Starbucks UK: A Case Study

This assignment delves into Starbucks' operations in the United Kingdom. Students are tasked with analyzing the company's financial performance, particularly its tax strategies and public image surrounding them. The analysis should incorporate various sources, including academic journals, news articles, and market reports. Key topics include Starbucks' profitability, UK tax contributions, consumer perception of the brand, and the impact of Brexit on their business.

Principles of Marketing
Management

Executive summary
Starbucks is a well-known coffee chain of America that started its operations in the year
1998 and from then it has been recording good growth within the nation. It has a presence of
more than 800 stores in UK and is regarded as second most popular coffee chain after costa
coffee. The operations in UK have been quite successful one but the recent brexit issue has
reduced sales in its stores. It further faced some taxation and gun policy issue that created a
negative image. Nonetheless, it is quite active in the area of technology as well as environmental
concerns which gives the company an edge over the competitors. But the high priced offering is
posing a threat for the company followed by the presence of Non-specialist shops and those who
offer low priced coffee than Starbucks. In this regard, the company is requited to reduce its
pricing so as to suit the needs of consumers and also offer healthy offering to them so as to
maintain its future sustainability in the long run.

Table of Contents
Introduction to the audit ...........................................................................................................................4
Company/ brand background of Starbucks in UK........................................................................................5
Macro analysis of Starbucks in UK through pestle analysis .........................................................................6
Micro analysis of Starbucks.........................................................................................................................8
Competitive analysis for reviewing Starbucks closest competitors.............................................................9
SWOT analysis of Starbucks.......................................................................................................................10
Conclude with the strategic priorities for the coming year, based on analysis of the current situation....10
REFERENCES..............................................................................................................................................11
ONLINE......................................................................................................................................................12

Introduction to the audit
Marketing audit can be defined as the comprehensive interpretation of marketing
environment of business at internal and external level so as to analyze the problem areas and
opportunities for enhancing overall performance of the company (Sisson and et.al., 2017). This
helps any company in finding out about how well the marketing manager is carrying out the
activities and whether it is adding to overall performance of the company or not (Voigt, Buliga,
and Michl, 2017). The present audit has been carried out on Starbucks company so as to analyze
its operations within UK market. This will done by discussing the UK operations of the company
in detail followed by carrying out macro/micro and Swot analysis. Competitor analysis will also
be done with respect to two rival firms being costa coffee and café Nero. The report will then be
concluded with strategic priorities for the upcoming year on the basis of analysis carried out in
entire report.
Company/ brand background of Starbucks in UK
Starbucks is an American company as well as coffee house chain that started its UK
operation in the year 1998 by acquiring 65 Seattle coffee stores in the country. This was as the
two firms shared common culture and focused on great commitment in terms of offering
customized coffee as well as showing mutual respect to individuals and the environment (Snell
and et.al., 2017). UK is one of the most important European, Middle East and African (EMEA)
market for the company and it will continue to grow as per the needs and requirements of
consumers. Its working is based on the mission to inspire as well as nurture the overall spirit of
human beings. The firm further believes in serving the best possible coffee to the consumers and
goal is to serve it by adhering with high quality standards as well as utilizing ethical practices.
Other than serving coffee the company in UK further offers teas, pastries as well as other treats
that are there to please the taste buds (Harrington and et.al., 2017). The company keeps on
innovating with its products and it recently launched almond milk in the nation after its huge
success in US.
Market position of company in UK market stands out to be second which is after Costa
coffee. This clearly showcase that Starbucks in UK had been quite successful in its operations
but in the year 2017 it experienced economic as well as geopolitical slowdown that impacted its

sales as well as economic growth. It was all on account of the impact of Brexit as well as security
concerns that led to overall weakening of consumer confidence. This has led to a fall in pretax
profit 61 percent which accounts to 13.4 million pound (Starbucks says Brexit vote hit UK
profits, 2017). Still its overall progress will continue to take place which will lead to building of
a leaner and more efficient business. The company in this regard has improved its investment in
providing light food options such as seasonal fresh fruits, salads as wraps thereby satisfying the
needs and requirements of health conscious consumers as well. The stores within UK has been
designed to be cozy as well as intimate so as to provide personal space to people so that it can be
used by them. A well-furnished area in form of sofas, coffee tables, bar stools as well as meeting
room table has been kept thereby ensuring that Starbucks had something for everyone (Austin
and Wilson, 2017). The ones who want to enjoy a peace and away from home environment can
relax on arm chair and read a book while those looking for enjoyment with friends can do so by
huddling on the sofa with a cup of coffee, soft lights as well as background music so as to make
the experience a compete one.
Macro analysis of Starbucks in UK through pestle analysis
The present section is about carrying macro environmental analysis of Starbucks coffee
chain within United Kingdom. This has been done by making use of Pestle analysis in order to
track the overall environment in which the company is acting and how it can affect its overall
operations.
Political – UK political environment is stable enough to aid in proper operations of
Starbucks but on negative note, the Brexit vote has impacted the overall profitability of
Starbucks within UK which has resulted in fewer shoppers who are visiting high street where
Starbucks stores are usually present. It has further been found that the sales of stores that opened
for more than a year has dropped by 1 percent (Wood, 2017). In the same way, there was also a
presence of Skip Starbucks Saturday that was initiated on account of gun policy of the company
where it allowed consumers to carry loaded weapons into the stores. The overall performance
can further be impacted by the type of political relations UK maintains with Brazil so as to get
access to coffee beans. As of now, things are friendly between UK and coffee producing nation
but coming future is not known to anyone which may impact the overall operations of Starbucks.

