride in, and it was unable to provide the friendliness and the chilled vibe that local customers cherished so much.

Starbucks Australia Marketing Strategy

Mission and vision.

The official mission statement of Starbucks is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time,” which is also applicable to Australia. Its mission and vision for the new expansion strategy will be “localizing” the product stepwise, in a caring, thoughtful manner. To achieve this goal, Starbucks will harness two conflicting trends: the need to fit in and the need to differentiate itself. The new mission respects the existing coffee culture in the country down under and wishes to meet customers’ needs and preferences for product quality and customer service. At the same time, Starbucks will retain the unique American vibe that has made it iconic in the first place. If those two tendencies are intertwined in a meaningful way, the company will be able to create a culture of warmth and belonging. Starbucks will no longer rely on its global brand image and instead will try to be present and connect with local communities with respect, dignity, and transparency. The company will hold itself to the highest quality standards and promote ownership and accountability in everything it does.

Financial Objectives

As much as Starbucks prioritizes quality over quantity, it needs some feasible financial objectives for its 20th year in the country down under. In its latest annual report, Starbucks (2019) states that in one year, it was able to take the revenue from $16 to $86 million. However, as much as this figure looks optimistic at first glance, in actuality, Starbucks has yet to make a profit. Therefore, the first and the principal financial objective, for now, is to cut the losses and make the net income positive.

Target Markets

One of the reasons why, initially, Starbucks did not strike a chord with Australian customers is because it misunderstood the critical market segments. In North America, Starbucks targets affluent, hardworking young people in their 20s and 30s. Its takeaway system is adjusted to its hectic, on-the-go lifestyle. While Australian and North American market segments do overlap, there is one significant difference that needs to be taken into consideration: the importance of social relationships. In Australia, Starbucks needs to get rid of the association of coffee with work and emphasize coffee consumption as a bonding experience. This shift will open doors to a variety of segments: friends, families, couples, and coworkers relaxing after a workday. As for the rest of the characteristics, Starbucks is likely to find them in Australia too: the lack of religious affiliation, open-mindedness, and regular social media use.

Positioning in the Market

Starbucks might want to strengthen the focal point of its Australian customer base, North American tourists, all the while building rapport with the locals. In big cities frequented by tourists, Starbucks will provide a safe and familiar space where they could reconnect with their home culture. In smaller towns, however, Starbucks needs to become a novelty and capitalize on exoticism.

Strategy: Marketing Research and Marketing Mix

The new strategy will be built upon the following elements of the marketing mix: corporate social responsibility coverage, social media, and customer experience. Below are the elements described in more detail:

Revised value proposition

In North America, Starbucks built its customer base by offering a brand new experience: coffee as a lifestyle choice. Before the Seattle-based company made an appearance, coffee shops prioritized the speed of production and delivery because their clients were always on the go. Weirdly enough, when entering Australia, Starbucks strayed away from what made it famous in the first place and capitalized on impersonal metrics such as customer turnover per hour. Employees were trained to speed up their activities, which, of course, did not let them engage with the customer in a meaningful way, for instance, through small talk. To tackle this issue, Starbucks will recalibrate its priorities: it will no longer rely solely on quantitative data but will also consider qualitative feedback. The staff will not be pressured to reduce the queue time; instead, baristas will be encouraged to communicate, give recommendations, and in general, act welcoming and friendly;

Augmented sensory experience

Since Australians appreciate the complexity of coffee consumption, Starbucks will capitalize on providing an augmented sensory experience. Previously, the coffee company would prioritize speed over quality, and it worked in countries where human contact and entertainment value were not of high importance. The Seattle-based company used vacuum-sealed coffee and automated machines, which at first, made coffee making 40% faster and significantly reduced queue wait (Statista 2019). However, it deprived customers of the grinding and preparatory rituals of the drink as well as the hedonic aroma. The pleasure of watching and smelling a drink in making needs to make a comeback to win the Australian audience;

Online presence and collaborations

So far, Starbucks has been consistently building its social media presence: at present, it has 37.32 million Facebook likes, 6.56 million Twitter followers, and 2.98 million Instagram fans (Statista 2019). Building on its success online, Starbucks will customize its social media content for Australia. Because for Australians, coffee is associated with close relationships and socializing, Starbucks will focus on storytelling with subtle calls to action. Aside from that Starbucks might want to start collaborations with local influencers and celebrities, which also needs to have a heavy emphasis on storytelling and less aggressive advertising;

Community outreach

So far, Australians have been feeling that Starbucks entered their market, seeking an easy profit, which must have been disappointing. The company might want to try and counter this initial impression by taking on more corporate social responsibility (Starbucks Coffee Australia n.d.). The right solution would be to launch programs and initiatives that would help underprivileged demographics and help young people. Admittedly, these actions will need proper news and online coverage to communicate to customers that Starbucks holds itself accountable and seeks to have a positive impact on the communities. This will help the Seattle-based company achieve two goals: differentiate itself among its contenders and rectify its reputation.

Starbucks Financials

Starbucks sales forecast.

To sum up, Starbucks’ situation is Australia is critical but not exactly dead-end. In order to rectify it, it needs to make amends and not repeat the same mistakes again. First, the Seattle-based company needs to carefully pace its expansion into the Australian market and let customers build up the appetite for the product. Every step needs to be accompanied with a great deal of market research. Second, the marketing mix shall include elements such as enhanced customer experience, corporate social responsibility coverage, and online presence. The first on the list will align with Australians’ coffee consumption habits while the latter two will improve the company’s reputation.

Reference List

Bowman, J. 2018. Who is Starbucks’ favorite customer? . Web.

Gaille, B. 2016. 30 curious Starbucks demographics . Web.

Grewal, L. 2019. Australian coffee market – statistics & facts . Web.

Lock, S 2018. Starbucks – statistics & facts . Web.

McArdle, M. 2010. Starbucks puts quality over quantity . Web.

Milkman, A. 2016. Australian coffee culture is inspiring a new wave of American cafes . Web.

Number of Starbucks stores globally, 1992-2019 . 2020. Web.

Research and Markets. 2019. Australia coffee market – growth, trends and forecasts (2019 – 2024). Web.

Sokolowski, J. 2019. Starbucks turns to technology to brew up a more personal connection with its customers . Web.

Starbucks n.d. Mission statement. Web.

Starbucks n.d. Store design. Sustainable design is part of who we are and what we do . Web.

Starbucks Coffee Australia. n.d. Community involvement. Web.

Stenback, K. 2017. 5 things you should know about Australian coffee culture . Web.

Square. 2018. The 2018 Square Australian coffee report . Web.

Trefis Team. 2016. How Starbucks plans to grow its international operations . Web.

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