Strategic Management: Impact, Internal Capabilities, and Competitive Forces

This report explores the impact of macro environment on Starbucks Corporation, analyzes the internal strategic capabilities of the company, and evaluates the competitive forces using Porter's Five Forces model. It discusses the political, economic, social, technological, environmental, and legal factors affecting Starbucks. It also examines the valuable, rare, imitable, and organized resources of the company. Finally, it assesses the competition rivalry, bargaining power of buyers and suppliers, threats from substitutes, and the threat of new entrants in the market.

Strategic management
Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..........................................................1
TASK 2............................................................................................................................................3
Analyse the internal strategic capabilities using relevant strategic tools...............................3
TASK 3............................................................................................................................................5
Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation..................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic management provide overall direction to the company’s policies and plans
designed in order to achieve organizational objectives. It allocates proper resources to implement
the right plan for the company. Strategic management helps organization to achieve its objective
and gain competitive advantages over the competitors in the market. In this report respective
organization Starbucks Corporation has been chosen, company is American multinational chain
of coffee house and food. (Carayannis, 2018) Its headquarter is in Seattle, Washington.
Starbucks Corporation is second largest coffee chain. This report includes information about the
impact of macro environment on the respective organization, analysis of organization’s internal
environment and its capabilities. Further, detail examination of porter’s five force model to
evaluate competitive market of the company. Critically evaluation of internal environment of
company to examine the strength and weakness of the company.
TASK 1
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies.
Macro environment define all the external factors that have an impact on the organization
to analyse the macro environmental factors PESTEL analysis is used below.
PESTEL analysis of Starbucks Corporation: PESTEL analysis refers to the all external
factors that have an impact on the decision making ( Ansoff, And et. 2018) process of the
company. Detail examination of all the external factors of the company is following:
 Political factors: These factors refer to the impact of government’s policies and
regulation on the specific organization. This includes changes in forgin treads,
government policies, taxation polices, environmental law etc. In the context of
Starbucks Corporation. Political environment is satiable for the growth of its business
environment. But there is changes in government polices for food and beverage
industry, government of UK is more concern about the health of there citizens and they
regulates many law for the these industry. This cloud be threat for the organization. But
to deal with these threat Starbucks Corporation can add healthy meal in their pre
existing menu. Thus, Starbucks Corporation can handle all the political factors
positively and could have stable growth in market of UK(Baylis, Wirtz, & Gray, 2018)
1

 Economical factors: These factors have significant impact on hoe an organization can
do their business and how much profitable they are. These factors includes exchange
rate, disposable income of customers, interest rates, tread restrictions and environmental
law. In the terms of respective company, Starbucks Corporation, company has strong
presence in the market. But company have high level of competition in market there are
several food brands and local food vendors that provide product and services on cheaper
rates. This could be a threat for the organization. But as mention above company has
strong presence in food market and also Starbucks Corporation has loyal customer base
and brand image. Thus, these factors can not influence the market of Starbucks
Corporation.
 Social factors: These factors involve shared beliefs and culture of group of individuals
that have an impact on the organization. Social factors explains choice and preferences
of people of the country. In the terms of Starbucks Corporation, company is highly
depends on the upper class customer who can afford the their products. But maximum
population of UK can not afford the products of Starbucks Corporation on regular basis.
This could be a threat for the Hine, ( Porter, L. Westera, & Alpert, 2018). organization.
To deal with this challenge organization can introduce discount offers for their regular
customers and attract them toward the brand. Although company is well established and
has access to other countries also and can deal with challenges also.
 Technological factors: These factors involve the impact of technology changes and
innovation on the current business of organization. It includes the new ways of
producing goods and services, new way of distribution of products, innovative ways to
connate with the target market. In the context of Starbucks Corporation, there are
various opportunities for the business. Company can develop their own online delivery
services that can help them to attract more customers.
 Environmental factors: These factors become most important aspect for the
government and local public because of increasing level of pollution and uses of raw
material that have a negative impact on the environment. There are several rules and
regulation of government to protect the environment which can impact the business of
Starbucks Corporation. To deal with these challenges organization can start using
recyclable cups and plates that can help them to deal with these challenges.
2

