Starbucks: External and Internal Analysis

This assignment provides an overview of Starbucks and its competitors, followed by an analysis of the external and internal environment of the company. It includes a discussion on the use of strategic tools such as PESTEL analysis and Porter's Five Forces analysis. The assignment concludes with recommendations to improve Starbucks' performance.

MSC management;
strategy

INTRODUCTION
Management is an activity of overseeing, administrating, controlling and organising the
business activities and operation with the help of effective plans and policies or strategies.
Administration of strategies is important and ongoing, planning, monitoring, analysis and
assessment of all that is required for a venture to accomplish its aims and goals. Changes in the
business environment need organisation to appropriately evaluate their strategies for growth and
development (Ansoff and et. al., 2018). By implementing effective strategic tools and
techniques, the administration of a corporation analyse the influence of business environmental
factors over the business in different form. This assignment is based on Starbucks which is an
American multinational chain of coffeehouses and roastry reserves. The enterprise was
incorporated in 1971 and is headquartered in Washington, US. This venture operate its business
globally approx 80 countries all over the world. There are different coffee beverages products
like fresh brewed coffee, hot and iced espresso beverages, teas, coffee and tea brewing
equipments mugs an accessories packed goods, books and gifts are offered by it. This written
document will discuss about company and its competitors, external environment analysis and
internal environmental analysis of the company. Further, will explain about recommendations to
develop Starbucks performance and stakeholder report.
PART 1
Overview of Starbucks and its competitors
Starbucks was established in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. This
firm operate its business globally 30,000 location in over 77 nations with the help of its number
of stores. The firm operate its business with the help of its diverse commodities like Coffee
beverage, smoothes, tea, baked goods and sandwiches. There are 291,000 people are employing
by this firm and they make their contribution in running the business of corporation cross wise
the globe. The vision of the company is to be a worldwide global brand and getting attention of
several companies who would like to share partnership. Starbucks, the leading retail firm, roaster
and brand of special coffee in the globe has been hostile as of stumbling financial system, its
own fast development and maximised rivalry from cheaper rivals.
The mission of this venture is to encourage and raise the human being- on person, one cup
and one neighbourhood at a time (Ginter, Duncan and Swayne, 2018). The function of this
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business is to propose quality and finest coffee product to its target audiences to fulfil their need
and retain them till long term. To accomplish its mission and vision the administration of the
organisation frame some principle such as embrace diverseness as an important factor, boiling
and distributing of coffee at its greatest and offer a great working place to employees where they
can performed well and can treated with respect and dignity. There are number of competitors of
respective company who create competition by offering substitute products in market. Caffe
Nero, Costa Coffee, Mc Cafe, Dunkin Donuts, KFC, Cafe Ritszza, Cafe Coffee Day, Coffee
Republic and Dilmah Tea etc. are some major competitors of Starbuck which generate rivalry in
coffee business industry by offering different similar products as respective firm. By using
effective business strategies like establishing efficient person attach and offering improved
quality goods to consumers it deal with the issues of competition in effective manner.
External Analysis
It is an activity of determining the influence of extrinsic factors of business atmosphere
that influence the business of a company in favourable and in favourable manner (Moutinho and
Vargas-Sanchez, 2018). External analysis states examining the industry environment of the firm,
considering components like competitive structure, competitive position, dynamics and history.
On a macro scale, external analysis considers macroeconomic, global, political, social,
demographic and technological analysis. The main purpose of this kind of analysis is to
determine the growth options and risks in a sector or any segment that will drive profitability,
growth and volatility. For this, the management of Starbucks can use PESTEL, 5 Forces analysis
and industry life cycle model. The description of them in context f Starbuck is as below:
PESTEL analysis- It is a method and process which is used by as business plan of action by the
management o Starbuck to determine the macro environment factors influence over the business
activities and operations.
Political- This factor contain some elements like political stability and instability,
corruption, government interference and many more. The major political feature that affects
Starbuck is about source the raw material and this has assembled a lot of the attraction for
politicians in the west and from those nations who sourcing raw material. Cause of it, the firm
wants to stay to communal and environmental customs. Free trade is another factor that
positively affect firm by offering free operations in different nations of the world.
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Economical- This component consist different aspects like exchange rate, tax rate,
currency rate economic growth, unemployment and others. Brexit is the main factor that
influences the business of the corporation because due to this, situation of inflation arise in the
world and this aspect scratched the productivity of Starbucks. This persuaded consumers to move
to cheaper substitutes to global economic recession.
