Strategic Analysis of Starbucks and its Rivals

This report provides a strategic analysis of Starbucks and its rivals, including an overview of the company, external and internal analysis, and recommendations for improvement. It also includes a stakeholder report.

Strategy

Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Overview of Starbucks and its rivals...........................................................................................1
External Analysis.........................................................................................................................2
Internal Analysis..........................................................................................................................5
Recommendations........................................................................................................................9
PART 2..........................................................................................................................................10
Stakeholder report......................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management is a process of administration of employees and business activities and
operations. With the help of effective management, the company can analyse, controlling and
organising business in effective manner. Different plans and policies are making contribution in
effective management of business venture and accomplishing its aims and goals. By using
appropriate strategic techniques and concepts, the corporation can determine the impact of
business environment components over the business in several terms (Le Grand, 2018). This
document is supported to Starbucks which is an American international chain of coffee houses.
This report will cover information of organisation and its rivals in current business atmosphere,
external environment and internal environmental analysis of venture. Moreover, the written
document will discuss about suggestions for development of respective firm’s execution and
about stakeholder report of Starbucks.
PART 1
Overview of Starbucks and its rivals
Starbucks is a chain of coffeehouses which operated it business globally in approx 80
nation with the help of its number of outlets in more than 30,000 locations. The firm was
incorporated in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The organisation
operates its business activities and operations with the help of its several coffee and beverage
commodities like smoothes, tea, baked products and sandwiches. The company provide
employment to 291,000 individual and they are help in running the business by performing their
roles and responsibilities in term of their different job roles. The mission of this firm is to
influence and attract people to take the services of this company. The utility of this business is to
propose quality and better coffee goods to its consumers to provide satisfaction to their needs so
that they can show their loyalty and retain with the firm till long term (Corbett, 2019). The vision
statement of this venture is to be a internal brand which able to attract number of firms and
would like to share partnership. Starbucks is an important retail company, roaster and brand of
particular coffee in the world has be intimidating as uncertain economic system, Its own rapid
growth and increased competition from cheap competitors.
To achievement its vision and mission, the management of this enterprise devise some
principles like embrace diverseness as an essential component and roasting and allocation of
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coffee at its effective and provide a great working environment where people are ready to
execute their skills and knowledge and treated by company in effective manner without
generating any kind of discrimination. There are several rivals who create competition for
respective company in term of offering substitute products and services. Dilmah Tea, Coffee
Republic, Cafe Coffee Day, Cafe Ritszza, KFC, Costa Coffee, Dunkin Dounts, Mc Cafe and
Caffe Nero etc are some main competitor of Starbucks (Burgelman, 2020). To deal with this
competition, the management can devise and frame effective business plan of action such as
making effective human connect and providing better quality products to customers. This will
help in running the business of this firm in smooth manner and firm can sustain and survive in a
competitive environment till long term.
External Analysis
It is a process of analysing the impact of external component of business environment that
influence the business of venture in positive as well as negative form. For this, the administration
of respective company can utilise PESTEL, Porter’s five forces analysis and industry life cycle
model. The explanation of them in reference of Starbucks is as under:
PESTEL analysis- It is a tool and technique that is utilised by as business plan of action by
administration of Starbucks to analyse the macro atmospheric components impact over business
operations and actions.
Political- This component include some aspects such as foreign exchange policy, trade
restrictions, political stability and instability, interference of government etc. The main factor
that influences Starbucks is about assets the raw material and this has assembled a lot of the
attraction for politicians in the west and from those countries which are the main source of
martial for this firm. Cause of it, the organisation desires to remain to communal and
environmental culture (Baylis, Wirtz and Gray, 2018). The main factor is free trade which
positively affects the company in term of providing option of operating business in diverse
countries.
Economical- This factor involve different elements such as currency rate, unemployment
rate, interest rate, exchange rate and economic development etc. Due to Brexit, the inflation is
occur which is the factor that highly affect the firm because the rate of raw material are increased
as well as tax rate also maximised and the venture also make change in its pricing strategy in
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high form. Cause of which target audiences shift to cheaper substitutes to international economic
recession.
