Starbucks Business Report

This report provides an in-depth analysis of Starbucks and its competitors, the external and internal environment, competencies framework, and recommendations for enhancing performance.

Starbucks Business
Report

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Introduction to Starbucks and it's competitors.......................................................................1
The external environment.......................................................................................................2
The internal environment.......................................................................................................6
Competencies Framework......................................................................................................8
Recommendations:.................................................................................................................9
PART 2..........................................................................................................................................10
Stakeholders report...............................................................................................................10
Starbucks internal and external stakeholders.................................................................10
Workers on the priority of Starbucks among stakeholders group........................................11
Power and interest of workers..............................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
From the case study of Starbucks it has been revealed that they are numerous competitors
prevailing in the open market place. Some of the rivalry of Starbucks are, McDonald's, Dunkin'
Donuts, Costa Coffee, Caribou Coffee, Cafe Coffee day and so on. All of them are working day
and night to meet the emerging needs of the customers. To be in the leading position among it's
competitors Starbucks scan external environment in order to make changes in their working
environment accordingly. This report is based on Starbucks. The founders of this successful firm
are, Jerry Baldwin, Zev Siegl and Gordon Bowker. This coffee retailer came into existence in the
year 1971on March 31. It's headquarter is in Washington, US. This assignment covers rivalry of
Starbucks. 5 Force analysis and Industry Life-Cycle model is studied to frame strong strategies
in order to cope up with rivalry. PESTEL analysis is devalued to closely determine external
environment forces impact on business. VIRO and value chain model are illustrated to better
understand which is most suitable for the company growth and success in the global market.
Additionally, recommendation is suggested regarding how Starbucks can enhance performance
over three years.
PART 1
Introduction to Starbucks and it's competitors
Starbucks is worldwide speciality coffee retailer. This leading firm has owned reward for
Seattle's Best Coffee in the global market. The annual revenue is $16 million and around
2,00,000 staff members are working effectively in 60 countries to meet the emerging needs and
taste of the targeted customers. Across the globe Starbucks has 21,000 Starbucks branded cafes
where customers can visit and can full-fill their demand accordingly. In the year 2008 and 2009
around 900 stores where closed due to the decline in the goods and services. In order to regain
their position in the market again Organization decided to diversify their products in other
segments where new innovative goods could create value in the market. The team mates of the
enterprise are trained as per the requirement in order to make enhance their skills and capabilities
to bind loyal customers for the coffee for the years. By this Starbucks will be able to gain
competitive advantages against rivalry (Tikson, 2018).
Starbucks is well-known for it's coffee across the boundaries. There are various types of
competitors for Starbucks prevailing in the competitive market place according to the case study
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are, McDonald's, Dunkin' Donuts, Costa Coffee, Caribou Coffee, Cafe Coffee day and so on.
They are creating challenges for Starbucks in order to cut down their market share to a large
extent. By doing so competitors can grow and develop easily in the market. McDonald's has
36000 stores across the world and 420, 000 co-workers are working hard to meet the set
objectives. Whereas, Dunkin' days sales outstanding is 51.22 and has 11,000 stores worldwide.
The annual sale of firm is $ 748.71 M. The competition with Starbucks is neck to neck. In
Canada Starbucks coffee is in more preferred as compare to cafe Depot and McDonald's.
However, in UK Costa Coffee is more demanded than Starbucks. But in Eastern Europe
Starbucks is very less demanded.
The external environment
Starbucks is able to be in the leading position because they study the external
environment deeply. Researcher of the firm examine all the external factors like, political, social,
technological, legal etc. factors in order to make improvements in the business working style. By
this they are able to flourish easily in the competitive market place. External environment is
uncontrollable in nature so it is very essential to keep eye on the changes occurring in the
external surrounding so as to attain productive outcomes in Coffee Cafe industry (Sisson, 2017).