Economic – in the economic front, UK tax rates has affected its overall tax paying
system as it was made to scrap its complex tax structures and pay corporation tax in 2015 as it
did for its first 14 years within the UK market. It thus became of poster child in 2012 for
avoiding the corporate tax after the emergence of its details related to meager tax contribution
(Davies, 2015). It has still been criticism by the officials on account of not maintaining
transparency that makes it difficult to find out if it is paying a fair amount of taxes on its
Frappuccino’s and espressos or not. The increasing prices of raw materials further put an impact
on the company. For example, in 2016 Starbucks increased the price of some products by around
30 cents so as to offset the rise in coffee cost.
Social – This factor is all about environmental, social and cultural impacts on Starbucks.
For them organization need to understand their wants and need which can according to new
trends and culture of the country. People of UK are more interested to having coffee with the
friends and family so for them there are around 23000 cafe and they all are contribute 8.9 billion
dollar to the economy of the UK. Starbucks is the more likely organization of the UK who
provides their services according to the demand of their customers in different style. They are
more concentrate toward the young generation in UK as well as in the international market. As
per the report of Mintel younger millennial represent a report who are the core client of coffee
shop market from the last 16 years (Fittand, 2013). This report is determine that the organization
need to reduce their cost according to the strength of their customers to pay as specific cost of
their products and services as well as this is need to involve a quality according to new trend and
fashion.
Technological – These factors are highly impact on the productivity and product costing
of each and every products of the organization. Technological factors are all about to use the new
technologies and innovative ideas to improve products and services easily. In this process
organizations are used various technology to introduce them in front of the customers as well as
to provide better services effectively. Now a days advance technology landscape their size in the
economy so it is important for individual and organization to use them in their day to day
activities. Starbucks introduce this in their company to att4rct more customers as well as to
reduce wastage and higher costing.

Environmental – In this factor organizations need to understand the value of
environment that will not have to negatively affect through the products and services of a
particular firm. In this process products of the company should have to be ecofriendly for the
economy. For this Starbucks has founded the solution for that in which they are using
biodegradable material instead of plastic which can be easily recycled. This process will help
them to provide positive effect on the customers as well as on the economy too. In it they are
also providing discounts if customers bring their own reusable cups (Grönroon, 2014).
Legal – In this process, government of the country regulate many more rules and
legislation for the organization as well as for their employees. It includes importance of
consumers law, trade law, healthy and safety of the employee as well as the consumers, human
rights, employment services and for the policy or rule of the organizations. In this employees and
company need to follow them otherwise government have authority to take strict actions towards
them.
Micro analysis of Starbucks
This analysis is all about internal factors of the organization that can easily affect on their
policies, decision making system as well as on quality and processing. These factors are helps to
make effective policy , planning an strategy for the firm. For Starbucks this analysis can be done
by McKinsey 7-S model -
Strategy – This is the planning of Starbucks in which is related to their objectives and
future goals. It is all about what they want to serve or offering to their customers. This is the first
step of the firm to make a effective plan top fulfill their future objectives effectively. Starbucks
build effective strategy about their products , place , process as well as services that they wants
to offer to the people. This is the effective tool to get future objectives and goal that organization
wants to achieve in the short term period (Hair and Sarstedt, 2011).
Structure – It is all about divisional organizational structure that need to be maintain
effectively in the company. In this process Starbucks need top manage their objectives and
activity in the facilitating manner that will be convenient for their customers. It can be depend on
the location and the service which they provide to others. A organization is deal in the various
division such as seniors, executive director, founder, presidents and vice presidents etc. and in

