Swot Analysis: The SWOT Analysis Of Starbucks

Introduction

According to Lussier (2000), SWOT analysis involves the process of evaluating the strengths, weaknesses, opportunities, and threats faced by a firm. This study aims at undertaking a SWOT analysis of Starbucks through analyzing the available opportunities and strengths accessible for Starbucks surmounting threats and overcoming weaknesses. Starbucks’ establishment in 1971 in Seattle Pike aimed at meeting the market’s need for high-quality, freshly roasted coffee served in a comfortable environment and quality service (Larson, 2008). This is clearly evident in Starbucks’ mission that reads, “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks, 2015).

Strengths

A good brand reputation

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. The gross and disposable income of the company will be greatly affected in case of a slow United States economy. The vulnerability can be mitigated by spreading risks to other countries by having increased stores abroad and considering the quality and pricing strategies in other countries to ensure Starbucks makes pricing consistent with the countries’ ability to purchase. This is evidenced by the low demand and sales in China because of high pricing of Starbucks’ products making the company vulnerable to the market loss to McCafe (Thompson & Martin, p.

Starbucks should ensure prices in international market are not inhibitive to customers and will allow them to have an increased market share and augment sales. This will also allow the company to face threats from other brands that have taken advantage of Starbucks high-pricing mainly McDonalds through McCafe. Innovation and addition of new products at Starbucks to augment the Starbucks experience and increase client loyalty is the other recommendation for Starbucks. This is aimed at overcoming increased competition from Dunkin Donuts and McDonalds. The threats in the operating environment can also be overcome by differentiating products offered at Starbucks from those of the competition in terms of better quality, impeccable service delivery, and augmenting customer service and quick response to queries. Developing a huge social media presence and offering product information and pricing through social media is the other strategic recommendation for Starbucks aimed at accessing a large audience and meeting the needs of technology-savvy generation that forms a huge bulk of Starbucks clientele (Hajli, p. 112). This will allow Starbucks to increase its physical and online market reach and expand the information on the company overcoming challenges on physical