Social- It includes culture, value, beliefs, demographic components and many more.
Starbucks can offer inexpensive goods but it might have to give up the superiority. This is the
major social civilization dispute that the start up endures (Okumus and et. al., 2019). It will
increase customer base to consist the buyers from the inferior and the middle profits groups.
Technological- This factor include diverse factors like artificial intelligence, precede
machinery, research and development, technological innovation and others. In Starbucks the
company use effective promotional tools like social media to create consciousness about the
merchandise and services of the corporation (Pan, Chen and Zhan, 2019). The firm also offer
WiFi facility, to its customers, which help in adding value to the brand and retaining consumer
toll long term duration.
Environmental- It consist climate, weather, environmental law, carbon foot prints and
many more. In Starbucks the management of the firm effectively follow all the rules and
legislation of environmental so that the production did not influence in negative form. The
venture use recycling substance inform of cups to offer coffee. Apart from it the green house
emission comes from the electricity in stores and from coffee roasting so that they can save
energy by using effective lightening in different stores.
Legal- This component include different laws and legislation that are framed and
formulated for effective running of the company in business sector without affect employees and
other negatively. The management of respective company properly follow health and safety law
to maintain the individual‘s health and hygienic. Apart from it, the firm also correctly regard as
customer fortification act and equality act so that they can offer quality products to consumers
and treating all employees equally so that there are not be any kind of discrimination.
Porter’s Five Force analyses- This concept is developed by Michael Porter to determine the
competition in a particular business sector and how it affect the company in form of high and
low. The brief description of this analysis is as below in context of Starbuck:
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Threats of new entrants- There are number of entry barriers to coffee industry so there is
less risk of new entrants. Apart from it, the venture required more capital for establishing such a
huge chain of stores (Kara, 2018). There several rules and regulation of government regarding
hygiene, quality, employment, business and environment etc. that is crucial to consider in
business operation which is also not easy to set up a large business. Consumers believe and trust
is another important that help in encouraging to incorporate business enterprise.
Bargaining power of suppliers- There are amount of dealers in global market that are
ready to present products and other needed raw material that utilised by Starbucks. So the risk of
bargaining power of providers is low. Expectation for the elevation Arabica coffee that is traded
at a quality, rests of the coffee beans needed by respective company are simply accessible. Thus,
the providers are in no place to negotiate with this firm or effort to influence its prices.
Bargaining power of buyers- Starbucks is suffering strong rivalry that means an
profusion of choice for the customers. Now these days’ people are well conscious with their
needs and options so if respective firm and other corporations create modify in their costs in
from of increment then buyers will simply switch to another brand. So this feature of good deal
power of purchaser is high and affects the business of the corporation (Ariffin and Sahid, 2018).
However, the store surroundings offered by Starbucks and its exclusive tastes has improved its
brand allegiance. Certain consumer is less responsive regarding cost will carry on buying from
this firm even if its elevates its costs.
Threats of substitute products- This force is also high because all the commodities which
are offered by Starbucks have their substitutes in market. The company offer coffee, tea and food
item like beverage and juice, drinks and other beverages. There are numerous companies that
also offered these kinds of products on effective prices. Many of similar goods also cost less than
the commodities of respective firm which generate the threat of substitute products high for
Starbucks.
Rivalry among exiting competitors- There are figure of rivals of Starbucks such as
Dunkin Donuts, McDonald, Coffee cage day, KFC and many small and local coffeehouses which
crate competition for this company by providing diverse related goods in sensible costs. The
rivals are working constantly to innovate, specialise and come up with plan of actions to get
attention of more consumers. Many of coffee and beverage being offered by Starbucks are also
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provided by rivals and there are few commodities that are inimitable to this firm. Therefore, the
reasonable rivalry is high for respective business enterprise.
Industry Life cycle model- It is an activity that consists different stages where businesses
operate, success, prospect and slump in a business sector (Nam and Yi, 2020). The description of
this cycle in context of Starbucks is mentioned as under:
Introduction- It is the first stage of this life cycle in which the management of Satrbucks
can create awareness about the products and services that are offered by the firm in a particular
business sector so that people are aware with them. For example, the organisation can use
publishing tools and promote for this which assists in getting attention of consumers.
