Strategic Analysis of Starbucks: Competitive Profile Matrix, EFE Matrix, IFE Matrix, SPACE Matrix, and QSPM

This article provides a strategic analysis of Starbucks using Competitive Profile Matrix, EFE Matrix, IFE Matrix, SPACE Matrix, and QSPM. It includes the company's mission and vision statement, strengths, weaknesses, opportunities, and threats.

1. Mission and vision statement
a) Mission Statement- Starbucks’s missions is “ to inspire and nurture human spirit, one
person, and one neighbor at same time”
b) Vision Statement- “To establish Starbucks as most recognized and respectable brand
in the globe and become a national firm with additional values and guiding principles that
employees could feel proud of.”
2. Competitive profile matrix
S.no STA
RBU
SCK
S
STARB
UCKS
PEET
’S
COF
FEE
PEET’S
COFFE
E
DUN
KIN
DON
UTS
DUNKI
N
DONUT
S
CRITICAL
SUCCESS
FACTOR
WEI
GHT
RATI
NG
WEIGH
TED
SCORE
RATI
NG
WEIGH
TED
SCORE
RATI
NG
WEIGH
TED
SCORE
1. Innovation 0.05 3 0.15 3 0.15 3 0.15
2. Product
quality
0.15 3 0.45 4 0.6 2.5 0.375
3. Customer
loyalty
0.15 4 0.6 4 0.6 3 0.45
4. Global
expansion
0.10 2.5 0.25 3 0.3 2 0.2
5. Convenienc
e
0.6 3.5 0.21 3 0.18 2 0.12
6. Market
share
0.5 3.5 0.175 2.5 0.125 3 0.15
7. Brand 0.15 4 0.6 3 0.45 3.5 0.525

Image
8. Price 0.10 1.5 0.15 1 0.1 3.5 0.35
9. Location 0.04 3 0.12 2.5 0.1 4 0.16
10. Brand
Marketing
0.15 3.5 0.525 2 0.3 3.5 0.525
Total 1.00 3.23 2.91 3.01
Competitive profile matrix of any firm helps the firm to design a very offensive as well as
defensive strategy and tactics plan for it. In case of Starbucks, Dunkin donuts and Peet’s
coffee were identified as being major competitors or rivals. Every single firm has own
critical success factors, which the firm’s outshine in. Coffee beans used by Peet’s are all
free traded and thus they provide a better quality as compared to Starbucks and even
Dunkin. Coffee by Starbucks carries the greatest level of buyer loyalty, particularly
through reward program, that permit them to elevated up to greatest rating in the
segment. Analyzing all the three firms weighted scores, Coffee supplied by Starbucks has
highest followed by Dunkin close behind it and then Peet’s being the last one (Ansoff,
2014).
3. External factor evaluation matrix
S.NO OPPORTUNITIES WEIGHT RATING SCORE
1. New market in Latin America as well as
Europe
0.05 3 0.15
2. Diversification in product mix 0.1 4 0.4
3. Innovation in cup designs 0.03 3 0.09
4. Expansion in Asia, middle east and Africa 0.1 2.5 0.25
5. Home delivery experience 0.05 3 0.15
6. Alliance with other companies 0.08 3.5 0.28

7. Buyer packaged products 0.05 3.5 0.175
8. Integration vertically 0.04 3 0.12
THREATS
1. Imitation 0.03 2 0.06
2. Rising prices of coffee beans 0.09 1 0.09
3. Competition from low cost coffee sellers 0.1 1 0.1
4. Independent coffee house movements 0.1 1 0.1
5. Trademark and copyright infringement 0.07 2.5 0.175
6. Cheaper options available 0.05 3 0.15
7. Peet’s coffee and Dunkin Donuts 0.02 2 0.04
8. Social activists 0.04 3 0.12
TOTAL 1
External factor evaluation is s tool that uses all the opportunities and also threats from the
SWOT analysis of a firm to analyze the exterior ecology for the firm. More of the EFE
score of a firm represents the betterment of all its current strategies in capitalization of
the opportunities existing and thereby removal of all threats. With Starbucks EFE score
being 2.45 depicts that the firm is doing all an average work in its field (Haskova, 2015).
4. Internal Factor evaluation:
S.NO STRENGTHS WEIGHT RATING SCORE
1. Strong brand image 0.1 4 0.4
2. Extensive supply chain internationally 0.03 3 0.09
3. Diversification in business throughout its
subsidiaries
0.05 3 0.15
4. Strong and robust customer loyalty 0.1 4 0.4
5. Very strong public relation 0.04 3.5 0.14

