Starbucks Business Report

This business report provides an analysis of the external and internal environment of Starbucks, including recommendations for improvement. It also includes a stakeholder report and analysis of the company's competitive position.

Starbucks Business Report

Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................3
External environment analysis...............................................................................................4
Internal environment analysis.................................................................................................7
Recommendations................................................................................................................10
PART 2- Starbucks Stakeholder Report........................................................................................10
a) Starbucks’ internal and external Stakeholders.................................................................10
b) Priority stakeholder’s Group – Employees......................................................................11
c) Power and interest of Employees stakeholder group.......................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
In the world of coffee maker, Starbucks is considered as one of the major brand which has a
huge coffee house chain of stores. This American global brand was firstly founded in 1971 in
Washington by Jerry Baldwin, Zev Siegl and Gordon Bowker (Bharadwaj and et.al., 2013). With
increasing its brand image among coffee lovers, give advantage to Starbucks in opening its
branches all over the world, where till 2018, it has more than 28,218 stores. By considering over
its past history i.e. it was found that Starbucks was brought in by three founders, they are
Gordon Bowher, Jerry Baldwin and Zev Siegl. They became market leader but still they faces
aggravated competition from other firms rendering their services within the market as Starbucks
renders there services in Speciality Coffee Café sector that is regarded as one of most contending
industry.
The major rivalries of Starbucks are Dunkin Donuts, Caribou Coffee and McDonalds. As
per the case study related with Starbucks, 2015, the firm possess maximum returns in context of
equity with respect to their competitors. Shares along with other securities are listed within
NASDAQ as well as stocks of the firm are taken as return generating stocks. Starbucks has
around 47.08% is return on equity and it is more than as compared to their competitors which
was 45.49% and 32.97% of McDonalds. Apart from these elements, Starbucks is also
experiencing high competition from their competitors like McDonalds. From the case study, it
has been found that Starbucks possess total 191000 employees and on the other hand McDonalds
have 420000 workforce that is double of later. Net profit margin attained by Starbucks is around
14.57% but it is less as compared to McDonalds and it is 17.43% and which is being attained by
Dunkin Donuts is 23.55%. By taking into consideration these figures as well as statistics, it has
been observed that the firm is facing intense rivalry within the industry. This denotes that the
rationale behind assertive strategies of Starbucks serves as their as their intention for sustaining
as well as surviving within the marketplace.
After examining the position of Starbucks as well as their competitors, it is apparent that
firm is market leader with respect to coffee store within the marketplace. For creation of
strategies and policies, it is crucial for firms to determine the opportunities as well as challenges
which are present within the market (Blackburn, Hart and Wainwright, 2013). In reference to
Starbucks,both (internal & external) of these environments have been identified within this
business report. The aim of this report is development of business strategy document so that
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environment in which they are delivering their services can be analysed. Starbucks is global
coffee chain that is liable for facilitating individuals with respect to products that are offered by
them. This report is being segregated within two distinct parts, the first section within this report
involves elaborated introduction related with firm and their competitive positioning within the
market place. Internal along with external environment of firm has been provided along with
recommendations by which performance of organisation can be improvised in upcoming 3 years.
It is recommended that strategies of Starbucks needs to focus on growth through
penetrating in the rural market which is not being covered by them. To address this, Ansoff
matrix must be used as well as stress must be laid on market penetration and unify with cost
effectual raw materials (Boies, Lvina and Martens, 2011). This method involves operations of
organisation associated with advanced techniques and tools that can be utilised by them. For
this, Starbucks can make use of SMART objectives to have impelling outcome: it is being
provided below:
To improvise growth rate by 10% through the usage of omni marketings channels for
disbursal of data via qualitative cost within upcoming year.
Thereby, unified operations will aid organisations in future for enhancing sales and
market shares while rendering their services. By making use of identified activities and strategies
in an effectual way, it will aid within attainment of goals in stipulated time duration. This will
assist Starbucks for evaluation of contributions that are being made by employees that will
enable them to reach their goals. Strategic relationship will provide inbound logistics through
which supply chain can be maintained with respect to coffee beans. Apart from this, Starbucks
can adopt for changing their managers with those who are innovative as well as creative in
rendering their services (Campbell, Edgar and Stonehouse, 2011). Starbucks have maintained
their strong position within the global market which furnish high revenue as well as leads within
acquisition of huge customer base with respect to their competitors and attain high productivity
along with profitability.
MAIN BODY
There are various factors of business environment that have impact over business as well
as its business activities. It is very important for organisation to analyse as well as evaluation all
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of these factors in order to perform business activities in correct and appropriate manner.
