The Assignment on Management - External Environment Analysis

MANAGEMENT

Management 1
Contents
Part 1....................................................................................................................... 2
Introduction............................................................................................................ 2
External environment analysis..................................................................................... 2
Pestle Analysis..................................................................................................... 2
5 force analysis.................................................................................................... 3
Industry Lifecycle Model........................................................................................ 4
Internal environment analysis...................................................................................... 6
VRIO analysis..................................................................................................... 6
Value chain analysis.............................................................................................. 8
Resources, capabilities and competencies framework.....................................................9
Recommendations.................................................................................................. 10
Part 2..................................................................................................................... 12
Starbuck’s Stakeholder Report...................................................................................12
References.............................................................................................................. 14

Management 2
Part 1
Introduction
Starbucks was formed in 1971 with the purpose to offer some of the globe’s premium fresh-
roasted whole bean coffees. Along with offering the greatest eminence coffee in the world,
the company is engaged with the clients and groups to conduct trade sensibly. It is the
mission of the organisation to stimulate and foster the human spirit. Starbucks is having the
aim to cultivate coffee under the uppermost standards of quality by making use of moral
sourcing practices. The company picks high-quality beans from coffee farms in Africa, Latin
America, and Asia. The unique products offered by Starbucks can be enjoyed in stores, at
homes, and on the go. There are over 30 blends and single-origin best coffees.
Starbucks has revolutions itself from one coffee bean store in Seattle to a 30,000 café global
coffee powerhouse. The brand is fortunate to be linked with masses of clienteles daily with
extraordinary products through its stores in 80 markets. The company has been hostile with
opponents like McDonald's and Dunkin’ Donuts to remain on the topmost position as coffee
king. Starbucks has acknowledged with extraordinary growth and accomplishment since its
inception. In the 4th quarter of 2018, the company opened almost 604 new sites. The company
is leading with the approach of go-to coffee place to work and entertain. It is assisting
Starbucks with its marketing approach. Starbucks has been using hostile expansion strategies
to push out of the rivalry. The company has been concentrated on forming a compressed
network of stores in the US along with opening up in new sites around the globe. The
company has also arrived into coffee beans and ground coffee market and has attained new
competitors such as Maxwell House and Folgers.
External environment analysis
The external environment analysis comprises the following:
Pestle Analysis
Political factors: The regional incorporation is a recent trend that represents a prospect for
Starbucks to expand internationally. The company imports coffee beans from various nations
and every nation have its tariff and customs regulations. Moreover, Starbucks is greatly
affected by the political upheavals in the nations from where it imports coffee beans. In 2018,
the market saturation and store cannibalization made some stores of Starbucks to close in the
U.S.

Management 3
Economic factors: The high economic growth rate of emerging nations and lessening
unemployment rates has generated prospects for companies to attain more proceeds from
several markets worldwide. On the other side, the cautious consumer environment and
adverse currency impacts have been faced by the company in the UK, therefore it invests in
innovations for food and coffee offering. Moreover, Starbucks has been inspired by
customers in the UK (Kamboj, et al. 2016).
Social factors: It has been observed that the customers worldwide demand fair prices which
have made Starbucks change operating practices. Starbucks has executed the C.A.F.E
program intending to address concerns raised by the customers for social responsibility. The
company also adjusts its product category to see the growing demands of health-conscious
customers.
Technological factors: The advancement in the technology influences the product services,
innovations, customer’s experience and the way Starbucks interacts with other business
partners. The usage of technology has enabled Starbucks to manage changes in its product
mix to suit the new market segments. For instance, internet surfing services provided by the
company through Wi-Fi internet connectivity and VIA ready brew.
Legal factors: Starbucks has to make sure that it follows the rules and guidelines given by the
nations from where it is sourcing raw materials along with the home nation, the U.S. The
change in the disposable incomes influences to the purchasing decisions of the customers.
The labeling process of the company has been transformed through labeling food laws and
regulations. It has affected the product sales (Illia, et al. 2017).
Environmental factors: Starbucks is affected by environmental factors like global warming
and other environmental concerns at the global level. The company uses paper cups to serve
most of the beverages to be eco-friendly. Starbucks has also executed approaches to battle
climate change through capitalizing in clean and renewable energy like minimizing wastages,
wind-mill, conversing energy and water by 25%, enduring coffee overhaul and growing and
making use of climate-smart agricultural practices for farmers (Kang and Namkung, 2018).
5 force analysis
The threat of new entrants: Moderate
Starbucks is having moderate force when it comes to the threat of new entry. Both barricades
and original outlay to initiate a coffee company are not much higher. Although the level of