Management is able to cope with rivalry when they have measured the external environment
factors deeply. Top level management of Starbucks is able to create tough benchmark for others
because they change the working style according to dynamic environment. With the help of
PESTLE and 5 Force analysis they are able evaluate external factor smoothly. The brief
expatiation of PESTEL analysis are illustrated as under:
Political factor: It refers to as those governing bodies activities that affect smooth
functioning of the business to a large extent. Political factor covers foreign trade policy, tax
policy, trade restrictions, labour laws, corruption, government policy and so on. In order to
flourish Starbucks more in Coffee Cafe industry management need to understand political factor
on priority level.
Advantages :
 This provides mechanism which enables Coffee day industry to discover new
opportunities prevailing in the open market place.
 It helps to eliminate the influence and effects of potential threats for Coffee Day industry
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Dis-advantages:
 In the open market place users can oversimplify data which is used for making decision
in Coffee Day industry.
 Political factor evaluation should be done regularly in order to gain productive outcomes
But industry does not invest in it. Many times heavy financial loss is beard by them.
Economical factor: Tax rates, Law, policies, interest rates, wages, governmental activities and
so on some of the examples of economical factor. Coffee Day industry need to examine
economic factor in order to enhance the economy of the nation (Honack, 2017).
Advantages:
 It directly aid in improving public services due to which the living standards of the
people are raised
 By analysing economic factor Coffee day industry can raise research and development
work accordingly.
Dis-advantages:
 More unemployment will be raised in the industry of Coffee day.
 Reduces workforce efficiency of employees in Coffee day industry.
Social factor: It includes society traditions, customs, believes, traditions, culture and so on. It is
essential for Coffee Day industry to study social factors in order to bring clarity in long-term
strategy.
Advantages:
 By following social factors In Coffee Day industry it assist in enhancing better learning
opportunities for staff.
 In the industry of Coffee day more skilled and capable staff members are hired.
Dis-advantages:
 The disposable income of the people also affect Coffee day industries day to day
working.
 Customer service expectations is another drawback faced by Coffee day industry when
social factors are not full-filled accordingly.
Technological factor:Advance technology is adopted in the industry of Coffee Day in order to
cope with with competitors. By this cost of production reduces and goods are available at
nominal price in the open market place (Gupta, 2018)
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Advantages:
 The efficiency and agility of employees raises in the industry of Coffee Day by
implementation of modern technology.
 Better communication is raised by adopting advance technology in the industry of Coffee
Day.
Dis-advantages:
 Ethics of the Coffee day industry become imbalance
 By installing modern plant machinery in the industry of Coffee day it incur huge revenue.
Environmental factor: In this case, it covers climate change, raising pollution, population,
depletion PH level of soil, water and so on. Coffee Day industry need to work on environmental
factors so as to use the resources for effectively.
Advantages:
 By focusing on environmental factors industry of Coffee day is able to uplift sales ratio at
a tremendous scale.
 Easily finance can be gathered by the Coffee day industry through banks and other
financial institutions as they see that business are keen interested in controlling
environmental impacts (Guler, 2018).
Dis-advantages:
 For Coffee day industry it incur huge time and cost.
 Coffee Day industry need to train employees regarding how to use resources at the
optimum level in order to get best results.
Legal factor: Contract, securities, immigration, industry specific laws, consumer protection,
taxes and so on are some of the examples of legal factors. Industry of Coffee day execute legal
factors in order to assure customers that they are success level rate of Starbucks business around
the globe.
Advantages:
 Industry of Coffee Day will be able to run smoothly in the intense competitive world.
 By this liability of the industry is limited to a large extent.
Dis-advantages:
 More government interference occurs when industry does not follow legal laws.
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 Gradually loyal customer's market ratio decreases due to which industries profit margin
reduces at a tremendous scale.
5 Force analysis: It came into existence in the year 1980 and was published in Michael.
E Porter's Book. This is a tool adopted for examining competition of a business. The elements
of Porters five force analysis helps firm to raise their overall productivity and profitability share
(Robles, 2018). The five elements identified in this model helps in shaping every market and
industry in the world. The points are explained below:
Competition in the industry: Within the coffee industry of UK competition is high as
there are many players who operates their business as domestic as well as global level. Due to
the large competition among food and beverage industry it is evaluated that the power of
competitors is high within the marketplace of UK that impacts on the daily sales of companies.