Social- It considers aspects like beliefs, culture, value, life standards and other
demographic factors. Starbucks can offer cheap products but it might to give up the speciality.
This is the main social cultural argument that the start up suffers (Lane and Maxfield, 2018). It
will help in making maximisation in number of consumer to include the purchaser from low and
middle class people.
Technological- It includes different components like artificial intelligence, research &
development, advance technology and technological innovation etc. In respective company, the
fir use diverse advertisement tools in term of social media to generate awareness about products
and services of Starbucks. The enterprise also provides WiFi facility to its target audiences in yts
outlets so that it can retain them till long time.
Environmental- It includes weather, climate, environmental law like pollution act and
carbon emission etc. In Starbucks, the administration appropriately considers entire
environmental act like air and pollution act so the business did not affect atmosphere in
unfavourable manner. The management also use recycle material in cup to offer coffee. So that
they can make contribution in working for safety and security of environment.
Legal- This factor include different laws like health and safety law, employment law,
consumer protection act and many more. Basically this component considers all the laws that are
framed and formulated by the national authorities of nations. This company appropriately
consider health and safety law so that they can maintain people’s health and hygiene. The
venture also effectively follow consumer protection law so that they can offer quality product at
affordable prices and their target audiences will not be affect in negative form.
Porter’s five forces analysis- - This model is given by Michael Porter in 1979. This theory is
based on the concept there are five forces which determine the competitive intensity and
attractiveness of a market. The theory can also be used to identify areas of strength, to improve
weakness and to avoid mistakes (Dodgson, 2018). The description of this analysis is about
Starbucks Corporation.
Threats of new entrants- There are many coffee companies all over the world. The threat
of new entrants for Starbucks is moderate. But at the time Starbucks required more capital for
enhance the outlets all over the world. The barriers are not very high and initial investment to
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start a coffee company is not high either. Starbucks has grabbed a large number of share of the
market based on the infrastructure, efficiency and hygiene and product quality. The new brand
can attracts the customers using only low prices.
Bargaining power of suppliers- - The main source of Starbucks is coffee. There are
many coffee dealers in all over the world. Coffee ethically from several parts of the world.
Starbucks has maintain the great relationships with tea and cocoa farming communities to
educate them, about better cocoa farming practices and to help them derive maximum profits
from it (Escobar, 2018). So Starbucks has great supply chain management in last decade has
reduced the bargaining power of suppliers and brought it low.
Bargaining power of buyers- Now these days, people want to buy the best offerings
available by paying the minimum price as possible. This put pressure on Starbucks corporation
profitability in the long run. Now a day’s people are well aware about the taste and choices. So
other companies make change their prices so buyers can simply switch to other companies. So
this factor of bargaining power of buyer is high and its effect of the company. However,
Starbucks has improved the taste of the exclusive products so customer is less responsive
regarding cost will carry on buying from this firm on same cost.
Threats of substitutes- There are many substitutes in market when a new product or
service comes in a market and meets a similar customer needs in different ways, for example
services like Google, Dropbox and Google drive are substitute to storage hardware drives.
Starbucks treat their substitute by understanding the core needs of consumer rather than what the
customer is buying. Starbucks can increase the switching cost for the customers.
Rivalry among existing competitors- There are number of competitors of Starbucks such
as Dunkin Donuts, McDonalds, Coffee café day, KFC and many more small and local coffee
houses. Other companies create the competition by offering the similar products at reasonable
prices (Cecchin, Lane and Ray, 2018). Starbucks Corporation can tackle intense rivalry among
the existing competitors in specially eateries industry by building a sustainable differentiation
and Starbucks Corporation can by building scale so that it can complete better collaborating with
competitors to increase the market size rather than just competing for small market.
Industry life cycle model- This is activity that define the duration or life of a product. It passes
through some stages. The description of this cycle in Starbucks is mentioned as under:
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Introduction- This is the first step of this life cycle of Starbucks in which awareness
about the product and service provide to the people (Encarnation, 2019). For example, firm can
use promotional tools and advertise for this which helps to attract people and pay their attention.
