Strengths And Swot Analysis: SWOT Analysis For Starbucks

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

* Interest rates – An increase in interest rates in the USA would result in plans for investment and expansion being deterred by the Starbucks resulting in decreased productivity of the company. Furthermore, increased expenses for the consumers such as rising mortgage repayments would result in decreased availability of income to spend on luxurious products such as coffee. Low interest rates should have the

Rangkuti (2005) stated that SWOT analysis is one method to describe and make a judgment the real situation, project or business concept is based on internal factors (inside) and external factors (outside) which are Strengths, Weakness, Opportunities and Threats. Hill, T. & Westbrook, R. (1997) also stressed that SWOT only supported dissecting the company's situation to determine where the business was standing, rather no function solved the problem ultimately.

Starbucks Corporation, a global coffeehouse that reformed the coffee industry by introducing high-quality coffee under a pleasing and attractive environment. Coffee is the 5th most widely traded commodity in the world and it is believed that nearly 2.5 billion cups of coffee are consumed every day. Millions of people are directly and indirectly depends on the production, consumption and sales of coffee for their livelihood. The global market for coffee is characterized by volatile prices and production levels which impacts directly on the incomes of producers and prices facing consumers. Starbucks is the number one coffee retailer in the world market. Starbucks markets its coffee through grocery stores and licenses its brand

Economic conditions in the US and certain international markets could adversely affect Starbucks’ business and

The determinants of Starbucks profitability over time are variable costs and fixed costs. “A variable cost is a cost that change in direct proportion to a change in the level of activity (dict). Variable costs for Starbucks would include labor, coffee beans, dairy, and plastic products. A fixed cost is indirect costs of business expenses that remain unchanged (dict). Fixed costs for Starbucks include rent, taxes, and insurance as well as advertising. In the figure below (fig 1) we have Starbucks financial data in millions for the year of 2015. This includes their operating expenses, net revenues, such as company-operated stores, licensed stores, CPG, food service. It also includes their total net revenues and their balance sheet. As we can see “Operating costs dropped in the fiscal year

Abstract After decades of grande growth based on the Starbucks experience, Starbucks Coffee Company experienced continuous drop of stock price since the beginning of 2007. Upon first glance of their financial statements, there was 20% increase in revenues and 9% increase in net income last year. Such growth could be counter

SWOT analysis is an established instrument that helps to analyze company’s internal and external environment. This study analysis is based on internal strengths and weaknesses and external opportunities and threats. SWOT helps to identify priorities and create a common vision achieving the goals set.

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 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

Starbucks generates strong cash flows has solid liquidity. The company executes rigorous cost cutting initiatives to improve its bottom-line. However, throughout fiscal 2008, Starbucks continued to experience declining revenue, particularly in US operation. The decline is largely attributed to lower customer traffic.

SWOT analysis covers the strengths, weaknesses, opportunities & threats which a company is facing in its internal & external environment. Strengths & weaknesses fall under the internal environment of the company and opportunities & threats fall under the

Starbucks started in 1971 and by creating a cozy third place to customers beyond home and work and offering a slightly higher price yet fine quality coffee, within 25 years, it had opened just over 1000 stores. In order to maintain its leadership position, Starbucks had continued pursuing growth opportunities by selling Starbucks products through mass distribution channels and expanding its retail footprint. Along with the rapid expansion and success, Starbucks has encountered financial downturn in 2008, and the rise of competitors from both high price independent coffee shops, smaller coffee chains that resembled pre-expansion Starbucks model, to low price fast food restaurants chain McDonald’s and Dunkin’s Donuts has deteriorate the

SWOT analysis involve taking information from an environmental analysis and break it down into internal (weaknesses and strengths) and external matters (threats and opportunities). It is used for decision making and strategic planning. (Detailed of McDonald’s SWOT analysis is attached in Appendix 3).

Firstly, Starbucks’ net sales growth from 2006 to 2015 shows us that the company has been working well on its attractiveness through time. Indeed, except in 2009, sales have been constantly increasing from one year to another at a rate of 11% in average. Over the period, two specific year are to be highlighted. 2007 and 2015 experienced respectively an increase of 21% and 17% much higher than the 11% in average. While 21% was the normal sales growth rate in 2007, Starbucks has experiencing an amazing year sales wise since the beginning of 2015. According to the last estimations, this sales increase seem to be due to outstanding performances on the tea market as well as a great progression in terms of traffic in Asia and in the US.