Executive Summary
Starbucks Corporation is an American specialty store based in Seattle, Washington. The company specializes in coffee retail. Its stores can be found worldwide in Americas, Europe, Asia, and Africa. The company aims at establishing itself as the most recognized brand in the world. Through its well-established distribution channels and large customer base, the company has gained a competitive advantage in the industry. The staff are the main company’s asset. They are trained to win customer loyalty in the brand and to offer the best customer service. As such, the company treats its employees in the best way possible. The employee benefits include paid healthcare, high wages, and convenient working schedules. The company believes in environmental sustainability. It offers safe products, in addition to its well established corporate social responsibility program.
Vision and Mission
The company’s corporate mission is ‘to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time’ (Purkayastha, Sahu, Seshaiah, & Tripathy, 2019). The corporate vision is ‘to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow’ (Purkayastha, Sahu, Seshaiah, & Tripathy, 2019).
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Resources and Capabilities
Valuable resources present in the company include a well-established supply chain and a strong brand image. The quality of coffee is unique, its calorie information and origin are well indicated on the coffee cups. The stores have a comfortable environment, allowing customers to drink their coffee in a relaxed mood. The rare resources giving Starbucks a competitive edge over Dunkin Donuts are the special flavors and quality of the coffee. In addition to this, Starbucks is the most recognized coffee retailer globally. It offers specialty coffee to its customers all year round unlike Dunkin Donuts, a company whose offers are sold exclusively on holidays. Starbucks global presence makes it non-substitutable by other brands. It continues to expand on an international level, opening stores all over the world. The valuable, rare, and inimitable nature of Starbucks gives it a competitive advantage.
General Description of the Industry (PESTEL Analysis)
PESTEL is the best tool that can be used to assess the impacts external issues have on Starbucks. Political factors that directly affect the company emanate from the raw materials sourcing process. Trade agreements, laws, and regulations influence bean sourcing. Economic factors affecting the company relate to the ongoing global economic recession. Haskova (2015) states that economic factors, including the economic recession and exchange rates, are likely to undermine Starbucks’ profits. However, it is notable that the coffee drinking culture has been on the rise all over the world. The demand for coffee amongst the middle class benefits the company as it adds to the sales and revenue of the company, which means that the social factors play in favor of its growth. Technology has had positive impacts on the company as well. In the recent past, Starbucks has partnered with internet service providers to give free internet access in the retail stores in a bid to increase customer experience. Ecology is also a factor affecting Starbuck’s development. Environmental disasters such as global warming are likely to affect coffee plantations, thereby interfering with the supply of raw materials. Legal factors that impact the company are in form of licensure regulations and maintenance of product safety standards. Starbucks has to adhere to a costly legal framework in order to succeed. Therefore, technological and social factors confer an advantage to the company, whereas political, ecological, economic and legal externalities have negative impacts.
Starbucks’s SWOT Analysis
The company’s main strength is its strong brand image, which is well recognized worldwide. The availability of big data, analytics, and artificial intelligence helps the company in marketing, sales, and decision making (Marr, 2018). Moreover, the company has a strong and extensive supply chain. The main weakness is the highest priced product, which is likely to make customers shift towards other brands. The company’s products are also imitable by other companies. Additionally, the company has been accused of tax evasion in the recent past.
Despite these weaknesses, opportunities continue to present themselves to the giant corporation. Markets for Starbucks products are continuously developing in most countries. The company has the prospect of partnering with other firms such as internet service providers to offer Wi-Fi in the shops. Furthermore, the company can easily launch new products in its stores. The major threat facing the company is competition from similar brands that focus on coffee and pastry. Moreover, it faces competition from other low-priced sellers. The main raw materials are prone to crop diseases and poor weather. This SWOT analysis can be used by the company’s management to stay competitive.
Current Strategies in Use
The business world is continuously changing. Starbucks has been forced to put in place continuous improvement strategies. The company, for instance, has constant new product options available depending on the season. A clear example is the re-launch of pumpkin spice latte contributing to increased customer visits to the stores (Team, 2016). Furthermore, the company has taken advantage of changing consumer preferences and introduced new menus in its main stores. Starbucks is also focusing on food as a future growth driver by partnering with Princi, an Italian bakery to serve food in its new stores (Team, 2016). As such, current strategies in use enable the firm to gain an advantage in the highly competitive coffee industry.
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References
Haskova, K. (2015). Starbucks Marketing Analysis. CRIS-Bulletin of the Centre for Research and Interdisciplinary Study, 2015(1), 11-29. https://doi.org/10.1515/cris-2015-0002
Marr, B., (2018). Starbucks: Using big data, analytics, and artificial intelligence to boost performance. Forbes. Retrieved from https://www.forbes.com/sites/bernardmarr/2018/05/28/starbucks-using-big-data-analytics-and-artificial-intelligence-to-boost-performance/#5af042b465cd
Purkayastha, D., Sahu, B., Seshaiah, S. V., & Tripathy, T. (2019). Can Starbucks Sustain Its High Prices in China? China-Focused Cases (pp. 103-118). Springer, Singapore. https://doi.org/10.1007/978-981-13-2706-3_6
Team, T. (2016). Starbucks is maintaining its competitive edge. Forbes. Retrieved from https://www.forbes.com/sites/greatspeculations/2016/10/13/how-is-starbucks-maintaining-its-competitive-edge/#64caf581759c