Potential of new entrants into the industry: It is considered as a major threat within
food & beverage industry as innovation of new products is high because the coffee industry have
high attractiveness. Within the beverage industry there are several competitors such as Barista,
McDonald's and so many. So the potentiality of new entrants is moderate as it required huge
capital investment but who are strong in finance then they can easily enter into the market.
Power of suppliers: For the beverage industry mainly coffee beans is important for a
company to completely make a cup of coffee that beans are supplied by many suppliers from a
different locations. The bargaining power of suppliers is too high as many suppliers are available
but demanded in industry with the better quality of goods.
Power of customers: As customers termed as a king of the market and they are
considered as a stakeholder of a business organisation. The bargaining power of buyers is too
high and they required new and innovative things so that a company requires to update or bring
innovation in its products and services. Also, supply a wide range of goods and services that
attract large number of customers and manage bargaining power of customers in an effective
manner.
Threat of substitute products: Several kinds of products are available in the food &
beverage industry such as tea, coffee, soda, drinks etc. whereas, the location of shops plays
important role in that industry. As Starbucks facilitates space for hag outs, entertainment as well
as party. In addition, within the marketplace several substitutes of coffee are present so the threat
of substitution is high and it is continuously increases.
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Industry life cycle model:
This model is related to the process of organisational functions that includes various
activities, stages as well as prospects (Ragas 2017). It is directly associated with the stages like
initiatives, growth, maturity as well as decline. The industry life cycle model for the Starbucks
are discussed below: Introduction phase: In this, organisation focus on introducing their business operations
in the marketplace. Within the context of coffee industry in UK and Starbucks
organisation there are numerous tasks that are needed to be performed at a low cost and
better quality. The main motive of initiation stage is to operates or launch businesses in
the market in order to get huge market shares within the industry. Growth phase: It is considered as a growth of a company as there are several tasks that
are executed by a management by making appropriate rules and regulations for the
purpose of increasing future profitability of a specific business organisation. Within the
respect of Starbucks, they add more varieties and flavour of products and services in
order to increase their market shares and profitability. Maturity phase: At this stage of industry life cycle, the company get maturity where
profits increases along with the increment in demand. While due to the huge competition
in the marketplace leads in increasing challenges which impacts on their brand image and
reputation (Mayer, 2018).
 Decline phase: Along with the rapid innovation it is hard for a business organisation to
sustain and survive for a long period of time within the marketplace. Effective
implementation and control of life cycle model helps in analysing the maturity as well as
decline phase that consider as a complex process for a firm. For example, due to the
health conscious people in the market creates the demand of green tea.
The internal environment
In the competitive world internal environment is assessed as they has the capacity to
influence decision of the firm as well as attributes of human assets. It is important to for
Starbucks to determine internal environment because they impact the success and approach of
operations (Martínez Puente, 2017). However, it helps in recognizing potential opportunities and
threats prevailing outside firm's operations. Internal environment can be assessed by various
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models which are, VRIO model, value chain model, resources, capabilities and competencies
framework and so on. Some of the models are showcased as under:
VRIO analysis of Starbucks:
Starbucks is one of most well known brand in the whole world by selling their coffee.
The brand is achieved success from years by using ethical practices and focusing on consumer
service positively (Lin, 2019). Here are the VRIO analysis of Starbucks that are as follows:
 Value: Starbucks has a strong brand image in the marketplace by using three major
pillars that are ethical activities, quality and customer service in order to gain
sustainability into marketplace. They value which provided by them to their consumers
are that they provide special flavours and quality of coffee which is the main attraction of
consumers to purchase again and again. The product that the company offers is valuable
as they let their customer feel distinct from others which give Starbucks a competitive
advantage.
 Rare: Factors which come under rarity of respective products and services are their
brand image not be copied by others easily and it is major threat for others too. The
another factor that rare in nature which is special flavour and quality of coffee they put
significant amount of investment on procurement and creation of special kind of flavours.
The services that they offer to the customer make their offerings rare than others which
can easily attract customers.