 Technological factors: There is all technology related trends are included in this
factors. Various technology innovation and development is included in this factor. In the
context of Starbucks Corporation, there are usages of coffee machines are raises that
could be threat for the company. To deal with this threats there are many opportunities
that Starbucks Corporation can use such they can link mobile app to their services and
gain benefits from it. Thus, Starbucks Corporation ( Lane, & Maxfield, 2018) has both
opportunity and threats in technological factors.
 Legal Factors: These factors considered law and regulation of government on business.
This factors can impact the business in both positive and negative way. In the context of
Starbucks Corporation, company have to follow rules and regulation of government of
UK, which can impact the its business.
TASK 2
Analyse the internal strategic capabilities using relevant strategic tools.
Resources or capability: It is analysis of the all capabilities and the different resources that can
help organization to improve its effectiveness. This analysis support business to examine its
strengths and gain competitive advantages( Le Grand, 2018)
Resources or
capabilities
Valuable Rare Imitable organised Competitiv
e
advantages
Brand image Yes Yes No No Competitive
Parity
Loyal
customer base
Yes Yes No No Temporary
Competitive
Advantage
Technology
and innovation
Yes Yes Yes No Sustained
Competitive
Advantage
3

Financial
growth
Yes Yes Yes Yes Sustained
Competitive
Advantage
Valuable: Starbucks Corporation, company is well established and have brand image in the eye
of their customers. Brand image is most valuable strength of company. Company has loyal
customer base that help the organization to gain profitability in their business. Customers are
attracted towards the brand image of coffee chain operation they are likely more involved in this
coffee shop factor. Company has their own technology that also helps them to attract customers.
Thus, valuable resources help company in sustainable growth and profit maximization. its also
improve the productivity and resources of the firm. Brand image is most important factor that
could increase the revenue of the organization(Tso, & Wood, 2018).
Rare: These resources can be explained as the resources that cannot be copy by other
competitors. Brand image of Starbucks Corporation, is rare resource other competitions are not
able to match the level of this organization. Because it requires high level of investment and
revenue to compete Starbucks Corporation. Customer loyalty is also rare resource of
organization because loyal customer is hard to manipulate. Technology that star busks is using is
also a rare recourse of organization which cannot be copy by others. Because organization is
using unique technology for online food delivery. Thus, Starbucks Corporation, have rare
recourses that help company to increase its profitability and gain competitive advantages from
other brands.
Imitable: These resources have unique and innovative quality that helps organization to gain
edges over the other competitors. Starbucks Corporation has technology innovation as imitable
resource. They use different technology to provide best quality of product and services. This
helps organization to increase its productivity and also help them to analyse the future treads in
the market. Another imitable resource of Starbucks Corporation is financial growth. Company is
second largest coffee chain in the world which biggest strength of organization. Thus imitable
resources help company to share maximum profitability in the market and also increase its brand
loyalty.
4

Organised: These recourse explain that every organization should have proper arrangement in
their environment. Proper organization (.Phadermrod, Crowder, & Wills, 2019)
of all the resources helps organization to have growth and development of business. In the
context of Starbucks Corporation, company most organized resources is financial growth. Proper
arrangement of financial resources can improve the productivity of the firm. Thus, Starbucks
Corporation should maintain their finance and financial growth to have stability in profitability
rate.
TASK 3
Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector for
an organisation.
Competitive forces are those factors which have impact on the business of organizations. To
understand these forces below is detail study of porter’s five force model.
Porter’s five force model on Starbucks Corporation: This model helps in evaluation of
external environment of market that has an impact on the business and revel the competition of
the industry. In the context of Starbucks Corporation, porter five force helps organization to
analyse competition and gain edge over it ( Vargas-Hernández, & Garcia, 2019)
.
 Competition rivalry: Starbucks Corporation faces tough competition from the
other food service and coffee house industries. Company has large number of
competition in the market. There are many food services that offer products on
cheap rates. That could attract customers that cannot afford the high rate of the
company. But Starbucks Corporation has strong brand image in the market, and
also has high level of customer base which is loyal to the brand. On the other
hand there are no threats from the local food services because of the brand
identity of the company and customer who is loyal to the brand could not use
other services.
 Barging power of buyers: Starbucks Corporation has been experience high
level of bragging power of buyers because of the low switching cost of food and
coffee services. Low switching cost increase the chances of customers switched
to the other brand. These forces are affecting the business of the company and
5

