Starbucks Business Report

This business report provides a comprehensive analysis of Starbucks, including its external environment, internal environment, and industry life cycle. It examines the company's strengths, weaknesses, opportunities, and threats, as well as its competitive landscape and strategies. The report offers valuable insights into how Starbucks is navigating the global coffee industry.

Starbucks Business Report

Table of Contents.
Table of Contents..................................................................................................................................2
INTRODUCTION................................................................................................................................3
RECOMENDATION......................................................................................................................12
REFERENCES...................................................................................................................................14

INTRODUCTION
The Starbucks is an international coffee house chain and it is founded in Washington, America. The
company has its speciality in coffee retailing and is being one of the leaders in this industry. The
company is having more than 20,000 outlets across the world, in which some are company owned
as well as some of them are operated under franchise system. The average revenue generation by
the company is more than $15,000 Billion. The company Starbucks is serving wide range of
products, ranging from various varieties of snacks, beverages, fresh juices, tea products, micro
grounded coffee, whole bean coffee, hot and cold drinks etc. There are some Starbucks evening
locations which sell bottled cold coffee drinks, ice creams, wines and beers too and also sometimes
serves as the grocery stores (Kay, 2019).
The company proved to be the leader of the industry by showing exceptionally high profitability in
the industry at a very fast pace. From the latest statistics it has been observed that the company has
proved to be over the other companies of the industry in revenue generations. However, in the year
2008-09 the company had to face some critical times so it could not be said that its functioning was
always smooth.
Therefore, in order to create value as well as to be the brand icon of the industry, the company is
regularly working on diversifying its product line & to grow in international locations. In the home
market i.e. in united states the company Starbucks is been leader since a long go as 50% of the
coffee purchased in cafes is been through this company which itself dominates the other local
competitors. Moreover, in the international markets the company is having entrenched competitions
which the company has to face.
In the coffee segment, the company's top competitors are Caribou coffee, McDonald's and Dunkin'
Donuts. These companies proved to be the biggest threat to the effective functioning of the
organisation Starbucks as these companies were successful in wooing the customer’s away from the
organisation Starbucks.
The company Caribou coffee is one of the competitor of the Starbucks, which is selling coffee
brewing supplies, baked goods, roasted coffee to grocery stores. The company is currently having
470 coffee houses operating in 20 states across the globe. The average sale of the company is
$326.5 million.
Another competitor to the organisation is McDonald's, which is one of the largest quick serving
restaurants. This company is operating in 119 countries with more than 36000 outlets across the
globe. This company has diversified its product line into McCafe under which it is serving coffee.
This is similar to the Starbucks in order to gain early success in the industry. The average sales of
the company are $27.4 billion dollars.
Dunkin Donuts is the another competitor to the Starbucks. Dunkin donut is popular for being the

leader as the doughnut chain by selling a large variety of doughnuts. This company has also started
selling coffee since last few years. Thus, the company's average revenue generation was $748.7
million from over its more than 10,000 outlets operating 30 countries (Mayer, 2018).
External environment analysis
PESTEL analysis of Starbucks
Political factors
In order to been agreed upon corporations globally in the developed and developing countries, the
company Starbucks has to follow several sourcing strategies for the sourcing of raw materials in
order to conform the practices of fair trade in the international market. As the main political
imperative of the company Starbucks is its concern towards raw material sourcing.
Moreover, the company has to follow all the rules and regulations from where it is doing raw
material sourcing and this are due to increase in political awareness as well as activism in the
countries which are under development.
Concerns of regulatory pressures is the another political imperative which the company Starbucks
has to face in its home market i.e. in United States. Some more political factors which affect the
Starbucks operations are the employment laws as well as the policies of tax.
Economical factors
The profitability of the company Starbucks is been affected due to the global economic recessions,
thus these are the foremost external economic drivers which affects the ongoing business of the
company Starbucks. It has been observed that even though the recession people are not cutting
down their coffee consumptions rather they are moving towards alternates who are lesser in price,
thus this creates several opportunities for the organisation Starbucks. Moreover, the company has to
face the inflationary macroeconomic environment i.e. the cost of labour as well as the rising cost of
operations in order to increase its profitability in its business. Additionally, some more factors of
external environmental which could affect the economy of Starbucks are the level of taxation in the
country, local currency exchange rates etc (Purkayastha and et.al, 2019).
Social factors
For including its customer base from the people of lower and middle tier income pyramids the
company is working on its expansion in consumer base by providing the coffee at the somewhat
cheaper price without sacrificing in quality which could be company’s main social cultural
challenge. Moreover, the company needs to be cognizant for the trends of green and ethical chic
consumers. The company has to been concern for strategies for next generation customers as well as
millennia’s for smooth running of its operations. Level of education, changes in lifestyle, change in
work patterns and consumer preferences are the various socio cultural factors which affects the
functioning of Starbucks.