 Imitable: The strong brand image that possess by them is difficult to imitate but can be
possible in long run. Another factor which is special flavour and quality of coffee
difficult to imitate in nature as it required special process to build. The major factor
which difficult to imitate that is global presence as it required lot of investment. The
product and the services that they offer can easily be imitated by the competitors but the
trust and emotional attachment with the brand enables the company to attract customers.
 Organized: Strong brand image come under respective factors and special flavour and
quality of coffee that helps to market their products and provide customer retention
strategy in order to gain potential outcomes (Lee, 2018). With their unique strategy and
ability to deal with the changing preference of the customers Starbucks can easily sustain
their business.
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Value chain model: It is required for every business organisation in order to perform
tasks according to the international standards. As it can be diversified into two categories for
achieving the work performance effectively. Primary activities used to create physical
conception of goods and services whereas, secondary activities associated with the organisation
infrastructure. Within the context of Starbucks, primary activities involves marketing, operations
as well as sales that leads towards the operates their operational function in more than 60
countries. Secondary activities assists company management in order to perform tasks according
to the business infrastructure (Krishna, 2018). While Starbucks majorly focused on human
resources as well as technologies that enhance the overall performance.
Resources: As the company Starbucks supply tangible products that are consumed by a
person which gives competitive advantages in the marketplace. Whereas, the strong area of
company is their physical evidence like retail businesses, outlets, machines etc. that is in used by
the management to get effective results. In the context of Starbucks, they use roast and brew
techniques for producing a final goods and services that results in gaining competitive
advantages in the marketplace.
Capabilities: It includes the goodwill of company, brand equity as well as customer
perceptions towards a business organisation that helps in leading market by effectively using
resources as a strong area for their business operations (Kemmeren, 2017). Starbucks properly
used their all capabilities while introducing products and services at international level that
results in increasing profitability as well as customer base. As the coffee beans is most important
capability of Starbucks which is required to make better quality of coffee.
Competencies Framework
It is defined as an inclusive structure which is designed to create appropriate basis of
skills, knowledge as well as attributes which are required by all workers of an organisation (Kay,
2019). Within the context of Starbucks, the competency framework as well as working
environment are shown as follows: Leadership development: It is associated with the activities, functions and tasks which
are to be performed by a company like Starbucks in order to develop employees abilities
and competencies which includes seminars, motivation and training programmes.
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 High potential talent: Most of the workers are highly skilled an trained who are working
in Starbucks which leads a business organisation in order to perform as per the customers
requirements and satisfied them (Honack, 2017). Recruitment and selection: Within an organisation several kinds of roles and
responsibilities are needed to perform which is varied from each others as it is essential
for the Starbucks in order to choose right applicants for a right job which results in
effective and optimum utilisation of resources and skills. Performance management: In the context of Starbucks, they sets benchmarks for their
workers which make sure that all business functions are effectively performed as well as
produce better quality of coffee (Gupta, 2018).
 Reward and recognition: As it is required for every business organisation in order to
motivate their employees for better performance it will increase workers morale. While
Starbucks offered better and effective management system that helps in maintaining
positive working environment at their workplace.
Recommendations:
Starbucks offers their goods and services at a national as well as international level. For
supplying goods and services to the customers properly a company Starbucks require to provide
efficient and effective products quality (Guler, 2018). For the Starbucks, mainly developed as
well as developing countries are termed as a potential market in order to appropriate objectives
formulation process as it makes simple for the company to expand its size and market in other
countries. For this SMART objectives are prepared that are discussed below:
 The company Starbucks should focus on increasing the market share by 25% mainly in
developing countries within a time period of 6 months.
 The management of a company needs to formulate and adopts effective marketing
strategies for the purpose of increment in its customer base by 30% across the world for
forthcoming future.
 The Starbucks requires to manage all requisites resources that leads a business
organisation in order to satisfying workers as well as develop their skills by setting
benchmarks for them.
