Starbucks SWOT Analysis In this SWOT analysis, we will examine the strengths, weaknesses, opportunities and threats of Starbucks Corporation. Strengths Starbucks has a strong market position and global brand recognition. Starbucks Corporation is operating in many countries and has one of the highest rankings in brand recognitions. They have motivated, high knowledge employees who work hard to achieve company goals and that’s due to a good work environment. Starbucks implements loyalty programs to help maintain customer satisfaction.
Price discrimination is a practice of charging different prices to different consumers under the circumstances of keeping the same cost of production. The manufacturers always set the high price in one particular region to gain excess profit because they have the certain ability to monopolize or control consumers’ demand. However, for those markets which have lower demand, manufactures will set a relatively low price to encourage the consumption. Starbucks charges the relatively higher price in Shanghai than in New York and Mumbai to pursue the higher profit. The high price elasticity of demand of Starbucks ' coffee in Shanghai can be one factor and Starbucks also maintain the high price through taking action to influence consumers’ sensitiveness for high prices.
The cost of supplying coffee to the Chicago stores were also part of the issue as it was costly. The rent and wage rates were also higher in Chicago than in other states. Another problem that Starbucks had to persevere is the requests of drinks made with nonfat milk from customers. The idea of serving nonfat milk at Starbucks was not accepted by Howard Schultz as he stated that would not represent the company. Howard Schultz realised that nonfat milk
Chinese have the perception that the less they pay the less trustworthy the product is. “So Starbucks has done well in China partly because of its snob appeal. Its audience is concerned less with the fact that buying a Starbucks latte is, by local standards, a luxury than they are with the prestige they gain by tapping at a laptop in a Starbucks cafe.” http://www.chinalawblog.com/2010/03/the_china_price_low_lower_lowe.html Place Starbucks supply chain strategy is direct from production to customer. The vision of the company is to keep a personal relationship with customers. The company’s goal is to locate the Coffee bars in high visible locations with high traffic and become the ideal place for customers who are on they want to have a break during their busy daily lifestyle.
SWOT MODEL ANALYSIS Strengths The primary strength of Starbucks which is presumably well-known for delivering high quality products and customer service was its perfect brand reputation and image. “Starbucks experience” which the company had promised mostly satisfied customers regardless of its high price cup of coffee by dint of the quality of company service as well as raw materials which were Arabica beans derived exclusively from coffee plantations and guaranteed by Fair Trade. As one of its customers optimistically reviewed, “The coffee is unique and tasty, but it is not the only reason I like to visit each day. The place has energy and it is well run” (Motley 2007). The other strength was its distribution channels, including its stores and coffeehouses located in strategic areas.
In Starbucks’s case, price increases throughout the company’s history have already deterred the most price sensitive customers, leaving a loyal, higher-income consumer base that perceives these coffee beverages as an affordable luxury. In order to compensate for the customers lost to cheaper alternatives like Dunkin Donuts, Starbucks raises prices to maximize profits from these price insensitive customers who now depend on their strong gourmet coffee. Rather than trying to compete with cheaper chains like Dunkin, Starbucks uses price hikes to separate itself from the pack and reinforce the premium image of their brand and products. Since their loyal following isn’t especially price sensitive, Starbucks coffee maintains a fairly elastic demand curve, and a small price increase can have a huge positive impact on their margins without decreasing demand for beverages. In addition, only certain regions are targeted for each price increase, and prices vary across the U.S. depending on the current markets in those areas (the most recent hike affects the Northeast and Sunbelt regions, but Florida and California prices remain the
But the core of the company remains fine coffee in its variations. Pricing Premium pricing strategy is used at Starbucks, which means that this strategy is aimed at taking advantage of the behavioral pattern of people who tend to purchase more expensive items based on the perceived relation between high value together with high price. Among the competing products Starbucks beverages are more extensive, for instance, McDonald's range of drinks. With the help of the current pricing strategy, Starbucks supports its high-quality image on the market. The company's high-end brand image is maintained by the firms generic strategy.
They make amazing coffees from the finest quality of Arabica beans thus they are able to maintain their focus.The closed down all their entertainment studios and began focusing solely on coffee.Then is opportunity.Without opportunities,Starbucks wouldn’t have been able to expand it’s business globally.Originally,Starbucks coffee shops are only used for short hours but now there are also stores that are open for 24 hours but most stores are open atleast until 10pm.This gives Starbucks an opportunity to sell their food and beverages for a longer time thus can use their materials efficiently to gain higher profit.Besides that,Starbucks took the opportunity to expand their business into Asian countries as Asians love coffees and teas and then into Europe countries.Starbucks also open their stores in busy places such as malls,near colleges and
Fluctuation in global coffee prices owing to changes in supply and demand, weather and climatic conditions affect profitability and revenue generation efforts at Starbucks. Starbucks has no power to determine the global prices of coffee making it one of the major weaknesses that affect Starbucks. The second weakness at Starbucks is the high vulnerability to changes in the United States market because of a high concentration of store locations in the US. A huge percentage of Starbucks stores are located in the United States making the company very vulnerable to US economy changes such as the 2008 recession. A slow US economy critically affects Starbucks and will have an impact on revenue and profitability.
STARBUCKS STRATEGIC MANAGEMENT ANALYSIS INTRODUCTION Starbucks Corporation is an American multinational corporation founded in 1971 in Seattle, Washington. Starbucks is the leading marketer, retailer and roaster of specialty coffee around the world. The company has more than 182,000 employees in more than 19,767 company licensed and operated stores that are found in 62 countries around the world. Starbucks product mix includes roasted premium coffee, handcrafted high-quality coffees, a variety of fresh food items, tea, and other beverages. Starbucks also sells a variety of tea and coffee products under their licensed trademarks through different channels such as food service, grocery, and stores accounts.