Starbucks Strategic Analysis and Business Planning

This assignment involves a comprehensive strategic analysis of Starbucks, including a marketing strategy, PESTLE analysis, Porter's Five Forces, Ansoff's Growth Matrix, and SWOT analysis. The task requires identifying internal and external environmental factors affecting the company's strengths, weaknesses, opportunities, and threats. Additionally, it involves understanding various skill management techniques that can increase sales and production rates. The assignment also uses references from books and journals to support the analysis.

BUSINESS HEALTH CHECK

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1 .................................................................................................................................................3
1.1 Analyzing the goals and objectives of Starbucks Corporation.............................................3
1.2 Explaining factors which affects the business environment of Starbucks:...........................4
1.3 Ansoff's Growth Matrix of Starbucks Corporation...............................................................8
LO 2...............................................................................................................................................10
2.1 Measuring the Effectiveness of the business of Starbucks.................................................10
2.2 Developing business plans to improve the business of Starbucks......................................11
LO 3...............................................................................................................................................12
3.1 Evaluating the skills of management and staff members of Starbucks...............................12
3.2 Plans for the development of skills for management and staff of Starbucks......................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

Illustration Index
Illustration 1: PESTLE Analysis......................................................................................................6
Illustration 2: Porter's Five Forces...................................................................................................8
Illustration 3: SWOT Analysis.........................................................................................................9
Illustration 4: Ansoff's Growth Matrix..........................................................................................10

INTRODUCTION
Business health check is a process which is used to analyze the overall performances of
the organization operating in the target market. It helps them to understand their management
system more to do respective change according too the requirements. This also helps to tack the
progress of the organization from time to time.
This report will focus on Starbucks which is leading coffee company in UK and study its
business environment which includes internal as well as external factors which affects them by
performing PESTLE and SWOT analysis and carrying out the assessment of the Porter’s 5
Forces Model on the organization. It will also focus on effectiveness of business and evaluating
the current skills of management and staff of the organization.
LO1
1.1 Analyzing the goals and objectives of Starbucks Corporation
Starbucks Corporation is a Coffeehouse chain operating in America. It was founded in
Seattle, Washington in 1971. Currently Starbucks Corporation is running successfully in 28,218
locations in the world. Starbucks has 898 outlets itself in UK in 2016 which makes it the second
highest coffee shop chain. It is famous for its variety of coffees available in their menu, such as,
hot and cold drinks, whole-bean coffee, espresso, caffe latte, different variety of tea, etc. Apart
from drinks, Starbucks also delivers fresh juices, pastries, snacks which includes, sandwich,
chips, etc.
Starbucks is the only non-British company which manages to establish its store in Great
Britain in huge numbers compared to any other European country. The brand has seen an
increasing number of licensed stores opened in UK in the past years. Starbucks is providing
people special experiences instead of just a cup of coffee. Starbucks corporation ha recently
announced its long term objective plans to expand its business in different countries. This will
help them to grow in the industry (Boiko, V.I. 2016).
Starbucks has various number of aims and objectives to achieve in the future to increase
their business in the target market. They try to provide a good coffee which the customers can
enjoy. Some other objectives of Starbucks, are as follows,
 Providing variety of items into their menu which can attract their customers.
 It is planning to enter into the tea industry and its initiatives to boost consumer
relationship in their business.

