SWOT and PESTEL analysis of Starbucks

This document provides a detailed analysis of the SWOT and PESTEL factors affecting Starbucks. It discusses the strengths, weaknesses, opportunities, and threats of the company, along with the political, economic, social, technological, environmental, and legal factors influencing its business. The document also covers the CSR activities of Starbucks, different leadership styles, and the importance of organizational culture.

Context of Business
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. SWOT and PESTEL analysis of Starbucks........................................................................3
Strengths..........................................................................................................................................3
2. Evaluate the CSR activities and their influence.................................................................5
3. Styles of leadership.............................................................................................................7
4. Organizational Culture.......................................................................................................8
5. Reflection Report..............................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Business organisations functions in the marketplace with the primary objective of
becoming successful with profit earning motive (Wang and et.al., 2016). In order to accomplish
this objective, it is essential for organisations to consider various factors such as micro and
macro environmental factors with adoption of latest technology and strategies. All these factor
are responsible for determining the success of an organisation. The organisation chosen for this
report is Starbucks, which is one of the leading coffee-house chain in the marketplace operating
at international level. The company deals in wide range of coffee products such as espresso
items, brewing accessories and refreshments, etc. across the globe. The topics covered in report
are various internal and external factors that affect the business of Starbucks, corporate
responsibility goals, the role of leaders in operational activities, importance of organisation
culture in context of its contribution in success of organisation and involve reflection report.
MAIN BODY
1. SWOT and PESTEL analysis of Starbucks
Starbucks has able to maintain its number one position in beverage industry mainly in
coffee section through strategic planning and innovation. This is possible by enhancing strengths
and overcoming the weaknesses along with considering external environment and identifying
opportunities and threats to take corrective measures accordingly. The SWOT analysis of
Starbucks is as follow-
Strengths
 Efficient Branding: The company has able to established its brand image in food and
beverage industry by providing quality products with good service management which
provide support in covid case. As due to good brand image people trust the brand.
 Efficient strategic planning: The company is operating at international level and has
developed effective strategic planning for its different branches in the most efficient
manner. The company continuously focus on expansion so it adopt the strategy of
reinvesting its profits in the business growth (Dörndorfer, Hopfensperger and Seel, 2019).
Weaknesses
 Premium pricing policy: The company has adopted the premium pricing policy that is
dealing in high price. Starbucks is targeting high income group people where focus is on
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limited market and able to increase its profit margins. Due to covid situation company
has to make changes in its prices of products.
 Lack of USP: The company is not following separate USP due to which company is
facing difficulty in achieving differentiation advantage. The products of the company are
imitable and can be used by any other competitor at low cost. As a result the company
might face huge loss of revenue.
Opportunities
 Expansion opportunities: The headquarter of the company is in USA, and able to
establish its brand in other countries and has more expansion opportunities opened in the
market place. Whereas due to the covid situation less opportunities are available for
expansion.
 Introduction of new products: The company has able to established its brand value in
marketplace which is facilitating great opportunity for Starbucks to introduce its new
range of products. This will help company in gaining customer attention and lead to
increase in its sales volume. As company is already famous for its current range of
products, the new product range will easily get established and known in the market.
Threats
 High Competition: In this scenario company is facing high competition in marketplace as
n number of substitutes are available in market which may lead to decrease in the sales of
products. Due to covid situation the competition in market get decreased as many
companies get liquidated.
PESTEL analysis
The companies use PESTEL analysis to understand the factors which affect the
businesses externally (Souto, 2015). The market for products are dynamic and there is a need for
management to understand the factors which affects businesses and help them to analyse the
market.
 Political Factors- Businesses which has its operations in many countries and their
operations are affected by the political boundaries of countries. Starbucks has to pay
taxes which affects the direct cost like custom duty, excise duty, service tax. Starbucks
has its major revenue from developing markets where their share is 75%. The Covid-19
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has impacted the political conditions of Starbucks has the situation of the countries is
affecting their business.
