Strategic Analysis and Evaluation of Starbucks in the US

This report analyses and evaluates the strategic tools used by Starbucks in the US, including PESTLE analysis, Porter's Five Forces, and Bowman Clock strategy. It also evaluates the advantages and disadvantages of strategic planning and emergent strategy, and discusses existing and future innovations. The report concludes with recommendations for the company. Coursework for business and management students.

Individual Coursework

TABLE OF CONTENT
EXECUTIVE SUMMARY ............................................................................................................3
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................5
Analysing the strategic tools........................................................................................................5
Evaluating the strategic planning by stating its advantages and disadvantages........................10
Evaluating the Emergent strategy by stating its advantages and disadvantages........................12
Evaluating Innovation existing and future with use of examples..............................................13
CONCLUSION..............................................................................................................................14
RECOMMENDATIONS...............................................................................................................15
REFERENCES..............................................................................................................................16

EXECUTIVE SUMMARY
This report analyses ad evaluates about the Starbucks's strategies in the U.S. By having
the critical exploration of the strategies and the extent to which they used to have the deliberate
or the emergent strategies. The report is based on the Starbucks's which is the world's largest
coffee house chain and it has 33,833 stores in the 80 countries. The company must have the
strategic planning in order to have the effective work in the area where they are operating.
The report will explain about the various strategic tools related to the Starbucks by using
the PESTLE analysis which shows the different factors which are political, economic, social,
technological, legal and environmental. Further the strategic tools applied in the report are
Porter's Five Forces and Bowman Clock strategy. This tools helps the company to analyse about
the position in the competitive market. Further this report will conclude and explain about the
Starbucks strategic planning and emergent strategies by describing its advantages and
disadvantages. The below report will also make know about the innovation that is existing and
future with the examples of the Starbucks.
The report will describe about the deliberate approaches strategy and the emergent
strategy by describing its advantages and disadvantages. This will help the company to know
about the digital changes in the market. The innovations of the Starbucks's used to rely on the
deliberate process of innovation that helps the company to have the good profitability in the
market. The emergent innovations done by the company with the happening of the pandemic
makes the company to lead in the market.
The recommendation given to the company that they must have the focus on the product
development and make their franchisees to take part in the decision-making. As this will helps
the company to have the new and creative ideas rather than just supporting the decisions made by
the company.

INTRODUCTION
As nowadays every company is using and possessing with the various types of strategies
which helps them to grow in the market. The current assignment is based on the Starbucks which
is an American multinational coffee house. The current report will outline the various strategic
tools which incudes the PESTLE, Porter's Five Forces and Bowman Clock strategy. Further this
report will outline the Starbucks strategic and emergent strategies by outlining its advantages and
disadvantages. Further this report will outline the innovation that is existing and future with the
examples and at last the report has outlined the recommendations.
Starbucks is the American multinational coffee house and the roasters reserves having its
headquartered in Seattle, Washington (homas and et.al., 2021). This organization is the world's
largest coffee house chain and it has 33,833 stores in the 80 countries. In US there are more than
8,900 stores operating. The company used to serve hot and cold drinks, pastries, beverages, and
many more items.

MAIN BODY
Analysing the strategic tools
PESTLE analysis of Starbucks
Factors Description
Political factors This is one of the most important factors that
has affected the company and the survivability
in the different market. As the company is
operating in many other countries they have to
follow the laws and regulations of the countries
where they are operating.
Economic Factors The continuing global economic recession is
the main factor that has affected the economic
drive of the organization. This factor is directly
linked with the profitability of the organization
(Pandey and et.al., 2021). In order to earn with
the profitability the company has to deal with
the rising labour and the operational costs. The
local currency rates and the taxes may also
affect the revenue of the company.
Social Factors As the main concern of the people is that the
company used to sell its products at high rate.
But if the company will be selling the products
at cheaper rates than they have to sacrifice the
quality they used to give it to their customers.
The organization used to focus on the
consumers and provide them quality.
Technological Factors The organization is in very good position in
order to enjoy the benefits in the current
market. It uses the new and innovative
technology which helps them to have fast