 Starbucks wants to grow its business and withstand pressure from their competitors.
Some SMART objectives of the Organization which they are planning to achieve in the
upcoming years, are as follows,
 There aim is to increase the overall growth by 90% at the end of the fiscal year. This will
help the company to increase there sales.
 They are trying to open more than 3,000 new stores and remodel many more in the next
five years which can help them to capitalize on the strong demand for Starbucks products
in America and UK.
 They are planning to expand their in various countries like, China, India, etc, which
according to them, will be very beneficial for them.
1.2 Explaining factors which affects the business environment of Starbucks:
There are many factors which affects the business environment of the organization in the
target industry. These factors can be internal as well as external which can affect the
organization's function. External or macro environmental factors can be identified by PESTLE
analysis or by Porter’s 5 force model. And SWOT analysis is used to evaluate the internal or
micro environmental factors of the organization (Darroch, J. 2014).
 PESTLE analysis of Starbucks Corporation : It is used to evaluate the external factors
which affects the business environment of the company. The PESTLE analysis
framework indicates the most significant influences on Starbucks based on the
characteristics of the macro-environmental factors.
1. Political Factors : They have to follow the laws of the government which has been made
for them to successfully operate in the country.
2. Economic Factors : There are so many economic factors which affects the working of
the Starbucks. For example, increasing growth of the developing countries, decreasing
the unemployment rate, etc helps them to create opportunities to gain more revenue. The
living index and purchasing power of the customers affects the organization in setting
pricing for its products and services.
3. Social Factors : In these factors, company tries to serve their products according to their
customers needs and preferences. As there is an increase in coffee culture among people
which helps the organization to expand their business in the market (Finch, B. 2016).

4. Technological Factors : Technologies plays an important role in any business. It is
mandatory for the organization to keep it updated according to the latest trends as most of
their work is done by machines only.
5. Legal Factors : There are many legal factors which they have to follow in order to run
successfully. For example, product safety regulation which helps them to improve their
performance.
6. Environmental Factors : Starbucks has specific regulations and makes sure that their
customers are not throwing their wastes openly into the surroundings. They ensure that
their products and its processing is all environmental friendly (Greenspan, R., 2015).
Illustration 1: PESTLE Analysis
Source : Scanning the Environment: PESTLE. 2017

 Porter’s 5 Forces Model : This method is used to evaluate their business position in the
market and can help them to plan strategies according to its various factors,
1. Bargaining Power of Customers : It is the most significant forces which affects
Starbucks Coffee’s business. There are so many substitutes available in the market which
can be a great threat to the organization. They have managed their prices in such a way
which can be easily affordable by their customers.
2. Threat from new entrants : New entrants can compete against Starbucks because of the
moderate costs of doing business and supply chain development. This becomes very
difficult for the organization to maintain their customers as these new entrants are serving
their products at low price (Gregory, L., 2015).
3. Threat of Substitute products : Starbucks basically serves coffee in their menu but due
to the availability of the substitute products makes them to introduce new items into their
menu to sustain their customers.
4. Bargaining power of suppliers : This factors does not have that great impact on the
organization as there are high variety of suppliers available in the market. This helps
them to buy their raw material at a very reasonable cost.
5. Competitive Rivalry within an industry : There are different companies which is
operating on the same field, for example, Costa Coffee, Caffè Nero, McDonald’s, etc.
which encourages them to serve more and better products in the menu to their customers
(Haskova, K., 2015).

Illustration 2: Porter's Five Forces
Source : Porter's Five Forces Analysis. 2018
 SWOT Analysis : It helps to evaluate the internal strength of the organization on the
following factors,
Strengths Opportunities
 The strong brand recall amongst their
customers.
 They have a good quality of food
services.
 They have strong financial resource.
 There is a huge scope of expanding
their business worldwide.
 They are introducing new products into
their menus.
 Growth opportunities in new markets
like Asia, Middle-east and Africa.
Weaknesses Threats
 Too high prices of the food items.  Continuously changing the eating

 There is lack of new and unique
product into their menu which make
them distinct from their competitors.
habits of the customers.
 Local coffee seller in the location
(Lloyd, B. and et-al., 2016).
1.3 Ansoff's Growth Matrix of Starbucks Corporation
Ansoff's growth matrix analysis help the organization to evaluate their marketing
strategies and manages to plan according to their position in the market. From this method,
Starbucks can identify their growth opportunities based on market research. Ansoff method
identifies 4 growth strategies for the organization, these are as follows,
1. Market Penetration : This process is used for the existing products of the organization
in the market. For example, Starbucks has come up with an idea of writing their
customers on their coffee cups which they have ordered. This helps them to increase their
sales and customer's satisfaction rate.
2. Market development : In this method, they try to increase their sales by introducing new
products into an existing market. For example, they have launched a unique coffee made
Illustration 3: SWOT Analysis
Source : Swot Analysis. 2018

up of rare and exclusive beans, which has attracted a lot of customers to try it (Lu, T.C.
and et-al,, 2017).
3. Product development : In this method, organization introduce their existing products
into a completely new market. This will help them to increase their customers.
4. Diversification : It is completely opposite of what they do in product development
process. In this process, a new product is being launched in new market. This will help
them to potentially increasing their sales by a significant amount. For example, they are
planning to introduce some new food items into their menu for the customers to have
(Moutinho, L. and Phillips, P., 2018).
Illustration 4: Ansoff's Growth Matrix
Source : Ansoff Matrix. 2016

