Accounting Financial Analysis Report

This report provides an analysis of Starbucks' recent financial performance, micro and macro environment, Porter's five sources, and SWOT analysis. It also discusses the company's business segments and its strengths, weaknesses, opportunities, and threats.

Running head: ACCOUNTING FINANCIAL ANALYSIS REPORT
Accounting financial analysis report
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1ACCOUNTING FINANCIAL ANALYSIS REPORT
Table of Contents
Starbucks Business and its segments.........................................................................................2
Starbucks recent financial Performance.....................................................................................2
Micro and macro environment...................................................................................................2
Porter five sources......................................................................................................................3
SWOT........................................................................................................................................4
Reference....................................................................................................................................5

2ACCOUNTING FINANCIAL ANALYSIS REPORT
Starbucks Business and its segments
Starbuck is the leader in roasting, retailing and marketing of the specialty coffee all
over the world. Operation of the company includes 7,300 coffee shops in US and near about
3000 in various other countries. Apart from coffee and coffee drinks it is also engaged in
shopping Tazo teas, espresso machines, pastries, coffee brewers and various other types of
food items. Initially, the company was based as the socio-economic segmentation that was
based on the consumer market. However, it further segmented its market through
demographically and geographically through selection of the store location (Starbucks Coffee
Company 2018).
Starbucks recent financial Performance
Though it cannot be said that the year 2017 was bad for the company, it started the
year with lower growth as it posted the slowest growth rates for sales since the period of great
recession. Since 2009 the company recorded weakest annual sales growth for same store and
the result of 2018 1st quarter too was not different. However, over the last 3 years from 2015
to 2017 net income of the company has been increased from USD 2.76 million to USD 2.88
million only.
Micro and macro environment
 Political issues – imposition of high tax rate by the government on the farmers from
whom the company purchases coffee will be required to pay high price for the coffee.
The company shall investigate the political issues carefully before planning expansion
to any particular country.

3ACCOUNTING FINANCIAL ANALYSIS REPORT
 Economic issues – if the growth rate of economy is low for the country sales will also
be lower. Further, if the rate of interest goes higher people will be left with lower
amount to spend on the luxurious items like coffee (Nguyen 2016)
 Social issues – population demographics and their attitude towards work must be
identified before recruiting them.
 Technological issues – the company is well aware for extending and improving the
internet facilities for analysing the customer related data and delivering new features
to the market
 Legal – the company must ensure that it does not violate any laws and regulations.
Further, it must follow the country’s employment laws.
 Environment issues – the company must consider the procedure for disposing the
rubbish as the laws related to that in some of the countries are strict (Nguyen 2016).
Porter five sources
 Threat of the new entrants – as the company has large market share threat from the
new entrants is low. For example, local baristas will never be preferred over
Starbucks.
 Supplier’s bargaining power – as Starbuck is most famous for specialty coffee,
suppliers need them as much as the company needs the suppliers. Hence, the
bargaining power of the suppliers is low (Duke 2017). For example, certified coffee
beans suppliers will always prefer to supply their products to big brands like
Starbucks.
 Threat of the substitute products – substitute for coffee is high as people may switch
to tea or any chill drinks, hence, threat of substitute products is high. For example, a

4ACCOUNTING FINANCIAL ANALYSIS REPORT
customer who does not find value in $ 5 latte from Starbucks may switch to large
coffee costing $ 2 from other brand.
 Customer’s bargaining power – bargaining power of the customer is high as they have
other choices. For instance, many of the Starbuck’s competitors are offering the
product at significantly low prices switching the brand is minimal.
 Competitive rivalry – as the competitors are gradually growing who offers the
competitive product with lower price rivalry from competitors are high (Duke 2017).
For example, it faces strong competition from Dunkin Donuts, McDonalds and
various other market players.
SWOT
Strength –
 Strong commitment and ethical
values towards the community and
environment
 Well trained, well motivated and well
valued employees
 Developed image for the brand and
established logo (Moutinho and
Phillips 2018)
Weaknesses –
 Majority of the market share is in
USA, however, expansion is required
for reducing the business risk
 As it always try some innovation, it
may face huge loss if innovation goes
wrong(Moutinho and Phillips 2018)
Opportunity –
 Technological advantages
 New channel for distribution
 Chance to expand the global
operations
Threats –
 Political and cultural factors in the
foreign countries
 It is exposed to increase in the coffee
price and the dairy products

5ACCOUNTING FINANCIAL ANALYSIS REPORT
 Diversification of business
 Alliance or partnership with other
companies (Moutinho and Phillips
2018)
(Moutinho and Phillips 2018).

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Reference
Duke, D., 2017. Porter’s Five Forces and the Coffee Industry. Management Teaching Review,
p.2379298117726765.
Moutinho, L. and Phillips, P., 2018. Strategic analysis. In Contemporary Issues in Strategic
Management (pp. 46-79). Routledge.
Nguyen, H., 2016. Supplier Selection Process in Café Industry: Case: X Coffee vs. Starbucks.
Starbucks Coffee Company, 2018. Starbucks – The Best Coffee and Espresso Drinks. [online]
Available at: https://www.starbucks.com/ [Accessed 14 Nov. 2018].