operation division hey deal in the management, finance division, marketing division, human
resources management, research and development team. In this various employees are work
together to get organizations objectives easily (Harrington, 2017).
Systems – Starbucks uses many system activities to improve their business structure in
the the competitive market. In it they are including product servicing, recruitment activity, team
building and time management to get more opportunities from the market. After this they
provides effective training and learning to their employees for improve productivity and
maximize profit. According to this factor all the organization's needs to work in the systematical
form to get their objectives easily.
Shared values – This is the objective of the organization to provide effective services to
customers. Starbucks needs to analyses their employees ability and skills to deliver and offer
effective services to their customers. In this effective communication is very important to
understand customers demand easily and fulfill them easily. For a organization it is very
important to understand what their customers and how they can effectively provides satisfaction
to them. The firm has further ensured to maintain high standards of excellence in terms of
purchasing and roasting of coffee beans followed by enduring towards a fresh delivery.
Staff – Staff and employees of a company are their key strength who provide their
services and contribution to get future objectives easily. For this, it is very important to provides
effective training ad learning to each and every employee of the organization. This process helps
to improve their working skills, ability and capacity that helps them to face all the challenges
easily. It has also been offering interest free loans to the staff members in order to make sure that
they are able to pay the housing deposits. All these strategies adopted by Starbucks has resulted
in increased employee retention rates and decrease in the overall turnover
Style – This is includes various activity that can be products and servicing style,
leadership style, management style as well as company's approaches in the various situations. In
it leadership style is stand for the growth of employees as well as for the organization. For
Starbucks, it is all about encouraging employees for the company's growth and to motivate them
to get future goals effectively (Kotler, 2013).
Skill – Starbucks is able to provide effective services and products to their customers
because they have a skilled workforce who provides their effective services toward the future
goal. Their employees are more skilled to us advance technology and innovative ideas in their

company. For this Starbucks is able to attain competitive advantages with the skilled and capable
employees who are full of knowledge and friendly in various approaches while dealing with te
consumers.
Competitive analysis for reviewing Starbucks closest competitors
As per the competitive analysis of Starbucks have strong rivalry in the economy of UK
because they have the large chain in world and they operating in the 23,500 location in
worldwide. Costa coffee is the strong competitor of Starbucks which is the second largest
coffeehouse in the world. This organization has expended to over 3000 stores in approx. 30
countries. Starbucks and Costa coffee provide almost similar products to their customers that's
why Costa coffee is the Second largest coffeehouse after Starbucks in the UK. To get effective
position in the economy both organizations are used effective ideas and innovative things in their
products and services.
SWOT analysis of Starbucks
Strength – Starbucks is the leading coffeehouse in the UK because they have a strong
workforce as well as the quality products which is makes them different from others. In this
process their employees helps them to provide effective services to the customers ac cording to
their need and demand. In other hand their store location and products quality is provide trust to
the customers for stay with them for the lifelong. Starbucks provides best think in their stores
such as Wi-fi, music, effective servicing, friendly atmosphere, wide variety of seating
arrangements so as to meet up the needs of various consumers (Honack, 2017).
Weaknesses – Starbucks offering their quality products at the higher cost that's why
middle class and low class consumers can not afford to take their services easily. In this case
their competitor organizations are easily take a strong place in the market after providing flexible
cost to the customers. There is a presence of higher operating cost for the company as it focuses
more on high quality standards as well. There is a presence of higher operating cost for the
company as it focuses more on high quality standards.
Opportunities – For Starbucks, flexibility of cost, innovative ideas and use of
technology helps them to get various opportunities in the market. This can be the appropriate
thing for them to get various opportunities from the target market as well as to attract more and

more customers easily. This strategy move them toward their objective as well as provide them
an edge over other competitor who tap the market segment.
Threats – They are the external market factor that can directly affect on the procedure of
the Starbucks. As per the report of Mintel, new rivalry, substitute products as well as some
organization those provides same products at the lowest cost can be the threats for a
organization. In this process they need to make a effective planning for them to protect the
company from their negative affects (McCabe, 2011).
Conclude with the strategic priorities for the coming year, based on analysis of the current
situation
On the basis of above audit report it has been concluded that Starbucks is a successful
organization in UK market so for them it is very important to maintain this position in the target
market. For this, they need to provide effective costing to attract their customers easily. To make
a strong competition in the market the needs to provide new things in the market with the
innovative ideas and use of technology. Offering new and low cost in their products may lead to
reduce threats from the market and helps to make long term customers. This project report
represent macro analysis that can affect on the policy and procedure of the organization as well
as decision making system. For a effective strategy and planning organization needs to provide
specific training and learning o their employees who can helps to fulfill their customers demand.
It is the most important factor for Starbucks to provide attractive price to their customers as well
as offer health supplements that help them to make effective goodwill in the market for a long
time.

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