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Starbucks Case Study Analysis

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A Brief Analysis of Wells- Starbucks Case Study

In 1971, Starbucks opened for the first time. The first mate of Moby Dick influences the name. This name and the mermaid logo were affected by the love of the sea in the heart of Pike Place Market from the original location of Starbucks, in Seattle Washington. The corporation grew to be the biggest roaster shop in Washington with several places until the early 1980s, beginning as one dedicating itself to high-quality coffee and brewing products. CEO Howard Schultz recognised a massive opportunity in 1981 and started working with Jerry Baldwin, the company's founder. Schultz took a chance to bring the cafe community environment that he discovered in Italy into the USA after a tour to find new products, and the brand Starbuck people know nowadays started to take shape. The first experiment was to sell espresso by the cup. In 1987,  Schultz left Baldwin to begin his own Italian coffee house Il Giornale, which discovered outrageous success when Starbucks determined to sell the original six places. He brought up his money with investment firms, bought the company, and mixed it with his Italian bistro locations. In 1992, the corporation saw rapid public growth and development tenfold by 1997, with places in the United States, Japan and Singapore. Starbucks started to expand its brand, too. Starbucks uses minimal publicity and has become an increasingly recognised word of mouth and brand. Starbucks reached 1,344 locations in 2004, according to Garza. According to the Starbucks website, 16,706 shops (as of 27th December 2009) are located in 50 nations. In 2009, the Farmer Support Center in Kigali, Rwanda, opened and became the world's biggest Fair Trade Certified TM coffee purchaser. You can also contact us for taking essay help.

The company's mission statement observed in the company profile includes, "Our mission is to inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time." Their core competencies can be described as high-quality coffee and products at reasonable prices and convenient areas, providing a community with an opportunity to share the experience and a range of options. Ethisphere magazine elected one of the most ethical businesses of 2010 for the fourth year in a row, also values ethics and good business practices. However, Starbucks faces its difficulties as sales began slipping in the current downturn before the other businesses. According to Melissa Allison, Starbucks' new business strategy is more cost-effective, with 900 stores shut down and 34,000 employment opportunities eliminated. Starbucks' new plan is to concentrate again on specific areas that reduce risk and increase front investments. It involves the expansion of foreign stores, the sale of instant VIA coffee and other goods at retail and convenience stores and the revitalisation of Seattle's best brand coffee through risk-sharing and cost partnership. 

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SWOT analysis of Wells- Starbucks

Starbucks is a worldwide recognised brand of coffee and drinks that has made tremendous progress in all the world's leading markets. The firm is a leader in its closest competitors, including Barista and other new competitors. Starbucks is so well-known in the western world that it is a leading brand for coffee.

As recognised in the analysis of this SWOT, Starbucks deals with internal and external strategic factors. The SWOT Framework identifies vital opportunities, threats and weaknesses of the organisation, which Starbucks needs to address through its strengths. Starbucks, as a worldwide leader in the beverage sector, addresses these factors efficiently. This SWOT analysis offers insights into possible business influences. The high performance of Starbucks is an indicator of its capacity to deal with the problems listed in the SWOT analysis. The SWOT analysis of Starbucks reveals that the business remains strong in the global beverage industry, although competition issues, corporate structure, and culture must be resolved. The SWOT Analysis of Starbucks is discussed below:

Strengths

· The primary strength of Starbucks is its solid economic performance, which has led the corporation to be the number one retailer in the world for coffee and beverages. 

· Compared to its rivals, the corporation is valued at more than $4 billion.

· Starbucks' intangible strong points include its customers' mindset. The corporation enjoys dominance on the world market for coffee and beverages due to its brand, which symbolises excellence and quality at a reasonable rate.

Weaknesses

· Therefore, the corporation is heavily reliant on its coffee beans and is hugely dependent upon the coffee beans price as a determining factor of its profit margins. It means that Starbucks is too price-sensitive to price fluctuations in coffee beans. It must, therefore, diversify its product portfolio in order to decrease the risk of such reliance.

· In modern times, the corporation has been on fire for procurement. Many environmental and social activist groups point out the unethical provision of coffee beans by poor third-world farmers. In addition, the corporation has also been charged with breaking the core values of "Fair Coffee Trade" established a few years earlier to handle this specific problem.

· The corporation prices its goods premium to the mid-range segment that puts its goods outside the funding levels of many working customers, who prefer to frequent McDonald's and other cafe outlets than Starbucks.

 

Strengths

· The primary strength of Starbucks is its solid economic performance, which has led the corporation to be the number one retailer in the world for coffee and beverages. 

