Swot Analysis Of Starbucks

With time the small industry of coffee has modernized into a multibillion dollar industry that surrounds the world. With the growth of the industry there has been many world wide changes. Over the past 30 years coffee shops have jumped to the front of the public culture. New coffee shops have changes the face of American cities along with British, German, Colombian, Kenyan and Indonesia towns to name few. (Coffee a comprehensive guide to the bean, the beverage, and the industry) Around the world coffee has become part of the daily culture and coffee shops have grown to accommodate the massive demand that people ask for. Without the growth of the industry there would be a shortage of the product and many would have to go without their beloved beverage. In the United States alone there has been a massive increase in the number of coffee shops. In 1980 the number of coffee shops was a year 2,000 and by 2008 there was an astonishing 27,715. (Coffee a comprehensive guide to the bean, the beverage, and the industry) This was an increase of over ten times in the short time. 11,000 of those stores, almost half, were Starbucks one of the biggest coffee brands in the worlds. The growth of Starbucks is due to the work of Howard Schultz a worker for the company before they became as massive as they are today. Starbucks started very small in Seattle, Washington in the mid 1970’s. Howard bought out the owners and then went on to turn the small company into a massive corporation. (Coffee a

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

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

There isn’t a very large market for regular coffee anymore; consumers want to see different products and experience different flavors. The point of this is that Starbucks adapt to this trend by constantly trying to innovate their brand with new products, but at the same time they stay true to their brand and they don’t compromise on quality; that is what made their success.

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.

As a well-established coffee retailer and over 35 years of success, Starbucks is at the maturity stage in the product life cycle. It is in this stage that Starbucks needs to shift gears and focus on marketing program modifications by increasing the number of customers and customer visits (Kotler, 2009, pg. 185). While improving service will attract first-time customers and retain current ones, further marketing modifications will need to be made if it wants to continue to grow. More advertising, distribution, sales promotions, and personal selling are a few of the ways to modify the marketing program.

Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty

Starbucks SWOT analysis allows the company to see their current position in the coffee industry. The company’s strengths are that it is a market leader In the coffee industry, it has 16,859 stores by the end of the year 2010 and continues to grow (Starbucks Corporation, 2010) a second strength is the expansion rate they have of opening stores internationally and domestically the only fault with the expansion is that they are opening stores that are right next to others and losing money in each store due to over crowdedness. Starbucks is also financially sound this can be proven because during the financial crisis in 2008 and 09 Starbucks profits barely were effected (Starbucks Corporation, 2010). However their stock price did fall. One of Starbucks leading strength is its brand recognition which is known for high quality products and friendly environment (Jurevicius,2013)

Starbucks roasts high-quality coffee beans to make espresso drinks and sells coffee products through multiple retail channels. The company has over 24,000 stores in 70 countries. Starbucks target market is affluent adults ages 18-40. This market segment makes up 49% of the company’s sales. In addition to targeting a specific market, the company employs a differentiation strategy. Along with the high-quality coffee, the company offers an experience within their stores which justifies higher products. Some aspects of this “coffee experience” include free Wi-Fi, friendly baristas, fast service, and comfortable seating. Also, the company relies on new product development as a strategic choice. This includes adding alcoholic beverages and food to its coffee shop. All of this is done with the idea of making the higher priced product worth it for the consumer.

These opportunities are related to serving customer needs because Starbucks will be able to satisfy the desire for their coffee along with the experience in other countries. Emerging international markets allow Starbucks to expand while our country is experiencing and economic recession. Starbucks has already begun flourishing in these emerging international markets, beginning in China. Specifically, they have opened 420 stores and consider it a great opportunity because of the large number of people in this area. China is great places for this type of product since the Chinese already have a taste for coffee and tea’s.

Largest Coffee House Chain in the World—Starbucks is currently operating with 21,878 in over sixty-five countries, making it the largest coffeehouse chain in the world. Looking forward, Starbucks intends to continue to expand growing their company even more (“Starbucks Company Profile,” 2015).

In a world where consumers value convenience, price, service and quality, Starbucks has become a major identifiable brand and competitor worldwide. Starbucks operates under the retail coffee and snack shop industry and relies heavily on consumer confidence, spending, preferences and overall economic climate, making the industry highly volatile. The hiring and use of employees to perform the daily operational tasks and duties to provide service and various industry products become an important element in this industry. Because the skill set of the individuals hired in this industry are relatively low, the cost in wages are minimal. The industry reportedly has generated over $30.2 billion in revenue, $1.8 billion in profit and has seen a growth of 2.7% from 2009-2014. Future projected annual growth in this industry is forecast to grow 3.8% over the next five years (IBISworld, 2014).

Inspired by the book and the movie about Moby Dick, Starbucks first opened as a storefront in Pike Place Market in 1971. It wasn’t until 1984 when Howard Schultz joined the operation as a chairman, president, and chief executive officer, and introduced to Starbucks the new Italian breed of coffee bean and Italian style of coffee drinking; a style that refreshed the idea of socializing and interacting among people of all walks in times that corporate life style was winning over the family and friendly style of living. Such goal was established by officially making it company’s mission statement; “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks, n.d). After 43

Starbucks, unlike other American restaurant chains, typically favor one of two business models: the standard retail business model or the license model. To this day, most of Starbucks net revenue is generated by the retail locations the company owns. Starbucks targets highly populated areas with large volumes of foot traffic. Additionally, Starbucks is accommodating globalization by loosening its licensing agreement requirements, and using pieces of the franchise model to rapidly expose itself to developing markets’ share.