Growth- In this phase, the development and success starts basis of buying of goods. In
Starbucks, in this step, sales rate increases, market share grows and customer base also
developed (Shrestha and Shrestha, 2018). Price can stay at its high extent during this period if
demand for product remains high.
Maturity- In this phase, the market reached the maximum size where industry growth is
likely zero and negative. Organisations like Starbucks that are strong in policy and sales numbers
can survive and entirely dominant the marketplace. The maturity phase of industry life cycle
characters high brand consciousness, wide allocation, and lower process to stay competitive and
new commodity changes to create brand distinctiveness.
Decline- It is the final phase of this, in which sales numbers drops to very low cause of
new product has immerged, rules & laws changes, problems with provide of raw substance and
high stage of rivalry. When changes re occurred in consumers needed and they demand new
coffee products the switch to another brand and the refuse and decrement occur in the business of
a firm.
Internal Analysis
It is an exploration of a company’s competency, cost situation and competitive viability in
the market. It can be an activity of determining the ability and competency of the firm so that
administration of the firm conscious with its intrinsic capability in term of strengths and
opportunities and the area required developing. An internal analysis is an exploration of the
company’s competency, cost position and competitive viability in the market. Organising an
internal analysis often incorporates evaluates that offer useful data about the firm’s capability,
weakness, growth options and risk. The information generated by intrinsic analysis is essential as
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the venture can utilise it to improve strategic planning objectives to sustain and develop the
business of company. The description of different concepts, that are able to analyse the impact of
internal business factor of a company, is as under:
VRIO Framework- This framework is efficaciously formulated to offer assistance to
organisation’s phrase of defending and introducting resources that provide the company with
competitive edge till long term. There four factors of this examination that is Value, rareness,
inimitable and organisation (Bagumire, Muyanja and Kiboneka, 2019. There are drivers
competencies in Starbucks that are its supply chain, service and allocation process, promotional
actions and product compilation service from outlet. The explanation of this study in context of
Starbucks is as under:
Valuable- Organisation like Starbucks has a powerful worldwide existence which is an
essential benefit for the venture annoying to develop their size, sales and market share. It is a
grand system to earn and achieve more revenues from new and existing customers (Ansoff and
et. al., 2018). The atmosphere of the company allows consumer to swallow a cup a of coffee and
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experience calm with of without organisation. It also consist calorie information or these
specially coffees on its menus in order to petition to a number of consumers.
Rare- Starbucks is the biggest coffee business internationally. There are other global
coffee chains. The respective firm is the only large coffee shop with an upscale, complicated
ambiance. Most other coffee shops do not have the environment to motivate consumers to bring
their computer and unwind for a while.
Inimitable- In the diminutive phrase, no rivals of Starbucks could achieve such a large
worldwide attendance. It would obtain crucial time and assets to achieve this. By considering
other coffee stores are previously using this ability, it there can be reproduced. It would be
comparatively easy for other coffee outlets to modernize their stores and reproduction the
business model of Starbucks, thus, the classy and comfortable relaxes for a while.
Organisation- By contributing a number of choices and repeatedly altering their list of
options, Starbucks is captivating benefit of this potential with a lot of choice, most individuals
can discover something they like and person who likes to try new food and drink regularly can
simply do so at Starbucks.
Value chain analysis- It is a strategic tool that utilised by company to monitor inner firm
activities (Ginter, Duncan and Swayne, 2018). The motive of this framework is to distinguish
that actions and processes of the corporation which are more precious. The description of this
analysis in reference to Starbucks is as below:
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Inbound logistic- it is crucial for the firm to formulate effectual relation with providers
so that can provide their effective support by offering needed material and commodities on time.
Without analysing inbounds logistic, the administration of corporation can suffer diverse
problems in goods expansion phases (Moutinho and Vargas-Sanchez, 2018). If the venture will
concentrate on its inbound logistic then it can improving raw substance, storing contributions and
inside allocating the objects for production.
Operation- The significance of analysing functioning actions happens when raw material
obtain and Starbucks prepared for exchanging material in to finfish goods and allocate it in
marketplace. If the administration of the corporation will concentrate on the processes of the
business like machining, testing and others, then it will assist in increasing productivity and
accomplishing constant financial growth in form o acquiring rivalry remuneration.