· Compared to its rivals, the corporation is valued at more than $4 billion.

· Starbucks' intangible strong points include its customers' mindset. The corporation enjoys dominance on the world market for coffee and beverages due to its brand, which symbolises excellence and quality at a reasonable rate.

Weaknesses

· Therefore, the corporation is heavily reliant on its coffee beans and is hugely dependent upon the coffee beans price as a determining factor of its profit margins. It means that Starbucks is too price-sensitive to price fluctuations in coffee beans. It must, therefore, diversify its product portfolio in order to decrease the risk of such reliance.

· In modern times, the corporation has been on fire for procurement. Many environmental and social activist groups point out the unethical provision of coffee beans by poor third-world farmers. In addition, the corporation has also been charged with breaking the core values of "Fair Coffee Trade" established a few years earlier to handle this specific problem.

· The corporation prices its goods premium to the mid-range segment that puts its goods outside the funding levels of many working customers, who prefer to frequent McDonald's and other cafe outlets than Starbucks.

Opportunities

· In order to better manage its suppliers' source and not merely whimsical suppliers, the corporation has the potential to expand its suppliers' network and supply range. In addition, the business would become less vulnerable and durable to the contingencies to coffee bean price levels.

· In terms of expanding it into the emerging markets, the company has a massive chance. The business will probably broaden to these nations and other emerging markets with one billion customers who want rapid coffee and breakfast in China and India, which offers a financially rewarding chance to take advantage of.

· Starbucks can also broaden the product portfolio to include retailers such as McDonald's and Burger King as the customer base that these retailers seek to expand to give Starbucks additional trade opportunities.

Threats

· The company is faced with threats from rising coffee bean prices and is exposed to supply chain risks associated with price variations of this crucial contribution. In addition, the rise in the cost of milk products negatively affects the company, which also threatens its profit margins.

· Violations of trademarks and copyright by less-known competitors wishing to reverse the success of the corporation. Starbucks has battled litigation against those who misuse the brand and renowned logo and other transnational corporation retailers in the developing economies.

· As the developing markets on which it has primarily depended are saturated, Starbucks must broaden into developing economies as an obligation. The ongoing economic downturn has made it hard for several retailers and faces significant threats from this perspective.

 

PESTLE analysis of Wells- Starbucks

Starbucks's macroeconomic environment is characterised by the continuing worldwide financial downturn that has diminished customer buying power. In the last few days, market customers are not reducing their coffee consumption but are moving towards cheaper options. It means that, though more affordable options, Starbucks can still utilise customers' buying power to have a substantial advantage over its competitors. Starbucks's PESTLE analysis investigates the brand's business practices. The PESTLE Analysis of Starbucks examines several external factors, such as political, economic, social, and technological, that affect its trade activities and legal and environmental factors. The analysis of PESTLE is also regarded as the analysis of PESTEL. However, the PESTLE analysis of Starbucks is discussed below: You can take else paper writing services at allessaywriter.com.

Factors

Implications

Political factors

· Starbucks's main policy requirement is the major worry over the supply of its raw materials, which has drawn the attention of politicians in the West and the nations from which it supplies its raw materials. That is why Starbucks is committed to respecting social and environmental standards and pursuing proper sourcing strategies in line with 'fair trade' practises that worldwide companies and governments in developing and industrialised nations have consented to.

Economic factors

· Starbucks is mainly driving externally because of the continuing economic recession worldwide, which has diminished the profit margins of several firms, as described above.

Social factors

· Although, as previously described, Starbucks can offer affordable options without compromising quality, this remains the critical socio-political challenge affecting the business in expanding its customer base into the middle and lower levels of the revenue pyramid.

Technological factors

· The corporation introduced Wi-Fi in its stores to enable users to surf the web and do their work during coffee sipping. It is a real added value and something that improves the customer experience for the Starbucks brand.

Legal factors

· Starbucks has to guarantee that the nations' rules, regulations, and legislations from which its raw materials are derived, and the United States' domestic markets must not be violated.

Environmental factors

· The activist groups, the worldwide advocacy groups and the customers themselves have expressed concerns over the business practises of Starbucks. Thus, if Starbucks continues to retain its confidence in its customers, it needs to consider these concerns.

The analysis above shows that Starbucks operates in an external environment that is reasonably stable. The primary reason for this is that they function in the beverages area; customers reduce consumption to some degree and not entirely due to the recession. Thus, Starbucks's job is to reduce cost and improve value so that its customer base remains and customer trust is attracted.

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