Technological factors
The Starbucks is getting benefits from the emerging mobile wave as the company is tied up with the
applications which introduce various discount coupons. Moreover, in order to facilitate its
customers to surf on web while sipping the coffee the company outlets are well equipped with the
facilities of Wi-Fi. Therefore this facility helps the company in increasing its consumer experience.
Additionally, introduction to mobile payments is another facility provided by the company, by
making complete usage of technological facilities.
Environmental factors
The environmental concern is very much critical for the company Starbucks as in order to hold the
trust as well as to enjoy its customer base the company has to pay attention towards the several
environmental factors. Moreover, disrespecting the concern towards the environment will results in
discouraging the consumer from environment activist as well as from international advocacy
groups. Issues regarding global warming, natural disasters in the countries which produce coffee
beans as well as environmental rules and regulations are the various concerns regarding the
environmental factors of the company Starbucks (Koh, Singer and Edmondson, 2019).
Legal factors
The company Starbucks ensures that while sourcing the raw materials, it must follows all the rules
and regulations so all the actions of the company are under legal procedures. Industry’s regulatory
licensing as well as regulations related to the strict customs and trade are the concerns which are
affecting the legal factor of the company.
Porter’s five force model analysis
In order to analyse the competition level in the industry the company uses the porter’s five force
model for analysing the same.
Threat of new entrants
New entrant threat for the company Starbucks is of moderate level. However, new entrants can
bring competition to Starbucks at the local level but they can’t compete it at the global level. Even
though the probability of success could remain low or moderate but the total market share of the
company including its quality of products, efficiency as well as its infrastructures make it high from
its other competitors. Competitors may attract the customers by lowering the price so their always
remain some threat of new entrant for the organisation Starbucks. Furthermore, higher access to
suppliers and raw materials tends to provide the competitive advantage to the company over the
new entrants of the industry.
Threat of substitutes
Substitute product threat for Starbucks coffee is high; as there are large number of products which
are available in the market which could serve as the substitute to coffee are non-alcoholic, alcoholic,

