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Starbucks: the Future of Coffee. Essay

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Introduction

During the past three years Starbucks has experienced yearly revenue growth approaching one billion. We have maintained a clear and concise mission, “to establish Starbucks as the most recognized and respected brand in the world” (SEC Annual Report, 2005). In addition, we have developed an aggressive strategy that leverages core competencies with a working business model and growth plan to accomplish our mission. However, in order to continue to maintain our growth indefinitely, we must continually evaluate our strengths, weaknesses, opportunities, and threats (SWOT) to ensure that our business model and strategies are robust and can sustain future growth in a constantly changing competitive environment.
Key
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As Starbucks grows, our business model may become obsolete due market saturation. For example, a Starbucks on every corner may not be sustainable if the corners are diagonal from each other. Starbucks’ current market cap is 20 billion (compared to McDonalds 36 billion) and may reach a critical growth point where high levels of expansion are unattainable as a percentage of Starbucks’ size. At this point, our strategy may need to be revised to match the changing environment. For example, diminishing growth may be offset by international growth opportunities including China and India.
Another potential weakness stems from the leveraging of 3rd party distribution channels. By leveraging other distribution channels and creating licensing agreements for our products to be sold in other countries and locations, Starbucks has lost some control over its brand image, quality, and environment. This could prove a future weakness.
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