Starbucks Swot Analysis

* Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.

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).

Another approach to strategy development begins with an analysis of external and internal factors, followed by some visioning, then planning. Including in the analysis phase is often a “SWOT,” a thorough examination of internal Strengths and Weaknesses, as well as external Opportunities and Threats. SWOTs are praised for capturing both the positive (strengths and opportunities) and negative (weaknesses, threats); and organizations embrace this approach with the hope of gaining a “balanced” analysis of itself, inside and out (Hetzel and Silbert, 2007).

Starbuck’s began their journey in the coffee market with the grand opening of a small cafe, back in 19711. The name for this company is quite unique and there is a clear back story behind this. The original owners were inspired by the story of Moby Dick and its thought to “evoke the romance of the high seas and the seafaring tradition of the early coffee traders.” Since the first Starbucks store, the company was famous for its community development and its active participation within society. Starbucks began to witness great change within their company once their management changed, in 1987 Harvard Shultz was appointed the Chief executive officer. Inspired by the traditional Italian design, Schultz adapted this design and integrated it within the lighting, layout and music choice played in the cafe’s. As a

2) Garthwiate, Craig; Busse, Meghan; Brown, Jennifer; Merkley, Greg “Starbucks: A Story of Growth” Harvard Business Publishing, July 2012.

Starbucks is known for their Frappuccino’s; unfortunately they are on a downward spiral in sales due to competitors such as McDonalds. In 2008 Starbucks admits to its losses due to their competitors. “Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills (Linn).”

Starbucks has a number of different strengths on which it can draw in order to see its vision come to fruition. The company has a great brand, and this brand allows it to enter new markets and to add new products to its lineup. For example, the power of the Starbucks brand allowed the company to enter into a worldwide deal with Pepsi for bottled drinks in the supermarket. Also, when Starbucks enters new markets, its brand value usually precedes it. It can attract expats immediately and will pique the curiosity of the locals. Considering the value of the brand in high growth Asian markets like China, Starbucks has tremendous potential to bring its vision to reality.

Even so, just two weeks earlier Howard Schultz announced that the company will be expanding internationally. The plan is to open more than 1500 stores in Germany, France, and Britain over a 3-year span (Forbes, 2008). It is estimated that this expansion will boost revenue by more than 20 percent (MSN Money, 2008). In spite of Starbucks’ struggle among its love-hate relationship between customers and protesters, one thing that Starbucks

This paper looks at Starbucks history and evaluates its current financial situation. Their sense of community, responsibility and social awareness has made Starbucks the company that it is today. Starbucks has adopted a unique culture that is hard to duplicate by other organizations. As stated on their website, the company’s vision is to establish Starbucks as the most recognized and respected brand in the world. The ideals, along with the leadership of Howard Schultz, Starbucks CEO, has helped position the company where it is today, which in turn has positively affected the financials of the organization. This paper examines the financials and makes recommendations for new

Back to the mid 2008, starbucks announced that they were closing 75% of its store in Australia (Patterson, Scott & Uncles, 2010). It was a huge and unexpected closure to this big coffee company, lots of media and Australian rated Starbucks as “failure” in Australia. But situation was totally different from Asia market, Starbucks reached their great success in Asia. As the world’s largest coffee company, Starbucks now faces lots of judgment because of the store’s closure in Australia. Taking a lot factors into account, as a loyal customer, I bielieve that despite its failures, Starbucks is a successful company.

The fast food industry in the United States produced roughly 191 billion U.S. dollars in 2013. By 2018, this figure was estimated to surpass 210 billion. The lion's share (77.3%) of this huge business is involved on-premises restaurants and drive-thru, the rest comprises of off-premises dining out and buffets and cafeterias. In 2013, there were more than 232 thousand fast food foundations in the U.S., providing employment to more than three and an a large portion of million individuals .

This case study gives an overview about Starbucks International Operations. It will explain how Starbucks expanded outside US and the strategies they adopted to give tough competition to its international rivals.

The major challenges facing the decision maker, Schultz, include the following: the challenge of the fast saturating U.S. market (Going Global Fast, n.d, p. 2). According to analysts, in two year time, Starbucks will have saturated the U.S. market. This will lead to stagnation or slow growth in sales and reduce the effect of increased sales per new stores opened. For instance, in Seattle, Starbucks has a café to serve every 9400 people; a number considered to be the upper limit of the coffee shop saturation. The challenge of 30 percent self-cannibalization a year as Schultz admits, where blanketing an area with new stores to dominate market culminates to cutting sales at

Starbucks has been a household name for over 20 years. It is the largest coffee house in the world with over 17,000 stores in 50 countries (Wikipedia Website, 2011). How can a giant like Starbucks stay on top of the coffee market yet retain its personal small coffee house feel? Starbucks continuous strive and strategic management plans have proven beneficial in keeping to the goals of the organization.

In developing an effective strategic plan, it often times contribute to a successful organization. The organization becomes geared with the proper vision and mission, if the conceptual goals are aligned with those important components. Lynne MacDonald believes, “ The development of a vision and mission statement is an essential part of the strategic management process. Having clearly defined the vision and mission of the organization, managers then can set strategic objective that are aligned with the company strategic planning. (1) Function deals with vision and mission on being able to understand how things operate (2) Improvise creates an infrastructure on development through each layer of the process (3) Use SWOT Analysis becomes predicated around strengths, weakness, opportunities, and threats. The SWOT process helps build that strong foundation within the infrastructure for creating a more dynamic effective strategic plan. (4) Strategic equal methods envisioning goals and defining systems.