The Pestel Analysis Of Starbucks

Introduction

In 3 years’ time, Starbucks will be celebrating its 50th anniversary – a half a century in the coffee and beverage business. In its earlier years and under the leadership of its founders (Jerry Baldwin, Gordon Bowker, and Zev Siegl), Starbucks’ core business was roasted whole coffee beans. Later, in 1987, under the leadership of Howard Schultz, the company diversified into the beverage market and other products, and thus, culminated into the current company. Starbucks (n.d.) notes, “…product mix includes roasted and handcrafted high-quality/premium priced coffees, tea, a variety of fresh food items and other beverages.” Furthermore, the company operates 25,085 stores worldwide both directly and through the franchise model. Moreover,

Thus, it is difficult for new entrants to join the market. Furthermore, its unique model of doing business and the management of ambiance put the company above the rest. However, it is not completely impossible for a competitor to adopt such a strategy given the right resources and investment, and therefore, Starbucks should persistently strive to retain the level of organization that has kept it above the rest.

PESTEL Analysis

Starbucks faces a number of political, economic, social, technological and legal factors that affect its profitability. Gupta (2013) notes, “The PESTEL analysis is an external environment scanning tool that presents the macroeconomic factors and their impact on a business entity.” Thus, it vital for a company to repeatedly monitor its external environment, and hence, guarantee business sustainability.

Political

Currently, there is a younger and technology savvy population whose online engagement can make or break the business of a company. Thus, Starbucks has an opportunity to increase the online coffee purchases and delivery, and hence, expand the customer base. Likewise, coffee farmers have been using traditional and crude ways of growing and harvesting coffee. Thus, to remain competitive through sourcing the best coffee beans, Starbucks can support farmers with better technology to grow and manage the coffee beans. However, technology has a downside as a number of companies from the Asia Pacific region are offering high-quality home-making coffee machines at cheaper prices, and thus, might in the long run substitute the store coffee purchases.

Environmental Factors

Currently, the world faces an increasing threat of global warming. Therefore, the abnormal weather patterns affect the coffee producing regions. Consequently, Starbucks faces a threat to its core business thus affects its brand image and uniqueness.

Legal Factors

The legal environment is constantly changing due to adoption and revision of laws, regulations, and policies. Therefore, policies like the wage policies require frequent review to ensure they meet the laws of the land of operation as governments across the world implement tighter labor laws. Besides, human rights organizations are incessantly fighting for employee rights. Accordingly, Starbucks should review its internal