Growth- in this phase, the increment and expansion of company start cause of purchasing
products in Starbucks, in second stage sales and volume rate increase, market share and size also
increase. Price can be increase if demand of product increase day by day.
Maturity- in this phase, the chances of company growth is zero percent and also negative.
Organisation like Starbucks can survive cause strong policy and high demand in the market and
dominant entire market. The maturity stage of industry life cycle feature high brand awareness.
More chances in this stage is to introduce some new product in the market.
Decline- This is final phase, sales number and volume of company down with rapid speed
because new law rule and technique enter in the market and problem with the supply of raw
material or high level of competition. Customer demand of new types of coffee taste so decline
and decrement arise in the organization and switch to new product.
Internal Analysis
It is an examination of an organisation’s ability, cost position and rivalry feasibility in
marketplace. It can be an act of analysing the capability and skills of the company so that
management of the organisation aware with its inner ability and competencies in term of
strengths and growth options and the field needed improving. The explanation of diverse
methods that is capable to analyse the influence of intrinsic business component of a firm is as
below:
VRIO analysis- This concept is effectively framed to provide help to company’s expression of
protecting and awaring origins that offer the firm with rivalry benefits till long term. There are
four components of this study that is value, rareness, inimitable and organisation (Shuen, 2018).
There are several competencies in Starbucks that are its supply chain, service and distribution
activity, publicity acts and product compilation service form stores. The brief explanation of this
in reference of Starbucks is as beneath:
Competencies Value Rare Inimitable Organisation
Speciality
Coffee
Yes No No Yes
Marketing and Yes No Yes Yes
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sales-
promotional
activities
String global
presence
Yes Yes Yes Yes
Upscale and
cosy
Atmosphere
Yes Yes No Yes
Services- Pre
sales and post
sales services
Yes Yes No Yes
Valuable- Enterprise like Starbucks has a strong global presence which is crucial advantage
of the company aggravating to improve their size, sales and market share. It is an essential
method to gain and attain more revenues from new and current consumers (Li and et. al., 2018).
The environment of the firm permits target audiences to the benefits of services and products that
offer by Starbucks and gain experience calm with or without venture. It also include calorie data
or these specially coffees on its list of food and drink items in respect to appeal to a range of
clients.
Rare- Starbucks is a large coffee house in international business environment. There are
different coffee chains that are offering coffee product in cross wise the world. The respective
company is the single fir, which is an upscale and complicated ambiance. Most other coffee
shops do not have the environment to encourage target audiences to bring their technical system
and unwind for a while.
Inimitable- In this stage, no competitive of Starbucks could accomplish such a large global
attendance. It would consume effective time and resources to accomplish this. By allowing other
coffee shops are effectively utilising this capability, it there can be remanufactured. It would be
comparatively easier for the other coffee stores to alter their outlets and regenerate the business
model of respective firm (Dahiya and et. al., 2018). Therefore, the classy and secure relaxes for a
while.
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Organisation- By making contribution in numerous choices and frequently changing their
list of options, Starbucks is captivating advantage of this possible with a number of choices, most
people can search something that they like and individual who likes to try new food and drinks
items frequently can easily do so at Starbucks.
Value chain analysis- It is a tool and technique which can be used by the firm to determine
internal activities of the company (Le Grand, 2018). The purpose of this concept is to
differentiate that activities and actions of the enterprise which are more effective. The
explanation of this concept in respect to Starbucks is as under:
Inbound logistic- It is important for the company to frame effective relationship with
dealers so that they can offer their appropriate support to firm in term of offering required and
required raw material timely. Without making analysis of inbound logistic, the management of
corporation can face different issues in product expansions stages. If the venture will focus on its
inbound logistic then it can developing raw material storing contributions and inside distributing
the resources and assets of manufacturing.
Operation- The importance of determining functioning activities happens when raw
material attain and Starbucks equipped for trading material in to finish goods and distribute in
the market. If the management of the company will focus on the activities of the business like
machining, testing and others then it will help in maximising productiveness and attaining
effective economic development in term of obtaining competitive compensation.