Outbound logistic- It includes that actions and operation which distribute the
merchandise to the customer by fleeting through intermarries. Some outbound logistics actions
are material managing, warehousing and order dispensation, transporting and distributing to
needed place. The management of Starbucks can determine the outbound logistic to earn
competitive edge and achieve its production expansion objectives.
Marketing and sales- Some advertising and sales actions of Starbucks are promoting,
promotional actions, assortment and building efficient relation with channel members (Okumus
and et. al., 2019). For successful advertising of the goods and services, the management of
individual can use advertising channel method to enclose its promotion and sales activities. The
marketing plan of activity can be drive and pull in environment and supported to respective
company business aims, brand image, competition vibrant and present position in current market.
Services- Starbucks provide before and after sales services that will function an important
role in developing customer allegiance. In existing time, consumer believes post sale service as
important advertising actions (Pan, Chen and Zhan, 2019). The administration of the
organisation must monitor sustain performance to evade destructive product image and increased
use it as a method to generate positive word of mouth endorsement cause of quick, timely and
efficient sustainability services.
Resources, Capabilities and Competencies Framework- This is a framework that offer data
about the benefits, aptitudes and abilities of the company. The description of this firm is as under
in reference to Starbucks:
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Resources- A firm’s assets are the functioning inputs that permit it to perform its
business actions. Assets are categories in to three groups’ corporeal resources, human resource
and organisational capital. In physical assets the respective company has machinery, furniture
etc. In human resource, it has retailer employees, distributors, and suppliers etc. organisational
capital refers to the monetary value and finance that assists in operating the business of this
organisation.
Capabilities- It refers to the activities and functions which perform by the firm to use its
resources in an integrative fashion. Basically it refers to the strength or ability of the venture
which make it able to establish an effective position in a particular business sector. Starbucks has
a string brand image because it offers a range of coffee products as per needs and demand so
people with effective quality. It operates its business internationally with the help of its number
of stores. It variety of commodities help in gaining completive advantages for the market and
having a large customer base.
Competencies- It mention to a resource or capability that offers competitive benefits to the
firm. The management of Starbucks offer unique coffee items which are able to satisfying
consumer’s needs (Kara, 2018). The enterprise also used affordable and reasonable pricing
strategies so that consumer can easily reach to products and take the benefits of it. Effective
business strategies of the firm also help in operating its business completive environment and
gaining rivalry advantages.
Recommendations
From the above mentioned information it can be suggested to the management of Starbucks
that they require to make development in some business region of the venture. It can be
recommended to this firm there are amount of coffee and beverage shops in this business sector
so to create development in its business the management of enterprise can make changes in its
products and services. To make increment in its sales and purchaser base the management should
develop some SMART objectives which help in existing and sustaining the production of this
company in competitive environment till long term duration. Some objectives that can be set by
management if Starbucks as below:
 To make increment in sales of its coffee products by 10% with in upcoming 9 months, by
offering a variety of coffee goods and devising modification in pricing plan of actions in
shape of competitive pricing and discount pricing strategies etc.
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 To develop customer base by 7% within 8 months by making innovation in its existing
products in form of savour and organic coffee products which are able to fulfil current
time consumer in appropriate manner.
 To main increment in market share by 5% within 4 months by making change in business
strategies, plans and polices of offering efficient return on asset to capitalist.
 To make growth and development in the revenue of the firm by 7% under the 8 moths o
time period by offering quality and innovative products and services to its target
audiences.
If the administration will work for accomplish these kinds of set business aims then it can make
development in sales, market share, productivity and efficiency of the firm. It will also assist in
gaining competitive profits and running the industry smoothly in rivalry atmosphere. By making
expansion of its business in that areas where it is not operating, can assist in capturing a large
size (Bagumire, Muyanja and Kiboneka, 2019). The management must provide training and
development sessions and programs to its employees who help in developing and improving
their skills and knowledge so that when the company will make change in technology and way of
working then they can easily adopt this change and effectively perform their roles and
responsibilities. It will also help in encouraging workforce and they will do their work and
execute their task in adequate and appropriate manner.
PART 2
Stakeholder report
Stakeholder is a person, organisation, social group that has a stake in the business of a
company. Therefore, stakeholder is the people and company that support a business venture to
effective operating its business activities and operations in effective manner. Therefore
stakeholders can be internal and external to the business and a stake is a critical interest in the
business of its actions (Shrestha and Shrestha, 2018). To identify the internal and external
stakeholders of the company like Starbucks, the management can conduct stakeholder analysis
which is mentioned as below:
Starbucks carry on developing its corporate social responsibility actions to deal with the
anxiety of diverse shareholder groups. The major stakeholders of respective company are
employees, customers, suppliers, environment and government.