Business environment in which Starbucks company is performing its task can be classified into
two parts such as internal and external. This should be critically analyse in order to identify the
impact of these factors on respective business. Micro and macro business factors will lead to
have direct and indirect impact over Starbucks company. Influences of internal and external
environment in context of respective company is mention below in detail.
External environment analysis
External environment can be describe a group of various factors that have influences over
organisation as well as its activities. It is essential for respective organisation to analyse or
determine all factors of external environment (Ghezzi, 2013). This will help in performing
business functions in better manner. External environment includes all those factors which can
not be controlled by organisation. Starbucks company is one of the well known organisation
which is providing its products and services to different part of the world. External factors will
lead to have major impact over company and this factor includes suppliers, customers, clients,
market trends, government policies and many more. In order to understand all factors of external
business environment different models as well as approaches such as PESTEL, porters five force
and industry life cycle analysis will be used.
PESTEL analysis
This is considered as an effective model as this help in determining different factor of
organisation. PESTEL analysis includes different factors such as political, economical, social,
technological, environmental and legal. All of these factors are mention below in context of
Starbucks company.
Political factor – This external factor represent all policies and rules that is made by
government party. Political factors will lead to have huge influence on organisation as all
functions and activities should be done by considering the impact of this factors. It includes
various rules, regulations, policy of tax, trade restriction , stability or instability of government or
political party (Grover and Kohli, 2013). Respective company is performing its functions in
different part of world and majorly in US market area. High rules and strict policies of
government will lead to have negative impact over organisation.
Economical factor – This factor refer the economic condition of country in which
Starbucks organisation is providing its services. Economic factors includes inflation, recession,
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GDP rate, economic rate and so on. All of these factors will lead to have impact over
performance as well as activities of Starbucks company. This company is providing high quality
coffee to customers. High interest rate charged by government will lead to have direct affect over
sales and profits of respective company.
Social factor – Social factor includes various factors which includes age, preferences,
occupation, choices as well as standard of living (Khalili and et.al., 2013). It is essential for
organisation to consider needs and wants of customers while developing a products. Social factor
will lead to have both positive as well as negative impact over organisation. Heath conscious
nature of customers will lead to have negative influences on organisation. Where as targeted
customers of respective company has high living standard and this will lead to have positive
impact over organisation as well as its activities.
Technological factor - This factor includes high and advance technology which help in
performing business activities in effective manner. Technology factors play a crucial role in
growth and development of organisation as though this Starbucks organisation will be able to
enhance its sales as well as performance. This company needs to use more updated and
innovative technology in organisation as though this respective company will be able to achieve
desired goals. Technological factors will help in gaining competitive advantage over other rival
companies.
Environmental factor – It is essential that this company is following all rule and
regulations that is developed by government for the protection of environment. This factor
includes ecological system, climate changes, weather condition and so on. Starbucks
organisation is providing different types of coffee to its customers. In this it is using plastic
material in glasses and straws (Johnson, 2016). Government has developed strict restriction on
usage of plastic material so this will lead to have negative impact over organisational activities.
Legal factor – This factors is majorly related to the various laws and legislations that is
set by government. Legal factor includes different laws that is developed for maintaining heath
and safety of organisation. It includes customers protection laws, employment laws, copyright
and patents or many other laws. It is essential this its company is considering high quality of raw
materials or coffee beans in order to provide safe and secure products to customers. Products
offered by this company is not providing damage to any person.
Porter's five force
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This is considered as an effective tool which is helpful in understanding the competitive
position of organisation in market area. Porters five force model will help in determining
different factors of business environment in order to enhance performance of organisation
(Scholes and et.al.2014). This model includes five forces such as rivalry among companies,
bargaining power of buyers, bargaining power of suppliers, threat from substitute products and
threat from new entrant. All of these forces are mention below in detail in respect to Starbucks
organisation. Threat of rivalry among competition – There are various companies which is dealing in
respective sectors. The major rivalry or competitors of this company is Starbucks are
McDonald's, Dunkin Donuts as well as various other coffee house. This company have
huge threat from these competitors as this will lead to have impact over organisation. It
is essential for this company to develop effective and strong business strategies in order
to gain competitive advantage over other rival companies. Threat of new entrant – The number of new entrant companies are continuously in this
sectors. The threat of new entrant company will lead to have impact over the business as
well as its activities. Starbucks company is one of the largest company that is dealing in
respective company. It is providing its services and product from number of years as
well as developed its strong brand image in market area. This will lead to reduce the
impact of new entrant for respective company. So this force will lead to have moderate
impact on Starbucks company. Threat of substitutes - There are many other companies which is providing same type of
product and services to customers. This will lead to increase more options for buyers and
customers. Different types of company is offering variety of coffees products in order to
attract customers (Schrader, Freimann and Seuring, 2012). Starbucks company is using
high quality of ingredient and other commodity for developing its products. Products and
services offered by respective company is supplied by any other organisation. So this
will lead to increase the threat of substitutes for respective company and this force will
have high impact over organisations. Bargaining power of buyers - There is high completion in the sector in which Starbucks
company is performing its functions. this company is facing intense completion which
lead to increase the choices of consumer. Buyers of this company are well informed or
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known about their choices. This means that bargaining power of customers will have
impact on business. So bargaining power of buyers is considered as a strong or high force
for Starbucks. This company needs to develop creating and effective strategies which
will help in attract more and more customers towards business. Bargaining power of suppliers - Starbucks company is using high quality of raw material
or coffee beans for making its products. There are large number of suppliers which is
providing raw material to this company. so from this it can be analysed that there is low
switching cost for respective company and this force will have low influence on business
as well as its operations.