affect the profitability rate. There are high level of chances that individual are
able to changes to other brand. It could impact the business of Starbucks
Corporation. Thus to deal with this factors Starbucks Corporation can start
offering the discounting and entertainment offers so that they can attract new
customers and increase their productivity level in the market.
 Bargaining power of suppliers: Bargaining power of suppliers are low to
moderate in the context of Starbucks Corporation. The moderate sizes of
individual suppliers are external factors that impose the work force of Starbucks
Corporation. But the barging power of supplier is further weakened because of
the large number of suppliers available in the market. It is very easy for the
Starbucks Corporation to switch to the other supplier. It could be the biggest lost
for the suppliers to lose the company like Starbucks Corporation. Thus, the
bargaining power of supplier is low to moderate.
 Threats from substitutes: Because of the high level of arability of substitutes in
the food industry could be a threat for the organization. There is also low
swishing cost for the food services that could influence the customers of the
company. Starbucks Corporation could have huge impact on their business
because of the substitute products available in the market. Thus it is very
important for Starbucks Corporation to make proper marketing strategies that
can help them to deal with this threats.
Threat from new entrance: The threat from new entrance is very low in the context of
Starbucks Corporation. Company deals with high level of revenue and sales around the global
and it is impossible for the new entrance to compete with the Starbucks Corporation. It requires
large amount of investment and revenue in the industry of Starbucks Corporation. Thus there is
very low threat from the new entrance in the food industry(Varley, R., Roncha, Radclyffe-
Thomas, & Gee, 2018).
 .
6

CONCLUSION
From the above given information it can be conclude that strategic management helps
organization to analyse internal and external factors of the company. PESTEL analysis helps
organization to understand all external factors that have an impact on the decision making
process of the company. to understand the internal capability of the company various resources
are explained such as valuable, rare, imitable, and organised. In the last porter’s five force model
that help organization to deal with the competition and external factors.
7

REFERENCES
Books and Journals
Ansoff, H. I. And et. al. (2018). Implanting strategic management. Springer.
Baylis, J., Wirtz, J., & Gray, C. (Eds.). (2018). Strategy in the contemporary world. Oxford
University Press, USA.
Carayannis, E. (2018). Strategic management of technological learning. CRC Press.
Hine, K. A., Porter, L. E., Westera, N. J., & Alpert, G. P. (2018). The understated ugly side of
police–citizen encounters: situation, suspect, officer, decision-making, and force predictors of
officer injuries. Policing and society, 28(6), 665-683.
Lane, D., & Maxfield, R. (2018). Foresight, complexity, and strategy. In The economy as an
evolving complex system II (pp. 169-198). CRC Press.
Le Grand, J. (2018). The strategy of equality: redistribution and the social services (Vol. 13).
Routledge.
Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-performance analysis based
SWOT analysis. International Journal of Information Management, 44, 194-203.
Tso, H., & Wood, B. (2018). Better positioning through competitor analysis and enhancement of
brand awareness on website.
Vargas-Hernández, J. G., & Garcia, F. C. (2019). The Link between a Firm´ s Internal
Characteristics and Performance: GPTW & VRIO Dimension Analysis. REBRAE, 12(1), 19-30.
Varley, R., Roncha, A., Radclyffe-Thomas, N., & Gee, L. (2018). Fashion management: A
strategic approach. Macmillan International Higher Education.
8