Starbucks: External and Internal Analysis

This report provides an analysis of the external and internal environment of Starbucks, including the impact of the macro environment and the competitive forces in the industry. It also highlights the valuable resources and strengths of Starbucks.

Strategy

Contents
INTRODUCTION...........................................................................................................................3
External environment.......................................................................................................................4
Internal environment..............................................................................................................8
Recommendations..........................................................................................................................12
PART 2..........................................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Starbucks is an American international business organisation that operates large chain of
coffeehouses and offer good quality of caffeine related products. The main motive of
organisation is to gain top position in coffee market by operating and controlling all operational
activities from their headquarters that is situated in Seattle. Starbucks was established in the year
1971 by three business man that provides good quality of coffee beans. Further, with expansion
of business idea management focuses for building a strong loyal customer base and enhance in
market area through providing good quality of coffee. Moreover, the main aim of business is to
match coffee products with needs and wants of customers. Starbucks open its first coffee store in
Seattle, Washington (Yuliati and Purnomo, 2019). In the present scenario, management is
completing their work at worldwide level and there are more than 28,000 stores are operated by
business among different locations. Along with this, coffee beverages, tea, baked goods,
sandwiches and many more products are offered by organisation for satisfying all needs and
wants of individuals in proper manner. Coffee industry is wide in scope which show market of
organisation is growing with CAGR rate that is 5.5% that forecast market for upcoming years.
The global coffee industry is growing its market with developing nation that is National coffee
association that show more than 70% consumer prefers to drink coffee and beverage on daily
routine basis. Espresso coffee machine, drip coffee, brewers and coffee shops are key aspects for
the coffee organisation which is operating business in coffee industry. Along with this world
coffee export their products at large level. There are various task and operations performed by
management that is leading organisation to operate business in easy manner. Export of products
defines coffee year and it is managing proceed all coffee products in easy manner but from
recent years there are various challenges faced by company which is decrease in sales of coffee
products. Prices of products and services as per year 2019 information provided by World coffee
organisation demonstrate that there sale and demand of coffee is decreasing due to which
products are demanded in field of mills. Globalisation is one of essential aspects that impacted
on all industry specifically coffee as it is demanded among all market area. The major
competitors of Starbucks is Café coffee day, coffee republic, Dunkin Donuts etc. that is directly
impacting on market area of company. Moreover, this report is composed from point view of
Starbuck case study and its highlights on internal and external analysis of market.

Recommendation and stakeholder report will also be covered in this report. With the comparison
of Starbucks and its analysis for completing all report it is identified that Starbucks is facing
regular challenges due to which market organisation and its market impacted. Moreover,
research is also based on Smart objectives for generating right recommendation for all business
products. The current situation of Starbucks is better as compare to competitors as management
offer good quality of goods with proper health safety measures.
Figure 1Sourcehttps://www.marketwatch.com/story/starbucks-drops-to-lowest-consumer-
perception-level-since-november-2017-2018-04-18 ()
External environment
Macro or external environment performs an essential role in an organisation that directly
impacts on organisational goals and objectives. In the present scenario, external environment is
too board that is impacting because all world is performing their work at global level due to
which its market area are directly impacted. This refers that external environment is generating
different challenges as they are beyond the control of organisation due to which its business task
and operations is impacted (Tikson, 2018). Therefore, various tools are utilised by management
of Starbucks such as PESTLE, Porter’s five forces etc. are implemented to obtain essential
results. Due to which it is easy for company to obtain long term results. It also increases market
size and area that enhance organisational position to gain effective and efficient results. PESTLE
analysis form perspective of Starbucks is mention as follow:

Figure 2 Source(https://blog.learningtree.com/crafting-strategic-response-world-live-pestle/)
 Political aspects- PESTLE analysis works as an effective framework that is used for
identifying the impact of government and other authorities of business. In present
scenario, Starbuck experience its business at global level it governs large number of
opportunity, threats and market area is covered by management due to which its projects
are designed as per remote environment. This also refers that international organisation
manage their business by understanding all of its essential aspects. In context of UK
environment government is open for business organisation and it offers various
opportunities such as to provide location at squat amount for operating business in
effective manner (Tan, Kuan and Khan, 2017). The most effective opportunity for
business is that management provides regional integration of markets to perform all work
as per current business market area.
 Economic aspects—Economic includes all essential aspects that increases market area
for business to perform all work in effective manner. This determines that growth and
expansion of business is depends on monetary power for each organisation. In context of