 Economic Factors- Starbucks is a brand which has its product supplies to many
countries and they get profits from them, it is impacted by various economic conditions
of these countries. They offer products to customers who can afford luxury goods so the
economic conditions is important for their business to increase profits. The economies of
the developing countries is affected in this Covid-19 so the profits are reducing as the
lockdown made them close their shops.
 Social Factors- Social environment of various countries has proved to be a major factor
which impact the business of these companies and make them difficult to operate. In
Western countries, they prefer having coffee and they have a culture where they give a
good experience to customers. They made new products to give customers experience.
People where not eating out in Covid-19 as the societies are not allowing. The people are
not allowed to gather so they have to open take away services.
 Technological Factors- Starbucks has used various software especially in countries like
UK where technology is advancing and it has become easy for them to operate, they
have to make use of the various new machines which will keep the work updated and
will increase business efficiency. The Brexit has affected the technology factors as the
imports and exports of gadgets were not allowed which impacted their business.
 Environmental Factors- It is providing help to their farmers in cultivating and other
farming activities. Starbucks is also going for sustainable options to manufacture its
products and also keeping the environment clean. The environment in Covid-19 is
affecting the business of Starbucks as people are not preferring to go to the shops.
 Legal Factors- Starbuck's logo and name is taken by small companies. To keep
Starbucks away from these factors which are causing loss to them, it is important to
make them patent. Brexit has affected the business legally as there are small competitors
of it.
2. Evaluate the CSR activities and their influence
It is important for companies to contribute their profits to the society (Lankoski, 2016).
They operate in the society and use the resources of the society so it is their responsibility to help
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them to achieve their objectives. There are CSR activities which companies do help them and
make them a part of the society.
Analyse CSR activities of the organisations
 Education- The society have different people and they have different needs. The
companies provide education to people who cannot afford it as it is important to have
knowledge. They give a share of its profits to provide education to the people and which
will help them to have necessities.
 Food- There are people in the society who do not get food and they face problems.
Companies have a tie-up with other companies where they contribute their profits and the
people will get food. It has an impact on the society as their customers will feel that they
care for people.
 Employment- The people who cannot afford can get employment from companies. They
hire people for all positions where they can educate them and provide them training so
they will work for companies.
The activities which Starbucks do as a part of CSR
 Producing coffee- Starbucks helps farmers in cultivating their crops. They help them by
giving them money to grow coffee. Their crops are used by Starbucks and they get good
amount from that. They will not produce crops for others and will help Starbucks meeting
demand and supply. They are helping farmers as they purchase their products.
 Employee benefits- Starbucks is helping employees by giving them benefits. They
understand their needs and help them in increasing their benefits. They understand their
employees and make them feel that they care about their employees (Berger and et.al.,
2015).
 Waste management- Starbucks is contributing to the society by providing them products
reusable products. They use effective management of waste where they do not take
products which are not good for the environment. They use recycled good and make
products from them which are good in quality. Starbucks has a management in many
countries and it is their business strategy where they use products. The society is
benefited for it and they have helped them in increasing profits (COVID-19: How
companies can support society, 2020).
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3. Styles of leadership
Leadership is the art by which one motivates a group of people to work toward achieving
a common goal in an organization (Hu and et.al., 2017). Leadership styles are used in
organizations to provide direction to employees, for implementing plans and for motivating the
members of organization. These styles are broadly classified into different categories that are -
Authoritarian Leadership
Authoritarian leadership style allows leader to force its team members to perform on
expectations and to define the outcomes. This strategy is used when team members require clear
guidelines from the leader and provides most effective results in case of limited time. While
using this style the level of creativity sacrifices, this is because in this case the input from the
team is imitate. This style helps in reducing the level of mistakes in the implementation of plans,
hence leads to consistent results. In comparison to delegative leadership style the focus of
authoritarian style is on actions rather than allocation of work.