tea, juices and various other beverages. Moreover, quality products as well as good ambiences are
provided by the several restaurants and pubs are the another threat to the company Starbucks as the
substitute. Additionally, in order to moderate the threat of substitutes the company is continuously
working on enhancing its quality as well as brand loyalty by selling premium coffee and coffee
makers along with the great ambience and excellent customer services (Gupta, Nagpal and Malik,
2018).
Bargaining power of buyers
For Starbucks the bargaining power of buyers is moderate to low. The customer base of this coffee
brand is diverse and its customers are mainly sensitive to quality as well as they are willing to pay
higher prices for the products of premium quality. Although, a customer always compares the prices
so the company cannot exceeds a level otherwise the consumers may start switching to other
alternatives. Additionally, diverse product mix of Starbucks helps it in lowering the power of
buyers.
Bargaining power of supplier
Exertion of pressure on company Starbucks by the suppliers can be only from lower to moderate
level. For the selection of supplier, the company is having its own supplier diversity policy such as
ethical sourcing. Moreover, in order to enhance its supply chain the company ethically sources its
coffee from different parts of the world which helps in the growth of the company as well as coffee
farmers. Thus, by getting supplies directly from the farmers the company tends to eliminate the cost
of mediators for the supplies. Additionally, the company is having plenty room for exercise as it is
availed with the larger size of supplier base.
Competitive rivalry
The competitive rivalry intensity for the company Starbucks in the industry is moderate to high.
There is a large number of competitions in this industry as the barriers to entry and exit level are
small in this industry. The market share of the company Starbucks moderates its competitive rivalry
which is the highest from all its competitors. Although, the company’s diverse product list as well as
premium quality helps the company in giving some edge over its competitions.
Industry life cycle model
The industry life cycle model of Starbucks includes start-up stage, growth stage, maturity stage and
decline stage
Start-up stage
This is where the life cycle starts, as here sales are lower with higher retail prices.
Growth stage
An industry’s period of growth is been characterized by its rapid increase in its earnings.
Maturity stage

The maturity stage of the industry concerns with the high recognition of the brand, their wider
distribution or diversification of products with the lower price to remain competitive among the
other brands of same industry.
Decline stage
The stage of the industry is said to be declined if the industry shows the symptoms of declining
(Krishna, 2018).
Internal environment analysis
VRIO
It is an approach that can be used to evaluate company's internal sources as well as
capabilities to search put if they consider a source competitive advantage.
VRIO Framework is considered as a part that stands for the resource based view (RBV) that is a
perspective to examines the link between the Star buck's performances and internal characteristics.
(Knott, 2015)
Valuable
As per the RBV, resources can be seen as valuable when they allow a firm to apply various
strategies that can improve the effectiveness and efficiency through exploiting opportunities.
Anyway to assess an investment is considered as valuable by looking at its Net present values.
Resources be valuable if they assist Starbucks to enhance differentiation or decreasing the price
regarding product. The resources unable to meet this kind of condition that leads to the
competitive disadvantage.
Rare
Resources which can be acquired for few companies are known as rare. Valuable and rare
resources gives temporary competitive advantage, while on the other hand the situation when
comes regarding more than few companies uses the same kind of resources within a similar way
may leads to the competitive parity. It is done because Organization like Starbucks utilizes identical
resource to apply the same strategies as well as no firms can accomplish superior performance
(Vargas-Hernández and Garcia, 2019). As if the competitive parity is not considered as the desired
position must not neglect resources that are valuable but also common. Through losing valuable
resources as well as capabilities must hurt the firm because they are crucial for staying within
market.
Costly to imitate
A resource must be costly of other firms unable to buy, substitute, imitation. it within a
reasonable prices. Imitation can be occurred within two ways By duplicating the resources or also
gives the comparable product known as substituting.
Organized to capture values

The resources doesn't confer any benefit for a firm as if it is not organized it must capture the
values for them. A firm able to organize its policies, management systems, culture that be able to
realize its potential of its rare, costly as well as valuable resources. Only than the firm can
accomplish sustained advantage that is competitive (Kim, Lee and Shin, 2015).
Starbucks swot analysis
Starbucks is considered as the biggest coffee house chain within the world by innovative strategies
that able utilizes its business strength within overcoming weakness as well as overcomes success
barriers, known as threats within the coffee industry. The swot analysis is known as the strategic
management tools that focuses on the strength ,opportunities ,weakness and threats. (Phadermrod,
Crowder and Wills, 2019)
Strength
This component can be deals with the various internal factors that firm can utilizes the
strength to reduces its weakness as well as protect the business against competition. Main strength
of the Starbucks are
 It can consider as the strong brand image
 It has extensive global chain
 It is known as one of the strongest as well as strongest popular brands. The firm has
growing population of the loyal consumers that adds to the stability within the business of
the Coffee house. The Starbucks firm has the extensive global supply that becomes the
strength as it can support operations.
Weakness
The weakness can be identified by the mention below factors.
 The firm is mainly depends on its main key inputs that is coffee beans as well as it is
accurately dependent on the price regarding the coffee beans , this came to highlight that
Starbucks is considered as over price sensitive to the fluctuations within the prices of the
coffee beans ,that is accurately dependent on the fluctuations within price regarding the
coffee beans (Nickles and et.al., 2019). It also diversify its product range to reduce its risks
that can be associated with such kind of dependence.
 The Starbucks prices its product within premium to the middle tiers regarding the market
segment that places its products outside the budgets of various employees as they can
prefer to other such as McDonald 's as well as other outlets regarding their coffee rather
than Starbucks.
Opportunities