Industry Life Cycle Model
This model in used to determine the different stage of business. Organisation is go
through various stage of life cycle which start from introduction, growth, maturity and decline
stage. Industry life cycle model will help in understanding all stage though which organisations
move includes Starbucks. For this detailed description in mention below.
Introduction stage – This is considered as the first stage of organisation and in this company is
just started performing its business functions (Sia and et.al., 2016). This is the start up of
organisation and it stage majorly faced loss to company. At this stage respective company focus
on providing high quality products in order to meet with customers needs.
Growth stage – At this stage, Starbucks company needs to focus on growth and development of
organisation. This stage is essential stage as in this company will be improving its business as
well as trying to achieve desired goals.
Maturity stage – Once company has cover the growth stage it move to maturity stage in which
respective organisation will be earning maximum revenues. This is considered as the most
profitable stage and Starbucks company will be able to earn more profits.
Decline stage – This is the last stage of the life cycle stages. In this stage company profits will
start declining and business will be in loss (Slater and et.al., 2011). At declining stage respective
company have to develop effective strategy which will help in enhancing sales.
Internal environment analysis
It is very important for company to analyse its internal environment as this will help in
getting proper in sight about the organisation. This will help in identifying internal strengths as
well as capable resources of organisation. this will lead to take better business decisions as well
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as achievement of desired objectives. in order to analyse internal environment of Starbucks
company different models can be use such as VRIO analysis and value chain model. Both of
these model in mention below in context of Starbucks organisation.
VRIO Analysis
This is considered as an effective tools and effective way though which organisation can
analyse different resources and capabilities of organisation. VRIO model includes all those
resources which is valuable , rare, inimitable as well as organized model (Spender, 2014). This
model will help gaining competitive advantage over other rival companies. VRIO model in
context of Starbucks organisation is mention below in detail.
Component Valuable Rare Inimitable Organized
Staff member ✔ ✔ ✔ ✔
Especial coffee ✔ ✔ ✔
Effective global
presence
✔ ✔
Valuable – This includes all those resources which is valuable to organisation. these
components will have huge impact over attracting customers as well as enhancing sales of
organisation. Its employees or staff members are considered as valuable resources as this will
help in performing business activities in effective and efficient manner. Its employees have
required skills and capabilities which will help in achieving organisational goals and objectives.
This company has valuable coffee as its is very especial and attract customers (Verbeke, 2013).
Starbucks company is well known organisation as it has presence over different part of the
world. This will lead to influence more number of buyers as well as increase its sales and profits.
Rare – This includes staff member or workers as well as its especial coffee. Rare consist
of all those organisational resources that is which is rare and not available with other rival
company. Starbucks company is recruiting and selecting employees that is as per organisational
requirement as well as able to conduct business activities in require manner. It employees are
helpful in improving business standards so it is considered as rare. Where as its especial coffee is
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developed with special ingredients and raw products which make it more rare and different from
other companies. This company is developing high quality especial coffee product with the use
of high quality ingredients and coffee beans.
Inimitable – Inimitable includes those resources of organisation which is unique and can
not be copy by other companies or rival of organisation. Its employees are inimitable as it is not
possible that all employees has same skills (Woerner and Wixom, 2015). So this resources are
considered as inimitable as this help in performing business activities in different and creative
manner. This will lead to gain competitive advantage over other rival companies.
Organized – Organized refers to the all those resources that help business to conduct
business activities in smooth and effective manner. This includes staff member, especial coffee
as well as global presence. All of these resources are managed and organized in effective and
efficient manner. Starbucks company employees are performing all business activities in
organized manner. It is conducting its business functions in different parts of organisation in very
organized manner. Starbucks organisation has very organized business process through which
this company is developing its especial coffee products products.
