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Business Environment Assignment : Starbucks

   

Added on  2021-04-24

7 Pages1396 Words121 Views
Running head: BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENTBUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENTName of the Student:Name of the UniversityAuthors Note

1BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENTStarbucks is a global organization that deals with the retailing of coffee in the businessenvironment since the year 1972. The organization has positioned itself as a major seller of highquality coffee products (Starbucks.in. 2018). Since the last two decades, Starbucks has expandedits presence and market position to a great extent. In the recent times, the company serves coffeeat more than 64 countries and has also known to become the largest coffee house in the world.Besides having a positive market outlook, the company is currently facing underestimatedchallenges. Starbucks is unable to operate the new segments like its competitors McDonald.Customers are now more price oriented and as the switching cost is low therefore this makesthem easily to move to more competing brands. Starbucks primarily operates and competes in the retail coffee and snacks industry. Theindustry faced a major slowdown in the economy due to crisis and changing tastes of consumerwhich manage the revenue of US decline from 6.6% to $25.9 billion. The consumer thereforespent less on luxuries and expensive items. The consumer now prefers to cheaper items ratherthan coffee and beverages with increased price. The Starbucks industry is growing at a lowannualized growth rate at an average of 0.9% till the year 2013 (Cavusgil and Knight 2015). Thecountry has revenues currently of $29 US billion that is forecasted to grow over the next fiveyears at an annualized rate of 3.9%.Being the largest coffee organization both in terms of market shares and sales has madeStarbucks successful. Due to its high quality coffee products has attracted various customersthroughout the world. In the recent year Starbucks has managed to expand and consolidate itsmarket position. Despite the undisputed market position in the business environment and high

2BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENTgrowth Starbucks faces severe challenges that is difficult to overcome both in short-term andlong-term. Starbucks direct competitors such as McDonald’s and Dunkin Brands aims to attractand gain customers by their low price strategy globally. In addition to this Starbucks is alsounsure about the consequences of its growth strategy in its emerging market that will affect itscorporate performance.Starbucks went public in the year 1992 so that financial position of the company can beefficiently tackled and further expand in the overseas market. The organization facilitatespersonalized beverages according to the need of the customers. The beverages portfolio consistsof Torrefazoine Italia Coffee and Seattle’s Best Coffee (Starbucks.in. 2018). As per the companyvision statements and policies, the employees and partners are treated with high dignity andrespect. Being the world’s leading company of coffee, Starbucks is still striving to defend andexpand its market position against its competitors. Starbucks needs to undertake various strategicactions to survive in the long-run (Chen et al. 2014). The competition is very tough and themajor competitors like Dunkin’ Donut and McDonalds are going to great extent so thatStarbucks can be dethroned. The top management of Starbucks needs to take adequate action and measures to providecheaper price to its customers to gain competitive advantages. Starbucks Coffee has variety ofchallenges in its current market environment that can be analyzed through the Porter’s fiveforces. The bargaining powers of the customer or buyers are very strong and affect theStarbucks Coffee business in a very significant manner. The switching cost for the customer tothe substitute products is very low (Trigeorgis and Reuer 2017). The customer easily shifts fromthe Starbucks to other brands as they are competitively highly affordable. Customers also get

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