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In addition, numerous tasks are managed by the company's management as per the set
standards of global benchmark. In order to analysing the required resources the company
Starbucks must be implemented some strategies such as follows: Growth strategy: At initial level, the management of Starbucks implemented strict set of
rules, policies as well as regulations for performing and completing their organisational
activities (Glowik, 2017). As per the situations of current market it is analysed that the
company offered various products and services that directly results in increasing their
profit effectively as well as efficiently.
 Demographic segment: It is essential for a company Starbucks to segment their market
effectively in order to generate huge profits for a long period of time. It is simple for the
management to choose a specific target market for offering their products and services in
the market. It is in used for the purpose of getting long term profitability and benefits as it
focuses on the customers need in order to produce goods (Dalton. 2019).
PART 2
Stakeholders report
Starbucks internal and external stakeholders
Stakeholder Group Internal or
External
Power of the
stakeholders
Reasons for considering
them
Suppliers External The power of the
suppliers in Starbucks is
low as they can they
switch to other suppliers
easily.
Through this a company
executes their operations
effectively and
efficiently.
Workers Internal The power of employees
is also very high as they
support the company in
providing their services
to the customers.
It is the common and
useful aspects of a
company as it helps in
facilitating services to
their customers.
Customers External The powers also have This type of stakeholders
10

moderate power as the
brand value of the
company is strong and to
maintain it they keep on
innovating their services.
helps in raising
company's revenue and
profitability.
Shareholders Internal The shareholders of the
company have powerful
influence as they may
influence their decisions.
This kind of stakeholders
helps in raising the funds
for the company's
operations.
Government External The government has
lesser influence as they
contribute to the society
and comply with various
requirements.
They regulate some kind
of legislations which are
followed in a company to
conduct smooth
operations.
Workers on the priority of Starbucks among stakeholders group
Stakeholders plays a crucial role in an organisation that impacts on the company's
operations, activities and decisions whereas, these actions and plans also influence on these
stakeholders. The workers of Starbucks termed as a top priority among all stakeholders which
helps in performing activities effectively in order to satisfy their customers (Chowdhury, 2016).
As per the facts and figures of case study, it has been identified that workers are motivated as
they being rewarded by the management of company in order to encourage them towards the
better performance. This will result in increasing their contribution towards the efficiency and
effectiveness.
In addition, they facilitates several benefits and incentives like perks to their employees
which includes medical services, paid holidays and so on. Moreover, the company arrange
several programmes regarding employees training and coaching that increase their skills as well
as knowledge (Boone, 2017). This will result in providing several kind of opportunities. As
workers of Starbucks gives their contribution in performing different activities like warehousing
as well as numerous support services and so on. The company Starbucks procure their workers
11

from various locations along with a aim of facilitating recruitment to the domestic people. This
helps in making them a service oriented, increasing communication skills as well as effectively
fulfilling the customers needs.
Power and interest of workers
It can be ascertained with the matrix of stakeholder which contains mainly four quadrants
that assist in identifying the workers power and interest. It can be considered as follows:
Through the uses of this matrix it is identified that workers posses high interest within the
company so that they contribute more towards the accomplishment of objectives effectively and
efficiently as well as take essential actions towards the performance. Whereas, the power of
employees is low so that they does not have right to make business decisions. So the workers are
considered as essential requirement of a company that execute the operational functions
effectively but do not enjoy power to make business decisions (Atzori, 2018). For this purpose, a
communication strategy is being implemented within the Starbucks that assists them for effective
interaction among workers as well as to facilitate directions so that they can achieve their goals
effectively.
12

CONCLUSION
From the above it can be concluded that there are several competitors of organization
prevailing in the open market place. Management is framing unique tactics in order to overcome
the issues created by rivalry. PESTEL analysis is studied in order to better understand external
environment factors. By this management is able to cope with rivalries challenges. Various
models like, VRIO model, value chain, resources and so on are illustrated briefly in order to
select the most suitable model in the working premises. It will help in capturing huge market
ratio in global market. Internal factors are measured in order to make tough bench mark for
others in the international market. Additionally, recommendations suggested to improve
performance over 3 three are mentioned so that necessary improvements can be done in the loop
holes of performance.