work. They also use the WI-FI in order to
attract the customers.
Legal Factors This is the another main factor that must be
followed by the company in order to survive in
the market. The company must follow the rules
(PESTLE Analysis of Starbucks, 2022), laws
and regulations in the domestic market and in
the international market as well where they are
operating. They must also have the licence and
follow the licensing regulations and trade
regulations in order to have good operations.
Environmental Factors As the company used to provide the drinks in
the disposable glass which will affect the
environment. The company must follow the
environmental rules and regulations to have the
good profitability in the market.
SWOT analysis of Starbucks
Strengths
These are the positive factors of the company
which will make the organization to grow in
the market. The main strengths of Starbucks is
to have the good financial performance which
makes the company to grow in the market
Basak and et.al., (2020). The value of the
company is more than 4 Billion as compared to
its competitors. It has the largest coffee house
in terms of size and high volumes.
Weaknesses
As the company is the largest coffee house
seller so it is highly dependent on the coffee
beans which may affect the profitability of the
organization. The company must used to
diversify its products range which helps them
to have the good competition in the market.
The weakness of the company is that they used
to sell the products at high rate which cannot
be affordable for all to have the products.
Opportunities Threats

the great opportunity that the organization have
is tat they can expand its suppliers network in
order to diversify the source of inputs. They
also have opportunity to expand its products
offerings which includes the food and
beverages as well.
The company can also expand its market in the
various other market as it is very trending in
the present time.
The big threat that the company can faces the
rise in the prices of the coffee beans and affect
in the supply chain that are related to the
fluctuation in the prices. The organization is
the largest coffee house producer so it has to
face the lots of competition in the market.
In order to operate in the different market the
company has to face the lots of difficulty in
order to follow the laws and regulations.
Porter's Five forces of Starbucks
Forces Description
Threat of new entrants The threat of new brand in the market of the
company can be decided by focusing on the

brand equity of the new firm. As the company
is the well- known brand having the high
market sabre so for the new entrant it will be
difficult and the time- consuming process for
them to have the same market share.
Threat of substitutes The threats of the substitutes is high on the
organization as there are many competitors in
the market. The substitutes products of the
company are coffee, smoothies, tea and baked
goods (Abdel-Basset Mohamed and
Smarandache, 2018). As there are the
companies which used to sell the ready drinks
which may affect the profitability of the
company. The customers has many other
options to drink the best coffee available in the
coffee machines.
Bargaining power of suppliers The raw material that the company uses in the
production are related to the food materials.
The company not cultivate its raw material as
they used to take from the farmers or from the
suppliers. As the farmers and suppliers are fix
so the bargaining power of the supplier is less
against the organization.
Bargaining power of customers The organization has experience that the
bargaining power of the buyers and customers
is having the strong force. As the customers
used to purchase the coffee for themselves
rather than having the bulk so this may affect
the bargaining power. So by this it can be
concluded that the bargaining power of the

consumers is very less, as they are not the
regular customers to purchase product in bulk.
Competitive rivalry The cited organization used to face the lots of
competition in the food services and coffee
house industries (Basset, Sangaiah, and Jain,
2018). This is the important force which used
to affect the profitability of the company. As
there are large number of firms dealing in the
same kind of products so this may affect the
market of the company.
Bowman's Clock Strategy:
The Bowman strategy is the strategic clock which used to provide the various options in
order to position within the market based including the price and its value. There are eight
positions in this model which are described as below;
1. Low price and Low value added: In this strategy, the rices is relatively low
which helps the company to have competition in the market. The prices of the
products and the services offers is very low.

2. Low Price: In this strategy, the company used to produce the large quantity of
products. By producing the quantity at the large they it helps them to sell products
at low prices by having the low profit margin (Lombardi, Chidiac and Record,
2021).
3. Hybrid: This strategy is very effective as it helps the company to sell its products
at affordable price by having the differentiation in the products.
4. Differentiation: In this strategy the company used to provide their consumers the
maximum level of satisfaction. They used to sell the unique products which
attracts the customers to have that product.
5. Focused strategy: This strategy used to target the position of the product or
service at the goof prices. The buyers are ready to sell its products at the higher
rates.
6. Risk High Margins: In this the company used to sell its products at the high
prices and if the customers used to buy that product than the company will be
having good profit.
7. Monopoly pricing: The monopoly is the situation where there is only one
business in the market. This used to set their own value and prices of the product
as they are the single seller in the market.
8. Loss of Market Share: This is the position of the company where they used to
sell products at high profit margin and gain loss.
From the above different positions Starbucks uses the Differentiation strategy which
helps the organization tos ell the differentiated products in the market. By this the company used
to provide their consumers the maximum level of satisfaction by selling the different products at
the good prices Duke, (2018). The company used to sell the unique products which attracts the
customers to taste the products of the company. By this it will help the organization to earn the
good profitability in the market as it is operating in the different countries.
Evaluating the strategic planning by stating its advantages and disadvantages
The strategic planning refers to the process which helps the company's leader to
determine their vision for the future and helps them to identify the goals. It helps the company to
establish the proper goals that will helps them to reach the goals. The strategic planning usually
involves the series of action which helps the company to grow in the market. The deliberate

