Starbucks SWOT Analysis

free essayTo begin with, Starbucks has several opportunities. First, the company can increase the number of its suppliers. As a result, it will be less dependent on such factors as natural disasters, weather, increase of production costs, changing political and economic conditions etc. On the other hand, today the company has a wide number of suppliers in different regions of the world. Moreover, it uses fixed price and price-to-be-fixed commitments that secure Starbucks from the possible risks. Therefore, the company might have difficulties with finding new suppliers (Annual report, 2012). Second, Starbucks can open their new coffeehouses in emerging countries such as China or India, where they are not represented widely. Moreover, the potential of this sector has been proven by the recent report. Thus, it demonstrates that the growth of Starbucks’s earnings was also driven by a strong performance of the China/Asia sector, the store sales of which grew by 11 percent (Anonymous, 2013). Finally, the company can expand the range of its products. For example, Starbucks’s managers can introduce new food in their coffeehouses. However, the company’s CEO Howard Schultz always worried that their food would be of worse quality than their coffee, and he was right. In particular, Starbucks bought regional bakeries and changed them into industrial ones. That negatively influenced their taste. Therefore, when recession came, Schultz first started from changing the menu. For example, they added fewer and fresher ingredients, created the Vivanno smoothie and Bistro Boxes with eggs, cheese and fruits. However, Starbucks still has opportunities to expand the menu, because customers prefer McDonalds for their breakfast. The specialists see the reason of this in pastries and bakery offerings, whereas people usually want to order eggs, sandwiches and cereal (Berfield, 2012).

On the other hand, Starbucks operates in a highly competitive industry. One of its main competitors is McDonalds. In addition, the entry in this industry is easy enough, so there is always a risk, that newcomers will be more successful. Therefore, Starbucks always needs to offer new products to save old customers and attract new ones. Apart from that, some of the competitors use its trademark, which is costly for Starbucks due to the necessity to solve such issues. Additionally, the company has coffeehouses in many regions of the world, so it has to compete with local cafes that have lower prices and can make their menus more suitable for the needs of customers. Finally, the market is settled in developed countries, so Starbucks might have difficulties with increasing sales there. However, the market of developing countries is also risky due to unstable political and economic conditions (Annual report, 2013).

Apart from the environment, the strengths and weaknesses of Starbucks also demonstrate its sustainability. One of its biggest strengths is growth of profitability, which reaches 14 percent now. Additionally, Starbucks has a strong brand reputation. Customers associate this brand with qualitative and excellent service. Therefore, Starbucks is now the most valuable business ($4 billion) in the coffeehouse segment. In addition, Starbucks has been operating for a long time, so it has created its own experience that includes tasty coffee, friendly staff and relaxing atmosphere. Apart from that, it is the biggest coffeehouse chain in the world. Thus, Starbucks has 20,000 coffeehouses in 60 countries. Finally, its employees are experienced and devoted due to many benefits and higher payments than in competitors’ companies (Annual report, 2012).

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However, despite all these strengths, Starbucks has some weaknesses. First, coffee beans price can significantly influence its profits. Unfortunately, for the chain, it cannot control this factor. Apart from that, selling qualitative coffee and providing excellent service allow the company to set high prices. Moreover, these prices are higher than in McCafe that also offers premium coffee. In addition to that, customers valued that coffee better than in coffeehouses of Starbucks. Finally, its food does not have high popularity. Experts say that this happens because it does not respond to customers’ tastes (Annual report, 2012).

All the mentioned factors allowed Starbucks to become a leader in coffeehouse segment. Moreover, its profits continue to increase. Therefore, I think the company is even able to improve its position. However, it needs to implement several strategies to achieve that. First, it should continue to expand in emerging countries where competition is less intense than in developed countries. Second, it has to review its menu that would become more popular among customers. For example, Starbucks can create new breakfast offerings. Finally, the coffeehouse chain can find more suppliers. It would reduce the dependence on such factors as weather, political and economic conditions etc.

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To sum up, Starbucks is the biggest coffeehouse chain in the world, the financial rates of which continue to increase. The findings of SWOT analysis demonstrate that there are many reasons for these positive trends. First, it has a high brand reputation. Moreover, even high prices do not stop customers from visiting its coffeehouses. Second, it really offers an excellent experience, so the customer base continues to increase. On the other hand, Starbucks operates in a highly competitive industry. Therefore, it should always introduce new approaches in order to attract new customers and save old ones.

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