Strategic Analysis of Starbucks using SWOT, Porter's Five Forces, PESTEL, 7S Framework, VRIO and SAFE

This document provides a strategic analysis of Starbucks using various frameworks such as SWOT, Porter's Five Forces, PESTEL, 7S Framework, VRIO and SAFE. It includes a detailed analysis of the company's strengths, weaknesses, opportunities, and threats, as well as its competitive position in the industry.

Running head: MANAGEMENT
Management
Name of the Student
Name of the University
Author note

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Table of Contents
1.0 SWOT..................................................................................................................................4
1. Theories..............................................................................................................................4
2. Strategy framework............................................................................................................4
3. Strategy models..................................................................................................................4
4. Strategy tools......................................................................................................................5
5. Formulas.............................................................................................................................5
2.0 Porter’s five forces...............................................................................................................6
1. Theories..............................................................................................................................6
2. Strategy framework............................................................................................................6
3. Strategy models..................................................................................................................7
4. Strategy tools......................................................................................................................7
5. Formulas.............................................................................................................................7
3.0 PESTEL................................................................................................................................7
1. Theories..............................................................................................................................7
2. Strategy framework............................................................................................................8
3. Strategy models..................................................................................................................8
4. Strategy tools......................................................................................................................9
5. Formulas.............................................................................................................................9
4.0 7S Framework....................................................................................................................10
1. Theories............................................................................................................................10

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2. Strategy framework..........................................................................................................10
3. Strategy models................................................................................................................10
4. Strategy tools....................................................................................................................11
5. Formulas...........................................................................................................................11
5.0 VRIO..................................................................................................................................11
1. Theories............................................................................................................................11
2. Strategy framework..........................................................................................................12
3. Strategy models................................................................................................................12
4. Strategy tools....................................................................................................................13
5. Formulas...........................................................................................................................13
6.0 SAFE..................................................................................................................................13
1. Theories............................................................................................................................13
2. Strategy framework..........................................................................................................13
3. Strategy models................................................................................................................14
4. Strategy tools....................................................................................................................14
5. Formulas...........................................................................................................................14
7.0 Balanced Scorecard............................................................................................................14
1. Theories............................................................................................................................14
2. Strategy framework..........................................................................................................15
3. Strategy models................................................................................................................15
4. Strategy tools....................................................................................................................16

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5. Formulas...........................................................................................................................16
8.0 Value chain analysis...........................................................................................................16
1. Theories............................................................................................................................16
2. Strategy framework..........................................................................................................16
3. Strategy models................................................................................................................17
4. Strategy tools....................................................................................................................17
5. Formulas...........................................................................................................................17
9.0 Bowman’s strategy.............................................................................................................18
1. Theories............................................................................................................................18
2. Strategy framework..........................................................................................................18
3. Strategy tools....................................................................................................................18
4. Formulas...........................................................................................................................19
10.0 Strategic canvas................................................................................................................19
1. Theories............................................................................................................................19
2. Strategy framework..........................................................................................................19
3. Strategy models................................................................................................................20
4. Strategy tools....................................................................................................................20
5. Formulas...........................................................................................................................20
11.0 Generic strategy...............................................................................................................21
1. Theories............................................................................................................................21
2. Strategy framework..........................................................................................................21

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3. Strategy tools....................................................................................................................21
4. Formulas...........................................................................................................................22
Bibliography.............................................................................................................................23

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1.0 SWOT
1. Theories
SWOT analysis is used as a planning model that bases the strategies of an
organisation based on its strength, weakness, opportunities and threats that exist. In the case
of Starbucks, the application of SWOT can help to understand the competency of the
organisation (Starbucks.com 2018).
2. Strategy framework
Strength
 Brand image
 Product innovation
Weakness
 High price
 Distribution channels
Opportunities
 Speed of service
 Retail expansion
Threats
 Competitors
 Economic instability
Table 1: SWOT framework
(Source: Bull et al. 2016)
3. Strategy models
The correct strategy model that can be provided for the analysis of the capabilities of
Starbucks can be addressed based on the internal as well as the external factors that affect the
company. Based on the case study the strategy model that can be made includes:
Internal factors Useful Harmful
Strength
 Number of employees
Weakness
 Distribution channels

