The Industry demand has changed due to a shift in consumers’ attitudes towards healthier products. This placed Starbucks’ coffee culture at risk and threatened the company’s future. Starbucks has tailored their menu to include more organic and healthy product mixes, venturing into tea, bread and fresh juice products (Geereddy, n.d). Starbucks’ cornerstone product differentiation strategies and Human Resource Management are the main impacts to strategy formulation. Starbucks’ is a premium valued brand; costly to imitate.
The aggressive growth rate of stores across the world had a ripple effect which led to Starbucks undergoing multiple changes: a. Globalization – The number of retail stores were 5000 and counting. It also started experimenting with new retail formats such as ‘drive-throughs’. Around 15% of its revenue came from non-company operated retails channels, known as ‘Specialty Operations’ which included international licensed stores, grocery stores, warehouse clubs and online mail-order sales. The goal was simple – reach customers where they work, travel, shop and
Executive Summary Starbucks is an American coffee chain that began operating on the 31st of March 1971. Since then they have grown and expanded to over 24 000 outlets globally. Starbucks has a extensive Corporate Social Responsibility (CSR) programme. They are committed to Ethically and Sustainably 1Sourcing their Tea, Coffee and Manufactured Goods. This means that they hope to reach their goal of 100% ethically sourced cocoa, 65% ethically sourced tea and manufactured products by 2020.
“Starbucks Global Take-Over of China” Starbucks changed the concept of drinking coffee; no longer is coffee just a product it is a lifestyle. Through making coffee drinking an experience Starbucks was able to move a domestic product from a simple coffee shop in Seattle Washington to a renowned product globally. Starbucks has come a long way since its first beginnings in 1971. Today, it’s the world’s largest coffee retailer, with over 19,000 locations in more than 60 countries. What sets Starbucks a part within in the company is that the staff, which are known as partners, are responsible for the sale of over 2 billion cups of coffee every year and create what is known as, “the Starbucks Experience”(Krikorian).
Starbucks is an American company that was established in 1971 in Seattle, WA. Starbucks is the leading roaster, maker and retailer of special coffee around world. Starbucks employed more than 182,000 employees across 19,767 branches operated & licensed stores in 62 countries. They do the purchasing and roasting of high-quality coffees that they sell, along with handcrafted coffee, tea and other beverages and a variety of fresh food items, through company-operated stores. The company also sells different types of coffee and tea products and licenses their trademarks through other channels such as licensed stores, grocery and national foodservice accounts.
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 is a welcoming company to everyone and has made their mission “to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time” (Starbucks Corporation, 2016). This firm works in the present and looks out for the future. They keep their eyes on this vision of the company the whole time: “together we will evaluate our partners, customers, suppliers and neighbors to create positive change. To be innovators, leaders and contributors to an inclusive society and a healthy environment so that Starbucks and everyone we touch can endure and thrive” (Starbucks Corporation, 2016). Starbucks takes and creates opportunities that provide quality service and create change in the world, and always manage to challenge the status quo.
The increase in average temperatures and the turning of rainy seasons destroy large parts of farmers' yields and impede the overall yield of coffee. • Competitors The main potential challenges facing Starbucks are increasing competition from other retailers with similar concept of products. These competitors are able to stand out in the markets to generate customers. The main competitors are Dunkin Donuts, McDonald’s and Costa. It is essential for Starbucks to know their rivals and what they are currently doing to gain completive edge over them.
As seen in the article, in order to expand into China, a wide distribution of network is essential. However a lot of investments and time would be needed. In addition, Starbucks would face challenges from the external factors in China such as economic, political and culture issues. Hence, it would be better to establish a joint venture with a reputable and accomplished local firm. As such, Starbucks has established a joint venture with Taiwanese drinks maker Tingyi, with the brand name Master Kong, the largest firm in China that specialises in manufacturing and distributing instant noodles, beverages, baked goods and soft drinks.
Starbucks Coffee Company, founded in 1971, has grown to an international brand. As the world’s biggest coffeehouse company, Starbucks continues to lead the industry in sustainable business and innovation. Such success is attributed to the firm’s ability to address the external PESTEL/PESTLE factors. The PESTEL/PESTLE analysis framework indicates the most significant influences on Starbucks based on characteristics of the remote or macro-environment. Despite its current industry leadership, Starbucks must continue monitoring its remote or macro-environment.