13

REFERENCES
Books and journals
Atzori, R., Shapoval, V. and Murphy, K. S., 2018. Measuring Generation Y consumers’
perceptions of green practices at Starbucks: An IPA analysis. Journal of foodservice
business research. 21(1). pp.1-21.
Boone, C., 2017. In the News: An Exploration of Starbucks and the Media.
Chowdhury, M. E., 2016. Textbook to reality: Using corporate earnings reports as an effective
teaching tool for a business capstone course. American Journal of Business Education
(AJBE). 9(4). pp.147-152.
Dalton, C. M. and Thatcher, J., 2019. Seeing by the Starbucks: The Social Context of Mobile
Maps and Users’ Geographic Knowledges. Cartographic Perspectives. (92).
Glowik, M., 2017. 4.7 Case study: Starbucks. Global Strategy in the Service Industries:
Dynamics, Analysis, Growth, p.156.
Guler, A. U., 2018. Inferring the Economics of Store Density from Closures: The Starbucks
Case. Marketing Science. 37(4). pp.611-630.
Gupta, P., Nagpal, A. and Malik, D., 2018. Starbucks: global brand in emerging markets.
Emerald Emerging Markets Case Studies. 8(4). pp.1-22.
Honack, R. and Waikar, S., 2017. Growing big while staying small: Starbucks harvests
international growth. Kellogg School of Management Cases, pp.1-22.
Kay, M. J., 2019. Corporate sustainability programs and reporting: Responsibility commitment
and thought leadership at Starbucks. In Corporate Social Responsibility: Concepts,
Methodologies, Tools, and Applications (pp. 110-126). IGI Global.
Kemmeren, E., 2017, August. The Netherlands I: Fiscal Unity, Groupe Steria’s Per-Element
Approach and Currency Losses relating to a Non-Resident Subsidiary (C-399/16 [X
NV]); Starbucks and State Aid (T-760/15 and T-636/16). In Result of Conference"
Recent and Pending Cases at the Court of Justice of the European Union on Direct
Taxation", WU (Vienna University of Economics and Business), October 17–18, 2016,
Vienna, Austria (pp. 117-162). Linde Verlag.
Krishna, C. G., 2018. Starbucks Communication Strategies–More Than Just a Cup of Coffee.
IUP Journal of Soft Skills. 12(3). pp.23-53.
Lee, W. S., Moon, J. and Song, M., 2018. Attributes of the coffee shop business related to
customer satisfaction. Journal of foodservice business research. 21(6). pp.628-641.
Lin, L., 2019. Corporate Governance and Liquidity Risk of Starbucks Company.
Martínez Puente, R., 2017. Starbucks Corporation valuation.
Mayer, N., 2018. Starbucks corporation (Doctoral dissertation).
Ragas, M. W. and Culp, R., 2017. Observations and Conclusions from “Masters of Business”. In
Mastering Business for Strategic Communicators: Insights and Advice from the C-suite
of Leading Brands (pp. 201-217). Emerald Publishing Limited.
Robles, M. G., 2018. Tax planning in multinational corporations after the discussions referred
to immorality of base erosion and profit shifting (BEPS): With focus on Starbucks
Corporation (No. 7/2018). UASM Discussion Paper Series.
Sisson, D. C. and Bowen, S.A., 2017. Reputation management and authenticity: A case study of
Starbucks’ UK tax crisis and “# SpreadTheCheer” campaign. Journal of
Communication Management. 21(3). pp.287-302.

Tikson, S. D. S., 2018. Human Resource Policies and Work Culture: A Case of Starbucks.
Jurnal Bisnis, Manajemen, dan Informatika. 15(1). pp.1-12.
APPENDIX
Stakeholder Group Internal or External Reasons for considering
them
Suppliers External Through this a company
executes their operations
effectively and efficiently.
Workers Internal It is the common and useful
aspects of a company as it
helps in facilitating services to
their customers.
Customers External This type of stakeholders helps
in raising company's revenue
and profitability.
Shareholders Internal This kind of stakeholders helps
in raising the funds for the
company's operations.
Government External They regulates some kind of
legislations which are followed
in a company to conduct
smooth operations.