Business Analysis - Starbucks Part 1

Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks

Since Starbucks entered the coffee retail business, the company has made many trade-off business decisions. The first major trade-off was made when Howard Schultz wanted to acquire present day Starbucks from three entrepreneurs Baldwin, Siegel and Bowker. Therefore, Schultz prior to the acquisition made the trade-off to open his own coffee bar in 1986 instead of staying at Starbucks as the manager of retail sales and marketing. A bold feat, Schultz was able to replicate success and was offered to buy Starbucks for $4 million. At the time of the acquisition, many investors, including the former Starbucks owners, would not expect that the American consumer would pay a premium for coffee products. Schultz, after calculating the opportunity cost, was convinced that Starbucks would become a large coffee chain not only in the United States but internationally too. Reflecting this approach, Schultz’s trade-off worked. Starbucks, according to our book has revenue exceeding $13 billion and nearly 200,000 employees. The company has also expanded to 40 countries with 17,000 stores (Hill et al., 2015).

Starbucks Corporation, generally known, as Starbucks Coffee is the leading retailer and a brand of world’s forte coffee in the world, with more than 15,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim, wherever in this world where premium quality coffee is in demand. Starbucks is the largest coffeehouse company in the world ahead of UK rival Costa Coffee, with 20737 stores in 63 countries and territories, including 11910 in the United States, 1496 in China, 1442 in Canada, 1052 in Japan and 772 in the United Kingdom. The first Starbucks was open in 1970. The name was inspired from Herman Melville’s Moby Dick, a definitive American novel regarding the 19th century whaling industry. The nautical name matches seamlessly for a store that imports the world’s finest coffees to the cold thirsty people of Seattle. In May 1998, Starbucks have finally successfully entered the European market through its acquirement of 65 Coffee Company stores initially originated from Seattle in the UK. Both companies shared a common culture, focusing on a great commitment to customized coffee, similar company values and a mutual respect.

1.Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion.

Based on a SWOT analysis, some of the strengths of Starbucks are its corporate social responsibility and financial position. Weaknesses include too many stores and high prices. Opportunities are a growing market in Asia. Threats of Starbucks are increase of competition and increase of raw materials. Recently, a Wall Street analyst highly critiqued Starbucks for its products being too expensive and having too many locations. Because of this it is expected to not have as much growth as it used to in the past couple of

Starbucks is a well-known coffee purveyor with a global presence. All companies face opportunities and external threats that must be evaluated when analyzing the operations of the business. This paper will focus on the on nine major opportunities that are apparent for Starbucks as well as eight threats that could impact the company. The opportunities will be analyzed and discussed initially in the paper followed by the external threats.

An Analysis of Starbucks Company History Starbucks was opened its first coffee company in Seattle’s Pike place Market on 1971. The name was taken from the first mate in Herman Melville’s Moby Dick (Company Profile, 2005).

In making the decision to close a number of outlets in the United States, there were several factors that played into Starbucks' decision. These included the performance of the stores in question, and the company's expectations for the state of the US economy going forward. The long term plan for the company also played a significant role in the downsizing that the company went through.

With the financial system in strife, the stock market place tanking, it is imperative to commence your day with an enjoyable cup of coffee to endure some these life challenges. Gratifying everyday moments is just one way that it appears that Starbucks words denotes that they are not retailing solely coffee. They declare to be offering the coffee experience. The coffee bars that promote specialty coffee likewise gives consumers a setting where they can be able to be themselves. Starbucks presents themselves as the third location between home-based and office, where one can exodus, contemplate, study, converse or listen. They have developed into one of the prevalent competitors in the coffee commerce and appears to be still exploring for possibilities to magnify themselves. From a Christian worldview Mark 6:39 states, “Then He commanded them to make them all sit down in groups on the green grass” (NKJ). Therefore, when situations seem impossible for an organization, it is possible when God is included in the plan.

Over the past twenty five years, Starbucks has been leading the coffee revolution and turned a dying industry upside down by mainstreaming their stores and creating a public fascination. From the beginning of Starbucks stores through 2006, they have opened stores all over the U.S. and will be taking it overseas. Starbucks is leading the coffee revolution and has expanded their reach all over the world. With this much growth, it is easy for the company to lose their edge by forgetting the reasons they have become so large from the beginning. In this analysis, I am going to go over an economic assessment, marketing

Starbucks’ threats are limited to the economy, emerging competitors and a rise in coffee bean and dairy product prices. These threats are related to serving customer’s needs because they impact the price the consumers pay for a cup of coffee. While our economy is experiencing a recession, consumers who are not loyal

Using Porter’s five force model we can analyze Starbucks and the industry it is in. First looking at industry competitors. There are many competitors in the industry. Specialty coffee was to have around a 15% growth rate in 1994 (Starbucks, Ivey). This increase is due to the face that consumers are being more health conscious. Coffee is also the second most valuable commodity world wide (Business Insider). To stay ahead of competition and reduce the risk of imitation Starbucks has certain tools and qualities other companies do not possess. Starbucks has a signature roasting system (Starbucks, Ivey), that allows them to keep records of the way certain blends were made. It also has extensive training for all partners from CEOs to its baristas. This allows Starbucks to surpass the other competitors. (Sara)

The 1971 founded company Starbucks has undergone an impressive expansion throughout the last years and as a result now is the leading coffee house retailer in the world. Due to several joint ventures, partners, and an enormous amount of directly operated stores, it is present in more than 34 countries and serves around 33 millions of customers per week.1 Moreover, the company significantly increased its global publicity within subscribing to strategic alliances with various hotels, air carriers, schools, and stadiums.

On point that Starbucks is fully committed to is their one hundred percent ethically sourced coffee. From the Starbucks corporate website in relation to ethically sourced coffee:

Factors in the global environment provide both opportunities and strengths for Starbucks. Opportunities such as increased revenues, further expansions, and achieving their goal of becoming the most respected brand worldwide. Starbucks also faced threats. These threats include dealing with growing antiglobalization overseas and their huge risk of less return on each overseas store, this deriving from overseas operations being run by local partners instead of Starbucks