Participative Leadership
This leadership styles by its name makes clear its use in an organization that is to involve
team members in the decision making process. The leaders decision is consider as final decision
and team performs accordingly but team members feel included, engaged and motivated when
they get chance to participate in decision process. If in case team members are not satisfied with
the decision taken then it will lead to argument and is time consuming process to reach to a
conclusion. This leadership style helps in building a strong team and encourages team members
to use creativity in their work. In comparison to transactional leadership, the participative style
focus on the completion of task which was decided by leader.
Delegative Leadership
Delegative leadership style or laissez-faire leadership style focuses on delegating work to
team members (Holloway and Humphreys, 2019). This strategy is most effective and successful
if team members are competent, take responsibility on their own, and should focus on individual
work. In this style experienced employees can take benefit of their experience and the level of
innovation and creativity is given high importance, hence lead a positive working environment.
The only thing which create problem in this style is the level of difficulty while adapting to the
changes in the working conditions.
Transactional Leadership
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The transactional leadership style is use between a leader and his team members that is
exchange of things (rewards, punishments, etc) to get the work done. The leader sets clear goals
with reward and team members know how to do the work in the desired way to achieve the
reward. This is one of the best style used by leaders to get the work completed from the
employees in the most effective way in less time that is to achieve time bound goals. This style is
basically give and take style which follows defined routine and procedures in an efficient
manner. This style helps employees by motivating them to perform better and creates a system
which is easy for both(leader & employees) to implement. In comparison to Authoritarian
leadership, transactional style focus on the needs and requirements of employees, that is consider
the abilities of employees before assigning them task.
Transformational Leadership
In transformational leadership style, the leader plays very important role that is leader is
responsible for inspiring his team members with a vision to achieve goals by encouraging and
empowering them. It provides many benefits to organization that is low employee turnover rate,
gains the support of employees and establishes good relationship with employees. In comparison
to transactional leadership, the transformational style focus on motivating employees that they
can go all the tasks nothing is impossible.
After studying above about various leadership styles, it is suggested for Starbucks
management to adopt the transformational leadership style. This leadership style will provide
support as company is operating at international level with large number of stores. The company
should retain its experienced employees as they are capable of handling customers and has
maintain good relationship with them (Kahiya, 2020). Due to Covid situation company is facing
downfall in its sales volume where the adoption of this style provide great help in the
development of company as experienced employees know how to handle customers and has
established great bound with them.
4. Organizational Culture
Organisational culture refers to the values, activities, expectations and practices that
provide information about actions of all team and departments and accordingly provide solutions
to problem and guide them. A great cultural regulation and implementation lead to improvement
in the performance of team members hence help organisation in accomplishing its goals and
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objectives. Culture is that part of organisation which reflects the consistent and authentic
behaviour which is followed in workplace.
Importance of organisational culture
 Establishes relationship: On the basis of the existing culture within the organisation the
way of communication and interaction is decided. A good working conditions leads to
health working environment and this facilitate successful communication and
coordination among the members of organisation. Healthy and proper communication
helps in enhancing the productivity level which is very crucial for the success of the
organisation.
 Sense of direction: The culture of organisation establishes the predefined rules and
regulation for all the members which provide idea to everyone working in an organisation
to get the sense of direction and path which they have to consider and follow in the
workplace (Hutchins and et.al., 2019). This system help by saving time of management in
directing and maintaining discipline within organisation which contribute toward increase
in productivity.
 Common platform: Cultural within the organisation provide common platform to the
employees for learning and are equally treated due to this employees didn't feel neglected
or discriminated at workplace. This practices lead to sense of satisfaction among
employees and as a result they will participate in decisions and increase their
productivity.
Qualities of a great organizational culture
 Alignment: Alignment is a practice in which the objective of organisation and its
employees operational activities are pulled in the one same direction. The main focus of
organisation is to build continuous alignment so that with help of its workforce they are
able to accomplish their vision, purpose and goals (Zhu and Zolkiewski, 2015).
 Appreciation: Appreciation is that element which act as a motivating factor among the
employees of organisation where high performing employees are recognised and
complimented for their good performance.
 Teamwork: The operations which are performed in team helps in better implementation
and leads to good results as in teamwork employees get collaborated and establishes well
communication where employees feel happier and recognised within organisation.