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Employees- Starbucks prioritizes workforce in its corporate social responsibility
effectiveness. Workers naturally demands for better work place, job safety and privileged salary.
Workforce is main stakeholder of the company because they contribute in running the business
of organisation in appropriate manner. In Some nation like New Zealand, the company gives
very low salary to immature labour. These youth rates are often disparaged.
Customers- The respective company also consider its customers as between its top
shareholders. The attention of this stakeholder collection is high excellence services and goods
like coffee and connected beverages. For instant, warn and friendly relations are accentuated in
the firm and offering effective products and services to them so then they can be loyal and retain
with the firm till long term.
Suppliers-They are collected of extensive provide companies and coffee farmers. The major
attention of this shareholder group is recompense and an increasing require form individual
venture (Nam and Yi, 2020). They are also important for the company because they provide raw
material and needed commodities to company to manufacture products.
Environment- The management of respective has commercial social accountability
programs for atmospheric sound business. The organisation’s CAFE program has led to higher
biodiversity and gloom value in authorized coffee farms. With this, Starbucks is capable to
attend to its corporate social responsibility to this shareholder crowd. Even if there is space for
development.
Investors- This stakeholder group is also crucial for business of Starbucks because they
make investment in the business of company for its effective running (Ariffin and Sahid, 2018).
Investors have attention in high fiscal implementation of the company so that they can get
efficient rate of return on their savings.
Governments- Due to having international attendance of company, Starbucks address the
interests of numerous national authorities as stakeholders. The company consider government
policy and instructions in its business to run its business in efficient manner.
These above mentioned all stakeholder groups are crucial for effective operation of business
of Starbucks. But customer and employees is main and main stakeholder because they
highly contributed in business operations. For example, workforce have the nature of
attention to preserve constant employ in company, gain fair pay for work and work
protected, comfy surroundings. The character of power of employees is amalgamation
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bargaining influence, work action or beat and advertising. The firm can gain workers loyalty
by treating workers with admiration, provide a safe and healthy workplace and offer
development opportunity to them. For example, the firm can select customer as their main
stakeholder group on the basis of all income an age group. The firm can also consider
working professionals and non working people both male and female. Separately from this
customer nature of attention include safe and reliable commodities and fair substitute in term
of price (Kara, 2018). The nature of power of them consist moving to competitors brand and
the faithfulness can be gained by venture by offering superiority coffee products, offering
good client services and effective position where they can easily arrive at manufactured
goods.
Mendelow’s Matrix
It is a tool which is utilised and implemented to determine stakeholders and their attitudes.
This will consider factors like as the level of interest a stakeholder has in project or firm’s
selected plan of actions and whether are they likely to utilise power to impact this. By using this
tool, the management of Starbucks can segregated its stakeholder in the basis of the power and
interest and the explanation of it is as under:
High power, highly interested people (manage closely)- The purpose to fully involve these
individuals, making the greatest efforts to fulfil them.
High power, less interested people (Keep satisfied)-Put enough work in with these individuals to
manage them fulfilled, but not so much that they become bored with the organisation’s message.
Low power, highly interested people (keep informed)- Appropriately inform these individual
and talk to them to assure that no major problems are occurring. These audiences can also assist
point out any areas that could be developed or have been overlooked.
Low power, less interested power (monitor)- The firm do not bore these stakeholder teams with
excessive communication, keep an eye to check if their extents of interest or power change.
CONCLUSION
This has been summarised form the above information that production strategies are crucial
for the development of a company there are different strategic systems and methods are used by
an organisation to establish the force of internal and external business atmosphere over the
business of the firm. By using Pestel, Porter’s five forces and industry cycle structure, the firm
can analyse the impact of extrinsic business atmosphere. VRIO, Value chain and resources,
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capabilities and competencies framework are essential to determine the influence of internal
environment over the firm. Stakeholder examination also helps in providing data about the major
shareholder of the corporation who make contribution in growth and success o venture.
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Industry Life Cycle. 2017. [Online]. Available Through: < https://www.iedunote.com/industry-
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<https://sites.google.com/site/starbucksanddunkindonuts/business-strategy/vrio-analysis >.
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