strategy is the type of strategy that is planned and formulated internationally. In order to meet the
goals it must follow the three conditions: organizational details should exist, strategy must be
proper and by that the environment must be predictable. The organization has the different roles
in order to analyse the market and for making the best decisions which helps them to achieve the
goals in the market.
By following the guidelines the phase of the Starbucks's digital transformation strategy
was done in order to get the fundamental rights. This was done by analysing the industry and the
advancements in the technology. The company used to have the technological growth objectives
which helps the company to have the great strategic planning in the market. The power of the
external shareholders and stakeholders used to have impact on the business strategy. The
imposed strategy on the business by the direction of the company can influence the strategic
planning process of the cited organization. Starbucks's as the organization must listen to their
customers in order to collect the data that is driven to have the good decision-making on the
company. The advantages and disadvantages of the strategic planning are as described below:
Advantages
1.By formulating the strategy it helps in analysing the environment that used to provide
the accurate view for the long term as the cited organization has the deliberate strategy which
helps them to grow in the market.
2. The planned strategy is guided by experimenting and having the emphasis on the
learning which is beneficial for the company (Dumon and et.al., 2019). By testing
the all technological innovation before implementing the digital transformation
strategy has brought the company to increase in the sales.
3. The vision made by the leader has brought the changes in the strategy which used
to play the important role in the guiding the planned strategy. This will helps the
company to increase its stores in the competitive market.
Disadvantages
1. The drawback of the strategic planning is that it is the time- consuming process,
as the experimentation may take long time in order to give the opportunities to the
competitors in order to act more quickly to compete in the market.

2. There are various inherent risks and issues that could be emerged. In order to have
focus on that issues the made and planned strategy proves to be inappropriate and
detrimental to the organization.
3. By having the pre planning it will the organization will be having the lack of new
and innovative things coming in the market.
4. If the cited organization is doing the strategic planning than it creates the rigidity
in the working goals of the company.
Evaluating the Emergent strategy by stating its advantages and disadvantages
The emergent strategy is the pattern in order to have the action that is not pre panned and
this is made on the sudden situation in the market. This strategy used to describe those strategies
that are not internationally planned but which used to change from the business practices,
opportunities and changes in the market(Ahmadi and Abadi, 2020). Emergent strategy used to
result in the traditional methods that is based on doing the things or developing the past decisions
of the company. Starbucks's digital transformation strategy is evaluated as the emergent strategy
which helps the company to grow in the market. The emergent strategy is the strategy that it
arises in the unplanned actions and initiatives taken by the organization. By the happening of the
pandemic the company has made the emergent strategy which helps the company to cope up
with the worst situation in the market. Thus, the emergent strategy the company can do the
innovation according to the situation in the market.
The individuals by having the past experience may also affect the decision- making and
the priorities by bargaining and negotiating rather than just planning and analysing the situation.
The current global situation of the COVID- 19 has caused Starbucks's the long term guidance
and helps them to overcome from the uncertainty happens in the economy. The organization is
managing all the areas of the business in order to ensure that the things will be done best by
managing the goals and achieve the long- term success. Due to limited coffee house in the
market the company has increased in the sales after the happening of the pandemic. The
advantages and disadvantages of this strategy are as follows:
Advantages
1. By continuing testing the market and implementing the strategy, the cited
organization has the opportunity to learn about the new market. This will make

