Business Strategy of Starbucks: Analysis and Recommendations

Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................4
External environment analysis.....................................................................................................4
Internal environment analysis......................................................................................................7
Recommendations......................................................................................................................10
PART 2..........................................................................................................................................11
Starbuck’s Stakeholder’s report.................................................................................................11
Conclusion.....................................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
The business strategy is defined as the integration of different strategies and plans for
achieving the organisational objectives and goals. There is need for companies to adopt the
effective strategy for their business so that it is possible for attaining goals in specified time
frame. The development of strategy is important as it is helpful for maximising the profits and
money earned by an organisation. It is done effectively by analysing market properly and
managing the functions of company. The following report is presented upon Starbucks and it is a
coffee organisation which provides coffee and other food items across the world. There are two
parts of this report. The part one includes internal and external analysis such as PESTEL
analysis, VRIO model, value chain analysis and Porter’s five forces model. There are
recommendations developed on the basis of above models. The part two includes Starbucks
report.
Starbucks is a coffee company which operates in different countries. This organisation operates
business in various countries since many years by providing quality products and services. This
company was started in the year 1971 and the headquarters of this company are located in
Washington, UK. It is essential to develop good brand image and reputation so that company can
sustain in market for long period. This company has revenue of approximately US$24.71 billion
in the year 2018. Starbucks is required to have effective marketing strategy for enhancing sales
and profits in market. Starbucks corporation is an American multinational chain of coffee houses
as well as Rose reserves. This company is the main representation of second wave of coffee
culture. T Starbucks is one of the largest coffee House across d world and the third wave coffee
makers have always targeted quality minded coffee drinkers which are are able to afford a good
amount of money for purchasing lighter roasts of coffee beans.
Starbucks is facing amplified competition from their competitors that is McDonald’s. In
2018, the firm have 291,000 employees and on the other hand McDonald’s have 210,000
employees which is less. The net profit margin of Starbucks is 14.57%, but of Dunkin Donuts it
is around 23.55% and McDonald’s this is 17.34. This clearly specifies that firm faced high
competition within the industry. This also denotes the reason for aggressive market strategies of
Starbucks is zeal to survive and sustain.

Starbucks uses automatic Espresso coffee nowadays. The main objective of Starbucks
used to provide high quality coffee across the world. Starbucks offer hot and cold drink, whole
bean coffee, instant coffee, espresso, cafeee latte, etc. Best companies in world to attract a lot of
customers towards its services and products. Starbucks has cleaned increase in price due to de
rising labour and non coffee commodity costs. The price hike in Starbucks is list and third of
their beverages and it targets different regions. This company is master of employing value based
pricing and maximizing sales and profits of company.
PART 1
External environment analysis
Companies conduct external analysis for that it is easy to analyse and evaluate opportunities
that company is having within market. It is very important for companies to analyse their
strength and weakness for making plans and strategies that will help in achieving organisational
goals. External analysis is conducted for enhancing the knowledge and performance of company
within marketplace. external environment analysis also provides support in development of
different growth strategies of Starbucks. External analysis of companies is important for the
marketers so that they can develop effective strategies and plans to overcome the hurdles that
will occur within marketplace. Different organisations have to analyse various models before
entering into market and enhancing market share. There are various models which are helpful in
analysing external environment for Starbucks. These are pestel analysis, photos five forces
model and industrial life cycle model.
Pestel analysis
Starbucks is a company which is operating in different countries of the world. Why doing
business, this analysis helpful for developing a clear knowledge about how to run successful
business in different countries. Pestle is framework that carry out analysis of fix factors and
evaluates how these factors creates an impacts the operations and other affairs of an organisation.
Elements of pestle analysis are described below – Political factors- this is associated with adopting of strict regulations and policies which
are given by government for operating any business. In context of Starbucks, they are