6. Growth of network in market 0.04 3 0.12
7. Best product quality 0.08 4 0.32
8. Operating efficiency and high growth
resulting in good financial performance
0.06 3.5 0.21
WEAKNESSES
1. Very much dependent on a sole product 0.1 1 0.1
2. Too much dependent on American segment 0.04 2 0.08
3. Slow and steady expansion within European
region
0.08 1.5 0.12
4. Products that can be easily imitated 0.03 2 0.06
5. Importing roasted coffee 0.1 2 0.2
6. Generalization in standards of goods 0.03 2 0.06
7. Misinterpreting needs and demands of
customers
0.04 2 0.08
8. Higher price points 0.08 1 0.08
Total 1
For entire weighted scores, if the firm’s score is less than 2.5, it implies that the business
is actually internally weak. Businesses that score more than 2.5 signify a very strong
position of the firm internally. Starbucks has earned a score of 2.61; this is just somewhat
more than the internally weak verge. This firm is performing on average internally
(Haskova, 2015).
5. SPACE MATRIX (5 FP, 5IP, 5CP, 5SP)
X Strong brand image -1 Growth Potential 5
Market share -3 Profit potential 5
A Product quality -4 Financial stability 5
COMPETITIVE POSITION INDUSTRY POSITION

X Lifecycle of the product -5.5 Resource utilization 4
I Customer loyalty -2 Ease of entry in the
market
3
S Utilization of capacity -3 Productivity and
utilization of the capacity
3
Extensive international supply
chain
-4 Diversification in the
product mix
4
AVERAGE -
3.214285714
AVERAGE 4.142857143
TOTAL X-AXIS SCORE 0.928571428
6
Y Return on investment 5 Rising price of coffee
beans
-4
A Leverage 5 Rate of inflation -3
X Liquidity 4 Variability in demand -2.5
I Working capital 4 Price rate of competing
goods
-4.5
S Cash inflow 5 Market entry barriers -5
Inventory turnover 5 Competitive pressure -4
Earnings per share 4 Ease of exit from market -1
Price earnings per share 3 Price elasticity of demand -1
AVERAGE 4.375 Risk involved in the
business
-3
TOTAL Y-AXIS SCORE 1.26388889 AVERAGE -3.1111111
FINANCIAL POSITION STABILITY POSITION

Source: (White, 2004)
Space matrix carries four quadrants and shows what strategy a company must follow
from defensive, aggressive, conservative to competitive. This Matrix analyses firm’s
financial strength as well as its competitive advantages and compares them to the firm’s
stability in the environment and industry (Welsh, Raven & Al‐Mutair, 1998). The
quadrant at top left starting clockwise represent a very conservative then come
aggressive, third quadrant shows competitive, and last one depicts a defensive strategy.
After analyzing Starbucks on this SPACE matrix, we can see that the total points that
were plotted brought the firm in the 2nd quadrant thereby depicting an aggressive strategy
to be followed by the firm. The firm can contemplate backward, forward and even
horizontal integration, new market development, market penetration, product
development or even diversification ("Starbucks – The Best Coffee and Espresso
Drinks", 2018).

6. QSPM
QUANTITATI
VE
STRATEGIC
PLANNING
MATRIX
STRATE
GIC
OPTION
1
PRODUCT
DEVELOPEM
ENT
STRATE
GIC
OPTIN 2
MARKET
PENETRAT
ION
KEY
FACTORS
WEIG
HT
AVERAG
E SCORE
TOTAL
AVERAGE
SCORE
AVERAG
E SCORE
TOTAL
AVERAGE
SCORE
OPPORTUNI
TIES
Expansion in
Middle East,
Africa and Asia
0.1 3 0.3 4 0.4
Diversification
in the product
mix
0.1 2 0.2 2.5 0.25
Partnership and
alliances with
other
companies
0.08 4 0.28 3.5 0.28
New market in
Latin America
and Europe
0.05 3 0.15 3.5 0.175
Innovation in
designs of cups
0.03 4 0.12 2.5 0.075
Home delivery 0.05 2 0.1 3.5 0.175
STRATEGIC ALTERNATIVE