Value Chain Model
This model is established in 1985 by Michael Porter and this includes primary and
supportive business activities. This model will help in analyse different activities of organisation
in order to achieve desired goals and objectives of organisation. This model consist of primary
activities that will have direct impact over performance of organisation (Woodard and et.al.,
2013). Where as supporting activities are important in providing support the primary activities of
respective company. Porters value chain model in context of Starbucks organisation is mention
below in detail.
 Integration – It is essential that this company has integration between the marketing
activities as well as technology. This will help in promoting and selling products of
respective company.
 Objectives – The main objective of Starbucks organisation is to enhance its marketing
activities with the usage of advance or innovative technology.
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 Application – This company needs to use effective and modified technology in its
business application as this will help in integration of marketing activities to the
technology.
 Monitoring – Starbucks company needs to manage as well as monitor the business
activities as well as its products. Quarterly analysis or monitoring will help in achieving
desired goals as well as maximizing growth of organisation.
Recommendations
Starbucks is furnishing their services within distinct countries and have made significant
position in the Chinese market. Along with this, they have various option through which they can
attain probable growth in the same marketplace. It is suggested that firm deliver the customers
with local product mix at reasonable prices according to taste preferences, needs and lifestyle of
individuals with respect to specified market. In addition to this, within their international
strategies, Starbucks have to transfer their capabilities as well as competencies from country to
country to ensure that they deliver there services as per required standards by which they can
attain huge profits while rendering their services within global market in organic way. Starbucks
dominate great possibilities for growth in context of fresh juice and tea products which they can
render to their customers. It is suggested that products must be rendered with respect to their core
products and competencies which they possess. Coffee beans are significant raw material in the
value chain as there may occurs variations in the market prices. Starbucks must mitigate the
volatility risks associated with price as by trenchant execution of hedging strategies this can be
handled in an appropriate manner. For an instance future contracts can be made for
approximation of quantity of input at minimal prices. Through this, they will be able to handle
costs with respect to future at a greater extent.
PART 2- Starbucks Stakeholder Report
a) Starbucks’ internal and external Stakeholders
Stakeholder Group Internal or External Justification for including
them
Employees Internal They are consisted as
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operating hands of
organisation.
Customers External They can be considered as an
reason for developing products
and services. Customers are
helpful in earning revenues for
business.
Suppliers External They are helpful in providing
raw material as well as
conducting of business
operation continuously.
Shareholders Internal They are helpful in providing
capital and funds to
organisation for performing
business activities.
Government External They are considered as the
regulatory bodies that develop
rule and regulations for
organisation.
b) Priority stakeholder’s Group – Employees
As per the above analysis of Stakeholder group of Starbucks company, employees are
considered as the Priority stakeholder. This company is providing importance to its employees as
well as focusing on its employees. This is the main reason for selecting employees as the top
most priority stakeholder for this organisation. Employees play crucial role in overall growth and
development of organisation as well as help in achieving desired goals and objectives.
According to the study of Starbucks case it has been analysed that this organisation feel
that pampering employees is very essential part of organisation (Starbucks case study, 2019).
Respective company is providing various benefits as well as advantage to its employees.
Starbucks aim of offering paid vacations, holidays, medical services as well as stock options to
employees in to retain them for longer time period. This company believes that it should focus
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on development on growth of employees as this will help in increasing their performance. It is
providing training to its employees and staff member in order to enhance their skills as well as
capabilities to perform better. Approx 191000 employees of respective company is associated
with support facilities, store development, manufacturing, warehousing and other activities. This
company believe that skills employees will be able to conduct business operation in better and
effective manner.
c) Power and interest of Employees stakeholder group
In order to analyse the power as well as interest of employees stake holder matrix will be
helpful. By analysing stake holder matrix this company will be able to identify and determining
all those employees which have more power and interest on business activities in decision.
 High power high interest - As per this matrix it has been analysed that owner or
manager will have high power as well as high interest in business.
 High power low interest – It includes government and political parties.
 Low power high interest – Employees are includes in this as they as have low power to
take decision but have high interest.
 Low power low interest – This includes the suppliers of respective company.
CONCLUSION
From the above report it can be concluded that it is essential for an organisation to analyse
as well as evaluate different factors of business environment in order to perform business
activities in effective manner. Business environment is classified into two parts such as internal
and external business environment. Porters five force model will help company to determine all
those forces which will have high or low impact over organisation. this will help company to
take better business decision as well as achieve desired goals of organisation. VRIO and value
chain model will be helpful in evaluating internal capabilities of organisation so that business can
enhance its performance. Stakeholder market analyse will lead to determine which stake holder
of organisation have more interest and power in business decisions.
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REFERENCES
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Online
Starbucks. 2019. [Online]. Available through: <https://www.starbucks.com/>
Starbucks case study. 2019. [Online]. Available through:
<https://online.vitalsource.com/#/books/9781305856271/cfi/648!/4/4@0.00:0.00>
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