LO 2
2.1 Measuring the Effectiveness of the business of Starbucks
Business effectiveness is a procedure which is used to identify various factors which can
enhance the productivity of the organization. Improving the effectiveness of the business is
useful to evaluate the strength of the Organization. Various factors which comes under this
procedure are as follows,
 Products or Services : Its very important for the organization to maintain a good quality
of their products and services which is being served to their customers. This will help
them to increase their revenue (Newton, P., 2014).
 Sales : By delivering products according to their customers references and needs will
increase their sales in the target market. It is very crucial to satisfy customers through
their services.
 Marketing : Marketing in any organization plays an important role to promote their
services and goods to make aware public about them. This will help them to gain
popularity among them. Marketing can be done by various ways such, by advertising on
newspaper, magazines, through posters, by social media, or by organizing public events.
 Employees : If the working environment of the staff member is maintained in the
organization it will ensure that they will work effectively. This will result into increase in
the production for them. Having skilled employees is very important for them.
 Financial Management : Maintaining financial statement of the organization is very
important. By doing this they can manage their budget and plan accordingly.
 Business branding : A good branding of the business is very important. It will ensure
that they have a positive response from their customers (Rothaermel, F.T., 2015).
 Keeping Records : Keeping the overall records of all the things which is being happened
in the Starbucks is very important. In includes financial records, sales and production
records.
2.2 Developing business plans to improve the business of Starbucks
Business planning is a process which is planned by the organization to improve the
effectiveness of the business. This can be achieved by implementing various strategies into their
management system to enhance their productivity. Strategies are made to forecast the future of
the organization which can improve their marketing and sales and productivity in the target

market. There are various steps to prepare a good business plan for the organization, for
example,
 Executive Summary : Having a proper executive summary will help the Starbucks to
understand their functions more accurately. It will help them to manage their
management system and can plan their strategies according to the requirements.
 Research : Before planning any business strategies to implement in the management, a
proper market research is very important. This will ensure that they have undergone
through all the area. This will also help to know their competitors in the market
(Thompson, A., 2017).
 Purpose : It is very important to know the purpose of the business plan. It will help the
organization to understand their objectives and goals from that business plan.
 Financial resource : It is very important to have a good financial backup to implement
all the new strategies in the system.
 Sales Strategies : Strategies should be made accordingly which helps the organization to
increase their sales and production in the target market. It will be done with the help of
their customers feedback and requirements.
 Staff and management : Having good and skilled employees help the organization to
increase their sales and production. Employees has a direct interaction with their
customers which help them to make a good relationship with them. Having a good
knowledge of all the technologies being used in the system is also important.
 Monitoring : Monitoring the whole process of business plan should be done carefully to
manage the work. It will ensure the progress of the strategies being implemented (Wen,
S., 2016).
 Funding Requirements : Arranging a proper funding will also be a great opportunity for
the Starbucks as it will increase their financial budget for the business plan and can easily
implement more changes in the system.
 Results or Outcomes : They have to analyze the possible outcomes or results from their
business plan. This will help to increase their growth in the target market and can earn a
good profit.