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 Innovative vision  Excessive price
External factors Opportunities
 Retail expansion
 Innovation
Threats
 Competitor strength
 High bargain price
Table 2: Strategy model
(Source: Phadermrod, Crowder and Wills 2019)
4. Strategy tools
The application of SWOT can provide certain benefits for Starbucks. One such
benefit can be the fact that the company can access future goals such as retail expansion
based on the analysis of the strength of the employees and the weakness that the company
have.
5. Formulas
Aggressive strategy Strength
 Brand image
 Product innovation
 Number of employees
Opportunities
 Speed of service
 Retail expansion
 Innovation
Defensive strategy Weakness
 High price
 Distribution channels
 Excessive price
Threats
 Competitor strength
 High bargain price
 Economic instability
Table 3: SWOT matrix
(Source: Blockeel et al. 2016)

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2.0 Porter’s five forces
1. Theories
For Starbucks, the threat of new entrants is less as the quality of the coffee provided
by Starbucks is high. The bargaining power or buyers and suppliers can be considered as
moderate threat for the company as competitors such as Caribou Coffee or Pete’s Coffee and
Tea provide have a low amount in terms of prices of the product and the requirements
purchased from the suppliers. Hence, the threat from competitors is high in the industry. The
threat of substitutes can be considered as medium as the independent coffee shops offer
opportunities for the customers to enjoy beer, wine and other liquor.
2. Strategy framework
Figure 1: Porter’s five force analysis of Starbucks
(Source: Starbucks.com 2018)

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3. Strategy models
As stated by Grünig and Kühn (2015) the significance of the five forces analysis is
that it can help to determine the structure and strength of the industries and analyse the threats
that need to be mitigated on a high priority.
4. Strategy tools
The benefit of the five forces analysis as a strategic tool is that help in analysing the
competitive position in which an organisation exists. At the same time, the relationship of
Starbucks with that of the buyers and suppliers can be analysed with the model
5. Formulas
An example of the formula is that Starbucks can analyse the competitive strength it
possess while engaging in product innovation to satisfy the customers. The results can be
evaluated and based on the evaluation strategies for innovation of the products and services
can be made by the company.
3.0 PESTEL
1. Theories
The application of PESTEL is done to analyse the situation that exists in the macro
environmental factor of an organisation (Pan, Chen and Zhan 2018). It affects the strategic
planning of an organisation.

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2. Strategy framework
Figure 2: PESTEL framework
(Source: Schuetz and Schrefl 2017)
3. Strategy models
Category Political Economic Social Technologica
l
Legal Environment
Factors Policies of
Governmen
t
Taxes
Inflation
Interest rate
Demograph
y
Culture
Life style
Technical
advancement
Innovation
Legislations
Laws related
to
employment
and
sustainabilit
y
Environmenta
l regulations
Management
of wastes
Impact on
business
Unfriendly
political
Difficulty
to cope
Customer Technical Legality of Effects of
pollution and

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ties leading
to loss of
business
with
internationa
l market
satisfaction innovations the product wastes
Time
frame
Indefinite Maximum
for 3
months
About 3-5
months
Till technical
update
6-12 months Cannot be
applied
Type of
impact
High High Medium High Medium Medium
Rate of
impact
Increasing As per
overall
economy of
country
Cannot be
determined
May cause
damage
Undesirable Harm
Importanc
e
Unfamiliar Important Critical Essential Severe Unknown
Table 4: PESTEL of Starbucks
(Source: Starbucks.com 2018)
4. Strategy tools
The advantage that Starbucks can gain from the analysis is that it can analyse the
factors that affect the expansion of the company in foreign lands. Solution to the external
issues can be identified and developed based on the analysis.
5. Formulas
Example of PESTEL can be the fact that while trying to understand the manner in
which customer delivery can be made as a success, Starbucks can analyse the environmental
factors that influence the purchase of the product offered by the company.