Outbound logistic- It consists that activities and operation that allocate the commodities
to the consumer by briefing through intermarries. Some outbound logistics activities are material
administrating, warehousing and order allowance, conveying and allocating to required area. The
administration of Starbucks can analyse the outbound logistic to gain competitive benefits and
accomplish its manufacturing expansions objectives.
Marketing and sales- Some marketing and sales activities of respective enterprise are
advertisement, promotional act, assortment and building effective relationships with stores
members. For effective promotion of commodities ad services, the administration of company
can implement different advertisement tools to enclose its publicity and sales actions (Corbett,
2019). The marketing strategy can be drive and pull in atmosphere and supported to Starbucks
business aims, objectives, brand image, rivalry vibrant and existing position in existing market.
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Services- The respective firm offer pre and post sales service that will play an essential
role in improving consumer allegiance. In current time, target audiences trust post sale service as
essential activities of promotion. The management of the firm must determine sustain execution
to evade destructive goods image and developed utilisation it as a system to create favourable
promotion through word of mouth due to fast, timely and efficacious sustainable services.
Resources, capabilities and competencies framework- It is a frame work which provide the
information about company assets, abilities and competencies. This framework use under
Starbucks in given from.
Resources- The activities and processes of the organization utilize certain assets. These
assets are called resources. These resources can be created within the organization. They form
the internal resources. Such generated resources are organization-specific. Otherwise they could
be obtained externally from the suppliers available in the resource markets. They form the
external resources (Burgelman, 2020). The externally obtained resources are organization-
addressable. In addition resources can be categorised as specific or non-specific. Those resources
which can only be used for extremely specialized intentions and are significant to the
organization in adding value to goods and services are called specific resources.
Non-specific resources are less specific and are less significant in adding value. Also
resources can be broadly classified as tangible and intangible. The physical assets that an
organization possesses are called tangible resources. The physical resources, human resources
and final resources come under this category. In Starbucks, the firm required machinery,
technology, employees, raw material and many others as resources for business operations.
Capabilities- An organization’s resources which are critical in imparting it with
competitive advantage are called distinctive capabilities. When the capabilities originate from an
attribute which other firms do not have then they form an organization’s distinctive capabilities.
In addition to having a distinctive characteristic it should also be sustainable and appropriable.
When a distinctive capability is able to continue functioning over a period of time it is said
to be sustainable. When the organization like Starbucks, holds a distinctive capability is able to
benefit mainly from it then it becomes appropriable (Baylis, Wirtz and Gray, 2018). The firm can
derive the distinctive capabilities mainly the organizational architecture, organization reputation
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and innovation. The relationships between the organization and the stakeholders are critical in
developing these three aspects of the organization.
Competencies- Starbucks should posses some characteristics in order to have the ability to
compete with other organizations in the market place. These characteristics form the
competencies of the organization. For any organization to survive in an industry competencies
are must. At the same time competencies cannot be useful to an organization when they stand
alone. It is when they combine together in the right combination that they help the organization
to attain competitive advantage (Lane and Maxfield, 2018). For instance consider an information
technology organization. For this to compete in the software industry it should posses the
competencies to write programs and design tools which have to be combined together to provide
it with the competitive advantage in the industry.
Recommendations
As per the preceding defined data it can be recommended to the administration of Starbucks
that they need to devise improvement in some business area of the enterprise. It can be suggested
to this company there are number of coffee and beverage stores in this business area so to make
enlargement in its business the administration of venture can form modifications in its
commodities and services. To create augmentation in its sales and customer base the
administration should devise some SMART objectives which assist in surviving and nourishing
the business of this firm in rivalry atmosphere till long time frame. Some objectives that can
place by administration if Starbucks as beneath:
 By devising modifications and innovation in existing products of respective company in
form of flavoured coffee and organic coffee, the enterprise can make increment in its
customer by 8% within 9 months.
 To devise maximization in sales of its coffee commodities goods by 15% within next 10
months, by providing a range of coffee goods and making change in pricing strategies in
form of discount and competitive pricing strategies etc.