Starbucks management is earning good amount of revenue from all of its operations and
functions through managing work as per capabilities of business. Developing countries
provides large number of opportunities in market which is increasing market size of
business as per it area and it is beneficial to leads better goals and objectives that makes
changes within business. Along with this Starbucks also able to earn more amount of
profits through managing their work as per growth rate of each country. Example- Brexit
decisions impacts on sales of Starbucks products because individuals are not able to earn
and make expense on expensive products (Affia, 2018). Due to which sale of Starbucks
report is also end. Moreover, the raise in labour cost also increases threats for business to
manage there business successfully within market.
 Social factor- With the social aspects of PESLTE analysis an organisation understand all
social conditions and trends which influence consumer and business to invest into new
business. Starbucks follow all essential aspects which leads organisation for addressing
different factors that satisfy needs of all individuals in proper manner. Society plays an
important role for all organisation which increases market area for company. This refers
that all projects and products which are offered by management must manage according
to needs of society. It also demonstrates all of the current business organisation are
performing their work with aim of satisfying need of individuals. Society provides major
opportunity to business among which first is growing of coffee culture. Middle class
within society is increasing with rapid speed so they are also investing good amount to
match customer needs and wants. It governs that management is increasing business
amount by offering health conscious products to consumers. Thus, social factor provides
large number of business opportunities to Starbucks for operating business in effective
manner.
 Technological factor- The PESTLE analysis model demonstrate that technology and
related trends are identified by organisation for operating there business in effective
manner. This refers that there are different technological aspects identified as this all are
directly relates with business and its aspects that is used for understanding better
experience as per external factors that relates with macro environment (Alwaleed and et.
al., 2019). Rising mobile purchase provides opportunity to business as it expands market
area to perform business activities among different areas. Technology is also an essential

aspect that is used for transferring knowledge to farmers and small scale entrepreneurs
for managing business at large level. Thus, Starbucks utilise technology aspects for
completing their work easily in order to gain equal results by engaging local individuals
in their work activities.
 Ecological/environmental factor- With environment concept and analysis of PESTLE
model it is identified that impact of business operations also related with atmosphere that
in which Starbucks and other organisation operate their business. Macro or remote
environment generates different challenges for organisation. Therefore, to deal with such
challenges management implement all those activities that provides sustainability in
market (Asniwaty, Sehe and Siswanto, 2019). Further, it works as opportunity for
business management as if Starbucks operates business with sustainable action than it
increase goodwill of organisation. Along with this by supporting all activities it is also
identified that with proper sources it is eas for organisation to gain better results.
Example- Starbucks utilise all sources that relates with corporate social responsibility.
 Legal factor- Law, rules, regulation and legislations perform an essential role in
organisation which is leading management to complete all work in effective manner.
Starbucks address all essential actions that offer product safety regulations due to which
management is able to achieve all opportunities that are present in market. International
rules and regulations works as an different aspects it means trade regulations and
activities which is provided by management offer effective opportunities which is
increasing market area for business. But to follow all international generates challenges
for organisation which is increasing business size. This also determines human resources
generate opportunities for market.
Thus with PESTLE analysis and it implementation among market it is identified that business
opportunity work as an effective tool that enhances market area. Moreover, increase in
employment regulation also increases area for developing countries (Atwal and Bryson, 2018).
This determines management is increasing its aspects increased human resources area for
business.
Porter’s five forces
Competition rivalry and competition- In the present scenario, there are various task
and operations managed by business that offers food services and coffee products. With the five

force analysis it is identified management impacting on goals of organisation and this model
pertain to complete all work as per competitors. So Starbucks face challenge in the organisation
because of low switching cost.
Bargaining power of Starbucks buyers- Starbucks coffee company analysis strong
force that is related with bargaining power of buyers as buyers and consumer are king of market.
According to Porter’s five force model this force demonstrates an individual is able to change
perspective of all groups. Thus, Starbucks perform all operations as per market area and its
customer segment (Barjolle and et. al., 2017).
Bargaining power of Starbucks suppliers- Starbucks coffee company face force and
power of suppliers that is impacting on model of organisation. This also influence suppliers
make an organisation for working all task as per industry environment. With moderate size of
individual supplier face moderate force of its work and it supply large workforce that is offering
variety due to which its operations are accomplished in minimum area. Large supply and overall
employees determine management is able to offer good services.
Threat of substitutes- Starbucks corporations experience strong forces against the threat
of substitute products. High substitute and large variety of products provides different forces in
organisations. Low switching cost and availability of competitor products offer good amount of
products related with management. The Starbucks product price is too high so due to low cost
substitute products with satisfactory quality management face challenges to perform all work in
effective manner.
Threat of new entry- Starbuck corporation face moderate challenges in organisation due
to which its task and operations deal with changes with refer of different quality. Moderate force
is faced by management while performing their work in effective manner. Starbucks is an
international organisation that operates its business to complete work as per those segments
which is increasing market area.
Internal environment
Internal aspects for organisation perform an essential role that is leading business area to
complete all task and operations as per goals of company. Starbucks is a large organisation
which operates there business at different locations and it also provides efficiency to products for
completing all work as per there strength (Behuria, 2018). Internal analysis also works as an
effective tool which generates long term opportunity to business by analysing it task as per there