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4.0 7S Framework
1. Theories
McKinsey’s 7S model help managers to manage the hard and soft skills that exist in
an organisation. It can help in improving the condition of an organisation based on the skills.
The hard and soft skills portray the development an organisation can have in a competitive
industry.
2. Strategy framework
Figure 3: 7S framework
(Source: Aithal 2017)
3. Strategy models
Framework Application Aligned
Strategy Increase service delivery to customers Yes
Structure Hierarchical structure Yes
System Systems are concerned with support for Yes

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customers and innovative products
Shared value Starbucks shares its value with the
employees
Yes
Style Democratic leadership style Yes
Staffs The employees are called partners of the
company
Yes
Skills The skills are based on the production and
innovative creativeness
Yes
Table 5: 7S strategy model
(Source: Starbucks.com 2018)
4. Strategy tools
The benefit of the use of the strategic tool is that Starbucks can access the areas that
cannot be analysed easily. Decision of the possible changes that require to be made can be
analysed by Starbucks.
5. Formulas
Example can be provided that highlights the improvement of the company in terms of
service. Although customer feedback have provided Starbucks with an excellent rating in
terms of delivery, the home delivery system of the company need to be improved. The hard
and soft skills can help Starbucks to identify development of its services.

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5.0 VRIO
1. Theories
VRIO uses a set of questions to analyse the value that is added in a company (Hansen
and Schaltegger 2016). The questions are based on factors such as Value, Rarity, Imitability
and Organisation.
2. Strategy framework
Figure 4: VRIO framework
(Source: Keyes 2016)
3. Strategy models
Resource or
capability Valuable Rare
Imitable or
non-
substitutable
Organised
or exploit
Impact on
competitive
advantage
Provide quick
services to customers Yes No Yes Yes
Realised
sustainable
competitive
advantage

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Developing
innovative products
and services Yes Yes No Yes
Realised
competitive
parity
Ability to retain
employees Yes No Yes Yes
Realised
temporary
competitive
advantage
Table 6: Application of VRIO for Starbucks
(Source: Starbucks.com 2018)
4. Strategy tools
Starbucks can indulge in long term strategic planning and ensure that the innovative
factor associated with the company can be prolonged. It can gain strategic advantage based
on the rarity of the products and services
5. Formulas
An example of the formula can be provided as in a moderate competitive environment
like in Texas, Starbucks can use less innovative tactics for the development of the product
and reputation in the market.
6.0 SAFE
1. Theories
The SAFE criteria help in the analysis of the important factors that help in the
development of a suitable strategy, acceptance of the risk and the feasibility that exists in an
organisation (Hansen and Schaltegger 2016).

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2. Strategy framework
Figure 5: SAFE framework
(Source: Keyes 2016)
3. Strategy models
Competitive strategy Alternate direction Pursue of strategy
Cost leader in the form of
services provided
Gain the satisfaction of the
customers via service quality
Develop innovative products
and services for effective
delivery of products
Table 7: Application of SAFE
(Source: Starbucks.com 2018)
4. Strategy tools
The application of the SAFE theory can help in the development of conflicting
conclusion within the management. However, for Starbucks, the feasibility analysis about the
delivery of services to be provided to the customers can be done in an effective manner.
SuitabilityAcceptabilityFeasibility

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5. Formulas
Example can be provided that can allow Starbucks to find a suitable strategy that can
be accepted financially. A clear of description of the strategy such as enhancing the service
delivery speed for the satisfaction of the customers can be provided that can help in the
development of the competencies of the company.
7.0 Balanced Scorecard
1. Theories
The balanced scorecard helps in measuring the performance management so that
internal capabilities of the organisation can be analysed. It takes into account the financial,
customer, learning and the perspective of the internal process (Cooper, Ezzamel and Qu
2017).
2. Strategy framework
Figure 6: Balanced Scorecard
FinancialperspectiveCustomerperspectiveInternalprocessperspective

