Does the External Environment Determine the Success or Failure of an Organization?

As the world’s number one specialty coffee retailer, Starbucks sells coffee drinks, food items, coffee beans, and coffee-related accessories and equipment. In addition, Starbucks sells whole-bean coffees through a specialty sales group and grocery stores. Starbucks has grown beyond coffee into related businesses such as coffee-flavoured ice cream and ready-to-drink coffee beverages. The purpose of this paper is to analyze Starbucks business strategy, customer value proposition, company’s operations and the risks to financial results and reporting in the short term.

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

The external environment of an organization represents factors outside the company that affect the company's ability to function. The business cannot control these aspects but can answer to these changes if it needed. Of course the main problem for business managers is to manage to respond early to these changes in the external environment, but this depends on how soon any change is identified. Most of external environmental factors for example, economic conditions, are reported daily in the media; managers have a wealth of information with the help of which they can develop strategic plans. Nevertheless, some external factors are difficult to identify, especially when they are changing very slowly or hidden from

Background information: Starbucks is one of the biggest chains of cafés on the planet with 22,551 stores in 66 nations and domains, incorporating 12,739 in the United States, 1,868 in China, 1,395 in Canada, 1,117 in Japan and 830 in the United Kingdom. It was established 44 years ago – March 30, 1971 in Seattle, Washington, United States by three partners Jerry Baldwin, Zev Siegl, Gordon Bowker. The company entered global market after 25 years operations in domestic market in 1996 by opening store in Tokyo, Japan. Starbucks currently, serves hot, cold beverages and non-coffee items – sandwiches, deserts and CDs with their creation history all over the world. According to Wikipedia, in 2014, Company had more than 191,000 employees globally and theyt made revenue of $16,447 billion with 13 % net income.

External environmental factors are the macro environment affecting a business; they are factors outside the company and which they have no control over (Kotler & Armstrong, n.d.) these external factors bring about impacts to the company thus a company should always be prepared to react.

Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.

External environment consists of forces that directly or indirectly influence organization’s business activities. The actors and forces outside marketing that affect management’s ability to build and maintain successful relationship with target customers.

2.1) Internal and External influence is essential to any organisation that wants to be successful. The internal environment of an organisation refers to events, factors, people, systems, structures and conditions inside the organisation that are generally under control of the company. The external environment are those that happen outside of the organisation that cause change inside organisations and are, for the most part, beyond the control of the company.

A firms external environment is divided into two composites: the general environment and the industry environment. Fahey (1999) states that the general environment encompasses the broader society that influences an industry and the firms within it. The industry environment is the set of factors that directly influences a firm and its competitive actions and responses (Chen et al. 2010). Identifying opportunities and threats is an important objective of studying the general environment. Opportunities help companies achieve strategic competitiveness whilst threats may hinder a company's efforts to achieve strategic competitiveness (Gilad 2011). A firm will scan, monitor, forecast and assess the seven segments of the general environment to determine their effects on the firm. Firms identify early signals, detect meaning,develop projections, and determine the timing and importance of environmental changes and trends for firms' strategies and their management.

External Environment: The main external elements need to be observed and established in and around the organization which will affect the organization.

A company’s external environment includes all relevant factors and influences outside the company’s boundaries. By relevant means important enough to have a bearing on the decisions the company ultimately makes about its direction, objectives, strategy and business model.

The purpose of this analysis is to evaluate the Industry’s features and the company’s strategy. The main analysis in this project is external analysis and internal analysis. External analysis is contain of strategy group, five forces, partial SWOT, PESTEL, Industry life cycle and Internal analysis is contain of market segmentation, CSFS, partial SWOT, generic strategy, Resources and Core competency, the Boston matrix, the Ansoff matrix and financial analysis. At last the recommendation part will indicate the company’s future prospects.

Starbucks strategies have successfully made them one of the biggest names in the coffee market globally. Starbucks has been able to survive the high competitive market and to differentiate themselves from other coffee shops by producing high quality coffee. Also, Starbucks successfully create a huge numbers of loyal customers worldwide by providing great services and high quality products. Starbucks was able to survive 2008 financial crisis successfully. In 2008, Starbucks net income was -53% that means Starbucks was losing so much many yet, 2009 Starbucks was able to not only stop their losses but also to gain a profit of 24%. However, Starbucks should be worry from the possibility of another financial

Since January 2008, Starbucks has taken steps to address the deterioration in the US retail environment revitalize its global support structure. These steps have been designed to structure the company’s business for long-term profitable growth. Because of the continued weak economy and decreased customer traffic, as well as the cost associated with the store closures and other actions in its transformation strategy, the company’s fiscal 2008 results were impacted negatively in the following ways:

An analysis of the external environment includes the factors in a business’s external environment about a business's industry, competition, and political and social environments, and affects the firm’s strategy (Aaker, 2001).