experience
Vertical
integration
0.04 2.5 0.1 4 0.16
THREATS
Competition
from other
coffee selling in
lower cost
0.10 3 0.15 2.5 0.25
Social Activists 0.04 1.5 0.06 4 0.16
Imitation 0.03 1 0.05 2.5 0.075
Rising prices of
coffee beans
0.09 2 0.18 2.5 0.225
Options of
cheaper
alternatives in
the market
0.05 2.5 0.125 3 0.15
Infringement of
trademark and
copyright
0.07 3 0.21 3 0.21
Movement of
independent
coffee houses
0.10 3 0.25 3.5 0.35
Peet’s coffee
and Dunkin
Donuts
0.02 3 0.16 3.5 0.07
TOTAL 1
Source: (Snyder, 2006)

7.QSPM
QUANTITAT
IVE
STRATEGIC
PLANNING
MATRIX
STRATE
GIC
OPTION
1
PRODUCT
DEVELOPEM
ENT
STRATE
GIC
OPTIN 2
MARKET
PENETRAT
ION
KEY
FACTORS
WEIG
HT
AVERAG
E SCORE
TOTAL
AVERAGE
SCORE
AVERAG
E SCORE
TOTAL
AVERAGE
SCORE
STRENGTHS
Strong image
of the brand
0.10 4 0.4 4 0.4
Exclusive
supply chain
0.03 3 0.09 4 0.12
Diversified
business
throughout its
subsidiaries
0.05 4 0.2 3.5 0.175
Efficiency in
operations and
0.06 2.5 0.15 3.5 0.21
STRATEGIC ALTERNATIVE

strong growth
rate resulting
in superior
financial
performance
Rapidly
growing
network in
market
0.4 2.5 0.1 3.5 0.14
Quality goods 0.08 3.5 0.28 3 0.23
Good customer
loyalty
0.10 4 0.4 3 0.3
Properly build
and maintained
public relation
0.4 3 0.12 3.5 0.14
WEAKNESS
ES
Totally
dependent on a
sole product
0.10 1 0.3 4 0.4
Too much
reliability on
American
segment
0.04 2 0.08 4 0.16
Very slow
expansion rate
in other
nations
0.08 2 0.16 4 0.32
Import of
roasted coffee
0.10 2 0.3 2.5 0.25
Misinterpretin 0.04 4 0.16 1.5 0.06

g customer
needs and
demands
Higher cost 0.08 2 0.16 2.5 0.2
Generalization
of most of its
offerings
0.03 2.5 0.075 2.5 0.075
Products that
can be easily
copied
0.03 3.5 0.105 2.5 0.075
TOTAL 1.00 5.715 6.37
Source: (Welsh, Raven & Al‐Mutair, 1998)
For Starbucks, product developments as well as market penetration are seen as the most
vital strategic alternatives available for the business to now look into. By analyzing the
cumulative scores and weighted scores of new product development and comparing it to
scores of market penetration, market penetration for the firm seems to be clearly more
significant strategically (Cateora, Gilly, Graham & Money, 2016).
8. RECOMMENDATION:
 At corporate level the firm must try to reduce its price for its offerings by using
cheaper coffee beans.
 The firm must apply focus strategy to increase its strength
References
Ansoff, H. (2014). Strategic management. [Place of publication not identified]: Palgrave
Macmillan.

Cateora, P., Gilly, M., Graham, J., & Money, R. (2016). International marketing. New
York, NY: McGraw-Hill Education.
Haskova, K. (2015). Starbucks Marketing Analysis. CRIS - Bulletin Of The Centre For
Research And Interdisciplinary Study, 2015(1). doi: 10.1515/cris-2015-0002
Snyder, M. (2006). State of the Profession: The Starbucks Effect. Academe, 92(1), 70.
doi: 10.2307/40252902
Starbucks – The Best Coffee and Espresso Drinks. (2018). Retrieved from
https://www.starbucks.com
Welsh, D., Raven, P., & Al‐Mutair, N. (1998). Starbucks International enters
Kuwait. Journal Of Consumer Marketing, 15(2), 191-197. doi:
10.1108/07363769810210386
White, C. (2004). Strategic management. Basingstoke, Hampshire: Palgrave Macmillan.