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(Source: Martello, Watson and Fischer 2016)
3. Strategy models
Perspective Focus KPIs
Financial perspective Financial performance Prices, ROI, Operating costs
Customer perspective Customer satisfaction Speed of delivery, product
innovation
Internal process perspective Efficiency in business New product
Learning and growth
perspective
Skills and knowledge Innovative practises
Table 8: Application of balanced strategy
(Source: Starbucks.com 2018)
4. Strategy tools
Starbucks can view the organisation from four perspectives and based on the results
of the perspectives it can continue to develop strategies and grow in the competitive
environment.
5. Formulas
Example of application of balanced scorecard can be based on the identification of
KPIs. In the case of Starbucks, the KPIs of the company that is the speedy delivery of
services can be analysed from the four perspectives before coming to a conclusion about its
ultimate outcome.

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8.0 Value chain analysis
1. Theories
Value chain is used to analyse the internal firm activities. Starbucks can use it to
identify the activities that are most valuable to the organisation.
2. Strategy framework
Figure 7: Value chain
(Source: Bull et al. 2016)

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3. Strategy models
Figure 8: Value chain applied in Starbucks
(Source: Starbucks.com 2018)
4. Strategy tools
The advantage of the application of the tool is that it can help in the development of
the internal and external activities of Starbucks. Starbucks can prepare a margin that can help
in its development and procurement of services.
5. Formulas
For Starbucks, the development of its operations across 40 countries can be
considered as one of the aspects based on which Starbucks implement its services. The
service of Starbucks and the votes provided by the customers can help in the development of
the company.

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9.0 Bowman’s strategy
1. Theories
The application can help in the positioning of the strategy that focuses on the
positioning of a product. For Starbucks, such positioning can help in proper development of
its activities.
2. Strategy framework
Figure 9: Bowman’s strategy
(Source: Martello, Watson and Fischer 2016)
3. Strategy tools
The application of the concept can help in the positioning of a product particularly if
the product is new. It helps in differentiating its value from the already existing products.

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4. Formulas
Starbucks can use the strategy to understand the profit it may gain while trying to
enter new markets. In the United States, the development of any new product of Starbucks is
expected to meet with positive reviews from the customers.
10.0 Strategic canvas
1. Theories
Strategic canvas helps in capturing the current level of marketing in a business
environment. It helps in analysing the factors and the organisation that pose threat to an
organisation in its current state of development.
2. Strategy framework
Figure 10: Strategy canvas
(Source: Martello, Watson and Fischer 2016)

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3. Strategy models
1 2 3 4
0
20
40
60
80
100
120
Competing factors
Offering level
Figure 11: Strategy canvas for Starbucks
(Source: Starbucks.com 2018)
4. Strategy tools
The advantage of the tool is that it can help in plotting the gap that exists between the
industry value and the current value that is offered by an organisation.
5. Formulas
For Starbucks, the application of the strategy map can help in the development of its
value of service so that justification can be made about the manner in which Starbucks has
been awarded as the best service quality organisation in the industry.

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11.0 Generic strategy
1. Theories
The generic strategy is used to determine the strategy of an organisation. It focuses on
four factors that are essential for the development of a company. It involves cost leadership,
cost focus, differentiation focus and differentiation leadership.
2. Strategy framework
Figure 12: Generic strategy
(Source: Keyes 2016)
3. Strategy tools
The application of the tool can help in the development of strategies that are different
from the competitors. The manner of application of the strategies can help in gaining
competitive advantage in the organisations.

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4. Formulas
For Starbucks, the application of the generic strategy can define the versatility of the
company and ensure that it eliminates the weakness that it has of being expensive.

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Pan, W., Chen, L. and Zhan, W., 2018. PESTEL Analysis of Construction Productivity
Enhancement Strategies: A Case Study of Three Economies. Journal of Management in
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