 The firm can enhances its revenues by expansion within developing markets. Here the
opportunity can draw attention away from the United states market, where most of the firm
's revenues can be generated.
 The firm also expands its network regarding retail stores within united states towards the
market share as well as consumer segments.
 The Starbucks firms has also opportunity to expand its supplier network and also the
supplier's range form whom the firm sources so that not to be at mercy of whimsical
suppliers and at the same time diversify its inputs, it also aid the firm in becoming less
sensitive regarding the prices of the coffee beans .
Threats
 Starbucks faces the threats regarding the risking prices of the coffee beans. The enhances
within the prices regarding daily products influences the firm adversely that leads to the
another threats its probability (Büyüközkan and Ilıcak, 2019).
 Starbucks also faces the intense competition form the local coffee shops and also especially
stores that provides the firm a run regarding its money as niche consumers are concerned.
Value chain analysis
It is an approach where an organization recognizes its primary as well as support that can
add values regarding its final products as well as then evaluates these types of activities so that it
can increase differentiation and reduces costs.
It can be grouped into the primary activities as well as support activities given below.
Primary activities
inbound logistics- Here Starbucks focuses on maintaining excellent relationship within the
suppliers (Mudambi and Puck, 2016). They assure that to get a continuous supply regarding green
coffee, as Starbucks is a firm that can started a number of programs so that it can maintain as well
as manage its supply chain better. Farmer support centre is consider as a key part regarding its
supply chain management that gives support to the tea producing and coffee producing farmers.
Operations
It purchases, sells and roasts the high quality of the Arabica coffee beans as well as related
to the coffee products. Firm started roasting within 1971. As Starbucks roasts its coffee beans to a
little longer rather than the other coffee-makers so that it brings out the deep as well as intense
flavour of the coffee. It can own its roasting facilities but can also leads to the major parts
regarding its warehouses as well as distribution locations.
Outbounds logistics
The majority products of the Starbucks are sold within their own licensed stores. As the
firm has launched a variety of the single origin products. It can be sold by some leading retailers

within United States.
Marketing and Sales
It invests more within superior quality products as well as high level of the consumers services
instead of an aggressive marketing. Thus need based marketing activities are also carried through
firm any using new products launches within the form of various sampling areas all across the
stores. (El-Sayed, Dickson and El-Naggar, 2015)
Services
The aim of the Starbucks is to build the loyalty by its stores' consumer services. Objective of
the retailer as well as brand coffee within each of our targets marketing through selling the finest
quality of coffee as well as related products.
Marketing and sales
It invests more within the superior quality of the products as well as high level regarding
consumer services. Here need based activities can be carried out by the firm during the new
products that launches within the form of the sampling all over the stores.
Support activities
Infrastructure
It involves the departments such as management, legal and finances that are needed to keep the
firm's stores operational. The well-designed as well as pleasing stores ,also by the good services
give through the dedicated team of the staff members within green aprons. (Savino, Manzini and
Mazza, 2015)
Stakeholder analysis
Stakeholder Internal or external Justifications
Customers External Customers are considers as the
top stakeholders of the
Starbucks. High quality
services as well as product are
the top most interest of this
kind of stakeholders. For
example coffee and related
beverages. (Golub and et.al.,
2019)
Suppliers Internal Suppliers of the stakeholders
are coffee farmers and whole