strategy and strength factors. VRIO, SWOT etc. are some effective models which leads
organisation to understand their internal environment. VRIO is an abbreviation that stands as
valuable, rare, imitable and organisation and its implement and analysis of Starbucks show that
Starbuck’s employees works as a valuable resource for organisation and other aspects also. Thus,
with management analysis it is identified all work is completed with use of effective model
which are mention as follow:
Valuable
 This is the first aspect that is beneficial for increasing market area through enhancing
value in all resource of Starbucks perspective. Almost all products which are provided by
Starbucks are more valuable as company and management is concern about their
goodwill in market. This refers organisation is also providing better results to offer
external opportunities which arise share of company. Thus, quality is first aspect which
increases quality of foods (Dietz and et. al., 2018).
 According to VRIO analysis of Starbucks another valuable aspect which is identify show
that its local food products work as the most valuable resources for company which
increases market share. This also make perceived value of customers as it is related with
valuable aspects due to which Starbucks products are differ in unique with competition.
 Starbucks management is more concerned about all of it workforce that is engage with in
operations and functions of company. In context of Starbucks and its operations
thousands of employees are engaged in organisation for completing their work in
effective manner. With significant portion of employees and workforce management
trained them in proper manner to match operational performance of company with
employees.
 Intellectual property rights of organisation works as an effective tool for management to
ensure brand image and product quality of an organisation. This also refers that large
number of operations are engage within management that is used for generating longer
results because intellectual property rights leads organisation to perform all task within
similar and positive manner (Garthwaite and et. al., 2017).
 Global presence and distribution network are two effective systems which is leading
business to perform all of its work in systematic manner. This determines business and its

management leads to complete all work in proper manner by managing all resources in
organised method that satisfy needs of customers in proper manner.
Rare
 The money related assets of Starbucks are seen as uncommon as per the VRIO
Investigation of Starbucks. Solid budgetary assets are just controlled by a couple of
organizations in the business.
 The locality nourishment items are seen as not uncommon as distinguished by
Starbucks VRIO Examination. These are effectively given in the market by different
contenders. This implies contenders can utilize these assets similarly as Starbucks and
restrain upper hand (Ferreira and Ferreira, 2018). This implies the neighbourhood
nourishment items bring about serious equality for Starbucks. As this asset is
important, Starbucks can in any case utilize this asset.
 The workers of Starbucks are an uncommon asset as distinguished by the VRIO
Investigation of Starbucks. These representatives are exceptionally prepared and
talented, which isn't the situation with workers in different firms. The better
remuneration and workplace guarantee that these representatives don't leave for
different firms.
 The licenses of Starbucks are an uncommon asset as distinguished by the Starbucks
VRIO Investigation. These licenses are not effectively accessible and are not
controlled by contenders. This permits Starbucks to utilize them without impedance
from the opposition.
 The dispersion system of Starbucks is an uncommon asset as distinguished by the
VRIO Investigation of Starbucks. This is on the grounds that contenders would require
a great deal of venture and opportunity to arrive up with a superior appropriation
arrange than that of Starbucks (Honack and Waikar, 2017). These are additionally
controlled by not very many firms in the business.
Imitable
 Financial resources which are provided by Starbucks are more in cost due to which it is
complex for rival organisation to imitate them. Process to prepare food items and to
deliver them is done through including high cost materials and machines due to which

other companies face challenges to prepare them in proper manner. So on the other side,
new business requires huge profits to match products as per quality of Starbucks.
 Local food products which not high in cost and it results this is complex for management
to complete all work as per specific systems (Jaswal, 2019). This refers in the present
scenario, if competitive organisation performs some research perspective than it is easy
for management to gain similar results. Therefore, it provides a short term competitive
advantage to organisation that is not acquire for long run.
 The internal environment of company also works as an effective tool that is leading
organisation for managing its work as per customer service and segment of market. This
refers customer measure sense of belongingness with organisation. With this technique it
is easy for management to market all products easily.
 Distribution network and patents of Starbucks both are costly aspect for organisation so it
not possible for other organisation to imitate all work as per competition. It is also
developed with gradually increase in market share management of Starbucks imitate all
work with VRIO analysis.
Organised
 Financial resources of the Starbucks are organised in proper manner due to which it is
beneficial for organisation to complete all work in an organised manner. It demonstrates
that monetary and financial aspects are used by management in right manner through
investing all resources properly. With this it is also easy for company to gain sustainable
advantage in market (Muhammad, 2018).
 Patents, copyright and trademarks are organised by management in proper manner that is
beneficial for identifying all work and manage them with competitive advantage in
market. This refers organisation is increasing market area that exists to obtain better
results in company. With this unused competitive advantage management focused on
specific outcomes that offer competitive advantage to firm.
 Distribution network of Starbucks is organised in proper manner that is increasing market
share for organisation to increase their market share. Starbucks utilise this network for
proper analysis that is offering good quality of outlets to customers due to which all
resources are managed in proper manner.