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 Innovation: Innovation provides great support in carrying out operations in the most
effective and efficient manner with the use of available technologies and resources. A
culture of innovation refers to creative thinking for carrying activities in most creatively
way to provide maximum output.
Organisational culture at Starbucks Coffee-house
The organisational culture of Starbucks depends on various factors but majorly dependent
on belonging, diversity and inclusion (Kwilinski and et.al., 2019). Cultural characteristics are
quite unique within the company which is providing great support in increasing the level of
business in coffee house chain. Following are the main characteristics of organisational culture
of Starbucks Coffee-house:
 First preference to employees: The company consider employees on priority bases and
are involved in decision making process where their opinions are considered and
included in the strategics. This practice helps in providing enhancement and growth to
the subordinates in the company. The company believe in the fact that employees
suggestions and strategics matters and provide benefit because they are the one who are
in direct contact with the customers so know their taste and preference. Employees are
the one who are operating in real working environment hence provide better suggestion
on the bases of practical experience.
 Relationship oriented: The cultural within the company emphasise on developing and
maintaining clam and warm culture. These practices facilitate and create a friendly
environment where employees feel free to put their viewpoints and issues. Moreover this
create warm and healthy environment at the stores act as major factor in attracting
customers.
 Effective communication: The corporate culture within the company facilitate and
establish effective communication which helped in providing solutions to problems on
time which helped in maintaining continuous flow of work. Where as company consider
collaboration as most essential tool as it is necessary for completion of work and orders
in an efficient manner.
 Focus on learning and development: The health working conditions with help of
support and cooperation of team leaders and employees has facilitate the learning and
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development environment within the staff members. With the help of proper training and
coaching, the higher authorities assign roles and responsibilities to the employees.
5. Reflection Report
In this report, I have acquired knowledge about the various factors of a business, relating
to planning and strategic management, organisational culture, laws and policies followed, and
also about the leadership styles and its implementation in the business operations. From the
above study, I came to know that all the departments and branch of organisation need to function
and operate together and in coordination with each other which lead to the path of success.
Collaboration of the various unities, department and teams is crucial and necessary in the
business in order to survive and establish its brand name in the marketplace. I came to get
knowledge about various strengths, weaknesses, opportunities and threats which organisation
should consider and should build plan and strategies accordingly to deal with uncertainties and it
is required for future course of action (Corallo, Lazoi and Lezzi, 2020). While formulating
strategies and plans the topic management should carry out study and analyse the different
external and internal factors in order to develop efficient and effective strategies and plans. The
corporate social responsibilities plays very important role in the activities of business and its
essential for every organisation to comply with these activities in order to prevent government
intervention. Proper implementation of CSR activities help organisation to build good reputation
in the marketplace. As a manger, it is very important and essential to adopt the correct leadership
styles according to the situations in order to maintain continuous follow of work. Whereas wrong
implementation of leadership style lead to heavy loss to the business and organisation need to
suffer.
Recommendation: In context of Starbucks the transformational style of leadership would be
appropriate in order to provide effective results to the business. In the last I came to know about
the organisational culture and its importance and role in carrying out activities within the
organisation (Kew and Stredwick, 2016). The negative and unhealthy culture lead to the failure
of organisation. Starbucks has clam and warm working culture which is customer oriented and
helps in building and maintaining relationship .
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CONCLUSION
The various tools and techniques used by organisations provide support in the growth and
development of business and make it profitable. SWOT analysis help in identifying and making
internal process strong within the company whereas PESTEL analysis help in identifying the
external affects which is effecting the business and corrective actions are taken accordingly. For
the continuous growth and development of business, one need to understand and evaluate these
affect on frequent bases. Organisational culture provided great support to management as
employees get to understand about the business objectives and the methods which need to
implemented in order to achieve them. The company should adopt and follow best leadership
style according to situations in order to make themselves unique form its competitors. The CSR
activities provide support in building the reputation and brand image of company. With the
implementation of CSR activities organisations provide support to people who are in need from
its part of profit.
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