sale supply firms. Goal of the
farmers is to enhance the
coffee yield so that they can
generate the more revenues.
Firm can address these
suppliers by number of the
corporate responsibility
program.
Government External Firms can complies on the
rules as well as regulation.
Thus the firm has been
criticized regarding tax
advantages within Europe.
Firm also uses a network
location to the various
European countries so that tax
advantages can exploit. While
at present firms pays low
taxes within the United
kingdom.
Staff members Internal As Employees demand for the
job security, better working
condition, higher wages.
Starbucks given the wages to
the staff members. Firm can
boosted its CSR performance
by providing the scholarship to
their employees that can be
depended on the Arizona State
university (Street and et.al.,
2019). They feel more
motivated by working
regarding a greater cause as
well as enjoying their work.

From the above list the costumers stakeholders is selected. In the organization , Starbucks
there are various kinds of the customers that consumes the Starbucks' products as well as services.
The size of the stakeholder includes the female, male as well as youngsters. It involves the all age
groups people such as 20 -60 , here income level of the consumers are high class group. Thus they
belong to the various occupation such as students ,employees as well as home-maker. Starbucks
offers the high quality products to their costumers as costumers are considered as the top
stakeholders (Knott, 2015). Customers are the main priority of the organization. As by taking the
costumers topmost priority Starbucks modify their culture from coffee house to cafe.
Hence, the Impact on the consumers are very high as firms believes that any change in their taste
as well as preferences will influence hight on the firm's decision. Also, the Menedelow’s matrix
also used , consumers power and interest is high. This matrix keep motivating the firm to involves
within the decision-making. They required to be informed as well as kept satisfied to retain them.
Thus ,firms falls in the category D regarding mendelow's matrix. It means it includes high power
and interest.
RECOMENDATION
It is recommended that Starbucks set various strategies and frameworks for each and every
market to make the experiences of the firm to be a part regarding culture. Starbucks also fulfill the
tastes of the local, they can act local. As Korea and china both follows the huge culture of the
Alcohol and coffee. Firm can introduce the alcohol beverages for the special happy hour set within
some regions or nations. As there is high margins on cocktail, wine, beer may assist the firm to
match the local taste as well as preferences. It can boost the revenues more effectively.
Starbucks can also setup online chat room so that it able to facilitate among its stakeholders .
It also create free emails accounts so that it can spread its fames and also consolidate the loyalty of
the consumers. It can also provides cheap travel tour packages as well as Hotel accommodation.
Starbucks also enhances its sales to promotes its products by the recognized faces such as
celebrities. They can also pick up the two charities or events to reach the community. Firm's
managers also enhance the quality of the products as well as decreases the prices so that medium
income level consumers also enjoys their products. They also listen their employees so that they
can reduce their conflicts with other employees.
Further it could be recommended that the company must adopt strategies in order to bring regular
innovations and development in its products as well as in its operations. The company could
enhance its operational management for quality control check. Moreover, it may continuously work
for building strategies for loyalty as well as for the retention of customer base. Being cost efficient
is another recommendation which is been suggested to the company. Additionally, it is

recommended that for growth the company must work on strategies to increase its number of stores,
enhance its coffee experience, Starbucks may create new customer occasions, it may introduce at
home coffee by entailing packed coffee and K-cups, building of Teavana will also helps in
increasing the business of the company Starbucks. Furthermore, the company could establish new
partnerships as well as it can enhance its digital engagement by remaining updated with the latest
trend of digital technology (Robles, 2018).

REFERENCES
Books and journals
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aquaculture feed sector in Egypt. Aquaculture, 437, pp.92-101.
Golub, S.A. and et.al., 2019. Perspectives on the use of a health surveillance system for Guatemalan
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Vargas-Hernández, J.G. and Garcia, F.C., 2019. The Link between a Firm´ s Internal Characteristics
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