the company to ensure the better quality of work and helps them to have better
decisions.
2. By developing the emergent strategies it will provide the experience to the
individuals cope up with the changes and conflicts by having the innovative ideas.
Disadvantages
1. The drawback of the emergent planning is that it is the time- consuming process,
as the experimentation may take long time in order to cope up with the changes.
2. This is the very complex process in order to manage the strategy immediately ad
to cope up with the emergent risks in the market. This will makes the company to
have the skilful planning in order to set up with the pandemic situation.
Evaluating Innovation existing and future with use of examples
The innovation is the crucial factor that the company must have in order to have in order
to compete with the competitors in the market. By having the proper research and development
the company will able to know about the changes which helps them to compete in the market.
Starbucks innovation is based on the combination of the market pull and the technology push.
This means the company must know about the changes in the market which helps them to know
about the new technology in the market (Kersulić, Perić and Wise, 2020). Some of the
innovation of the Starbucks are planned internationally which helps the company to satisfy the
needs and wants of the customers in the market. In order to ensure the customer satisfaction, the
company has to operate within the three pillars that are convenience, recognition and
engagement. By focusing on these pillars it will help the company to fulfil the needs of the
customers. The organization has done the some innovation which are as described below:
1. The packaging innovation which helps the company to sell the high quality of the
product/ coffee by serving the individual sizes.
2. To meet the demand by having the high consumer needs in the market. The
company has introduced the differentiate product which helps them to grow in the
market.
3. The organization is bringing the innovation in the future by changing the
technology in order to have the faster production of the services to the customers.
The cited organization has the planned strategy that helps them to know about the market
and plan the changes accordingly. The strategic planning committee of the organization works by

searching the information required in order to understand the current status of the company. By
having this committee it will help the company to have the changes about the market. By having
the planned strategy there will be benefit for the company to know about frequent changes in the
market. But sometimes the planned strategy may also not work as due to lack of the market
research.
The expected trends for the company can be determined by using the Mintel which is the
best source to identify trends. This will help the organization to track the trends, analysing the
situation and interpreting the behaviour of the consumer. With the help of this it will make the
cited organization to know and understand about the changes in the cure, brands and markets
which makes them to target the customers in the market.
As there are various changes in the market that is technological changes and the changes
in the needs and the wants of the customers (Salas and Yepes, 2018). The opening of the new
brands coffee house may have the bad impact on the business. As new entrants in the market
used to affect the profitability of the cited organization.
There are various implications that affect the company by the happening of the COVID-
19 in the market. The implications of the deliberate versus emergent strategy on the business and
its affect on the organization to have the innovation.
Deliberate strategy is the one of the great strategy that arise from the conscious,
thoughtful and the organized action on the part of the company and its leadership. The pandemic
all over the globe has affected the leadership and profitability of Starbucks.
On the other hand the emergent strategy is the one it arises in the unplanned actions and
initiatives in the organization. By the happening of the COVID- 19 the company has made the
emergent strategy which helps the company to cope up with the situation in the market. By
having the emergent strategy the company can do the innovation according to the situation in the
market.
CONCLUSION
From the above report it is concluded about the various strategic tools which incudes the
PESTLE analysis which shows the different factors. Further the strategic tools applied is Porter's
Five Forces and Bowman Clock strategy. Further this report has concluded about the Starbucks
strategic planning and emergent strategies by outlining its advantages and disadvantages. Further
this report has evaluated about the innovation that is existing and future with the examples and at

last the report has outlined the recommendations which will help the organization to have good
productivity and profitability in the market.
RECOMMENDATIONS
Starbucks's strategy has shown that they are successful as they are having the continuous
growth by having the great profitability in the market. As the company used to make the strategic
planning which shows that they have the rigid plans in the modern era. This strategic planning
must be changed by the organization in order to cope up with the changing market of the
countries.
Further the Starbucks's transformation strategy will help them to precent them from the
competitors in order to gain the market share. The organization must bring the innovative
products or have changes in the technology which helps them have the good market share in the
world. It is also recommended to the company that they must take the risk in order to grow in the
market and have more stores in the market.
The technology transformation is the competitive advantage for the company which helps
them to achieve their short and long term goals in the market (Eshkol and Eshkol, 2018). By
having the new technology the company can have the faster production of the services.
The current strategy is growing in the market in order to make the company lead in the
market. It is suggested to the company that they must focus on the development of the product by
having the innovation having the franchisees in order to make the decisions. By having the
franchisees in the decision making it will leads to have the human capabilities to think and give
the innovative ideas. They used to add value by providing their knowledge and experience in
order to manage the business in the various other countries.

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Online
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