Figure 3Source (https://www.clearpointstrategy.com/vrio-framework/)
Thus, with VRIO analysis of the Starbucks from recent years it is identified that organisation is
offering good quality of areas that increases market share. In the present scenario, management
also focuses to build an effective network which is used to reach and target more customers. The
three year from 2017 specifically leading organisation to use all information properly which
demonstrate that its task is managed to gain better results for completing its task with right
manner in order to make desired outcomes by arranging all resources in proper manner by
collecting all data from previous year (Parimin, 2018).
Recommendations
Starbucks is a multi-national organisation which is operating there business at global
level and it is used for making long term results. This determines that organisation is facing
various challenges which are leading management to recommend right task among all
individuals. Large organisation manages their work with more number of employees. Therefore,
it is analysed that management is completing different task and objectives to deal with all
functions within right manner. Along with this it is also prefer that some recommendation on the
basis of previous years and report is mention as follow:

 Organisation which is performing their work at global level leads so management must
complete their work according to international rules and regulations. This determines all
task and operations which is used are able to make better informative results through
completing work as per international standards. Marketing guide of employees refers that
authorities must provide right advantage to its goals and it makes better opportunities for
managing all work in proper manner.
 Another recommendation for Starbucks demonstrates that it is essential for management
to implement all aspects of PESTLE. This determines organisation is offering good
perspective but they are concern about all those needs through which company enhances
its results to gain determine results as it is essential for management to understand and
analyse threats by which company work in impacted from years. Social aspects is only
focused through management but if management generates results from previous years it
show challenges and benefits both are focused by management.
 Globalisation or international market provides common platform to all individuals due to
which small and large companies compete with each other at a common place. This
defines organisation which manage their work by focuses on all those amount that
Starbucks utilise to manage operations. In simple terms it is recommend to organisation
that management use those resources which minimise cost of company.
 Demographic aspects for organisation works as an important tool that refers most of the
employees are facing tough competition from management. Due to conflicts between
workforces because of its different value it is identified that it is generating complexity to
make effective decision. Therefore, it is recommended to management and its area to
generate and implement demographic and social aspects for making all decisions in a
particular area that enhance company profits.
PART 2
Stakeholder report
Report of stakeholders is that kind of report which consist of various type of shareholders either
in group or individual. These are very important for an organization to grow. There are two types
of shareholders which are important for star bucks and they are customers, employees. These are
important from point of view that employees is going to help in achieving of goals that has been

set-up by the company and then customers which are going to help in building of brand image
and is also going to make it popular. After 2017 there has been a slight decline in customers but
is still improving it self for this purpose only stakeholders report has to be prepared. Starbucks
has two stakeholders one is customer and other is employee. The procedure that has been used to
maintain customer is to bring out innovative ideas of marketing but Brexit has impacted the
customer percentage in negative manner because of which an organization is because after 2107
there has been an decline in customers percentage. Employees has also been impacted because of
Brexit. Customers of star bucks can be gained back only after introducing of new and existing
offers that is going to attract customers and also being an bigger brand its image is also going to
play an important role in making customers loyal towards the brand. Also more employees can
be generated only through opening new job opportunities and also making a proper plan by
consulting with the management team. They are going to help in making certain plans which is
going to generate jobs of various types. Also data has to be collected from the existing customers
for improvement that is required to be done within the strategies of Star bucks. Being an bigger
entity it becomes there responsibility to help in maintaining brand image. Also it can be
concluded that due to new rules and regulation that has been formed after Brexit has impacted
percentage of employment has decreased. Also customers has been decline. This has made the
company face lot of difficulties. These can be solved by using appropriate strategy which has to
be formed by management. This can be made out that for solving of problems related to an
employee and attracting of problem and this report is going to positively impact in away that it is
going to make analyze the problem and work over it (Putra, 2019)
.

CONCLUSION
From the above file the concept of strategy has been understood and various type of strategies
has been explained in it. PESTEL has also been used for analysing of those factors that has been
effecting growth of the company in various ways. After this Potter’s five force model has been
explained this is going to help in analysing of those conditions in market that is going to help an
organization in sustaining of within the market. Ten a report over stakeholders has been
prepared which talks about how stakeholders has been impacted because of new policies formed
by UK government.

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