LO 3
3.1 Evaluating the skills of management and staff members of Starbucks
Skill management is a practice tool which is used in the business to enhance the
performance of the organization. Basically there are 3 types of skill management which can be
useful for the Starbucks to implement into their system,
1. Technical Skill Management : It is the skill which is used as the knowledge and
abilities needed to accomplish specific tasks relating to technology within the
organization. It can include, engineering, computer-related work, or some technology
related.
2. Operational Skill Management : In this, the organization ensures that their operational
management is operating properly.
3. Managerial Skill Management : In managerial skill, the manager is managing all the
work of the organization and makes sure that everything is working properly. He looks
after all the process of the organization (7 Steps to a Perfectly Written Business Plan.
2018).
For Starbucks its very important to have a good management skill in their staff members.
Currently, Starbucks has to increase their operational skill. It will be done by employing skilled
employees in the organization who understand the work more accurately. It will help them
increase their overall production rate. It will also help them to increase their customers by
delivering a good service in the market. All the work should be managed properly in the
organization. It will help them to become popular among people.
3.2 Plans for the development of skills for management and staff of Starbucks
There is huge scope of development in the Starbucks which they can adapt to increase
their business efficiency in the market (Managerial Skills: How Good Managers Promote
Productivity. 2018), such as,
Skills Strategies Time Resources
Communication Skills  It will organize some
seminars which can
help the employees to
develop a good
communication skills.
5 days They will need a
seminar hall to organize
the meeting, or training
sessions.

 They should try give
training on the
developmental skills.
That will also need
tables, chairs, notepads
and pens.
Management Skills They have to give their
employee a proper training
on the management system
of the organization to
understand its functions.
7-8 days For this they will need a
good management team
who can work patiently
with them.
Technological Skills Starbucks has to teach its
staff members to understand
the technological aspects
related to its working.
10 days All the latest technology
which is used by the
organization to work.
CONCLUSION
From the above it can be concluded that planning an objective or goals for the
organization can be a beneficial step for them. It can help them to increase the overall growth of
the Starbucks in the target market. This report also focuses on the different skill management
which can increase their sales and production rate. Understanding various internal and external
environmental factors by studying PESTLE and SWOT analysis is also useful for Starbucks to
understand its strength and weakness. And also helps to evaluate the opportunities for them.
From Porter's Five Forces and Ansoff's Growth Matrix helps the organization to build an
effective business strategies which can increase their revenue from the market.

REFERENCES
Books and journals
Boiko, V.I., 2016. METHODS OF DESIGNING AND IMPLEMENTING A BUSINESS PLAN
IN THE CULTURAL SECTOR OF THE REGIONS OF THE COUNTRY.
In PERSPECTIVE DIRECTIONS OF SCIENTIFIC RESEARCHES (pp. 169-172).
Darroch, J., 2014. Ansoff’s Growth Matrix—In Detail. In Why Marketing to Women Doesn’t
Work (pp. 131-147). Palgrave Macmillan, London.
Finch, B., 2016. How to write a business plan. Kogan Page Publishers.
Greenspan, R., 2015. Walmart: Five forces analysis (Porter’s model). Panamore Institute.
Gregory, L., 2015. Starbucks Coffee’s Vision Statement & Mission Statement. Retviered from
http://panmore. com/starbucks-coffee-vision-statement-missionstatement.
Haskova, K., 2015. Starbucks Marketing Analysis. CRIS-Bulletin of the Centre for Research and
Interdisciplinary Study, 2015(1), pp.11-29.
Lloyd, B. and et-al., 2016. Development of a multiple risk factor Brief Health Check for
workplaces. Public Health Res Pract, 26, p.e2641649.
Lu, T.C. and et-al,, 2017, August. Integrated Health Check Report Analysis and Tracking
Platform. In International Conference on Intelligent Information Hiding and Multimedia
Signal Processing (pp. 44-52). Springer, Cham.
Moutinho, L. and Phillips, P., 2018. Strategic analysis. In Contemporary Issues in Strategic
Management (pp. 46-79). Routledge.
Newton, P., 2014. What is the PESTLE Analysis?.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Thompson, A., 2017. Starbucks Coffee’s Stakeholders: A CSR Analysis. Panmore Institute.
Wen, S., 2016. Marketing strategies: Starbucks in China.
Online
7 Steps to a Perfectly Written Business Plan. 2018 [Online]. Available through:
<https://www.entrepreneur.com/article/281416>
Managerial Skills: How Good Managers Promote Productivity. 2018 [Online]. Available
through: <https://study.com/academy/lesson/managerial-skills-how-good-managers-
promote-productivity.html>