 To maximise the market share and revenue of the company by 6% in upcoming 5 months
by adopting new business plan of action, strategies and framing new policies that able to
attain effective return on investment to investors.
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 It has also been suggested that managers need to modify their strategies and policies
according to the changing situations so that they can effectively expand their business
functions at the competitive marketplace.
If the management of Starbucks will work to attain these business objective and goals then it can
make increment and maximisation in sales, market share, profitability and effectiveness of
venture. I will also help in earning rivalry benefits and operating business in sustainable manner
in competitive business environment (Scott and Scott, 2019). By making expansion in business
the management can expand its business where it is not exist, it will help in capturing a large
market size. By offering effective training and development sessions and programs the venture
can make development in improving employees’ skills and offering information about new
things like technology. It will help in adopting change in easy manner when the firm will make
change in its technology and others then people will do their work and perform their duties in
appropriate manner.
PART 2
Stakeholder report
Stakeholder refers to an individual, organisation, social group that has a share in the
business of an organisation (World Health Organization, 2019). Thus, stakeholder is people of
rim that provide its support a business s that it can effectively establish in particular business
sector and operate its business activities in successful manner. Stakeholder can be internal and
external so to find out them the administration of Starbucks can perform stakeholder analysis that
is as under:
Employees- They is main stakeholder of the company and Starbucks prioritise its
workforce in its corporate social responsibility effectiveness. Workforce naturally needs for
effective working environment, job security and better pay. Workers are primary stakeholder as
they make contribution in performing business operations in effective way. In some countries
like New Zealand, the firm provide very low pay to youth employees. These immature workforce
rates are often ridiculed.
Customers- In Starbucks, the management also consist its employees as among its major
stakeholders. The attraction of this stakeholder collection is high excellence services and
products like coffee and associated beverages. For example, friendly and good relation is
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emphasized in the company and providing efficacious goods and services to them so then they
can be loyal and retain with the organisation till long duration.
Suppliers- They is composed of extensive offer firms and coffee farmers. The main
concentration of this shareholder group is recompense and an increasing need from individual
enterprise (Dal Bó and Fréchette, 2019). They are also essential for the firm as they offer raw
material and required products to venture to production of commodities. It has also been said that
Starbucks have some suppliers who provide them high quality raw materials to them so that they
can effectively produce high quality products and services and satisfy the needs and wants of
consumer.
Environment- The administration of Starbucks has corporate social responsibility
programs for atmospheric sound business. The company’s CAFE program has led to high
biodiversity and gloom value in endorsed coffee farms. With this, Starbucks is able to focus to its
corporate social responsibility to this shareholder crowd. Even if there is space for improvement.
Investors- This shareholder team is also essential for business of Starbucks as they make
investment in the business of organisation for its efficacious operations (Cubas‐Díaz and
Martinez Sedano, 2018). They are one who provide funds and investment to the company in
order to perform their business functions in an effective manner and gain various advantages at
the marketplace. Investors have interest in high financial execution of the firm so that they can
get effective rate of return on their investments.
Governments- Cause of having global presence of business, Starbucks deal with the
interest of number of government as shareholders. The firm consider national authorities rules
and regulation in its business to operate in effective way. All these policies and strategies framed
by the government of UK is adopted by the management team of Starbucks in order to maintain
long term sustainability of the organization at competitive marketplace.
This preceding defined information about all stakeholder groups is essential for efficient
running of business of Starbucks. But consumer and workforce is major and primary shareholder
as they highly contributed in business activities. For instant, employees have the nature of
attention to preserve constant employ in firm, earn fair pay for work and work confined,
comfortable surroundings. The character of power of employees is amalgamation bargaining
impact, work action or beat and promoting. Apart from this consumer nature of interest concise
safe and relevant products and fair exchange in form of price (Lim, Chalmers and Hanlon, 2018).
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The nature of power of them include switching to rivals brand and the loyalty can be earned by
company by providing quality coffee commodities, providing effective consumers services and
appropriate location where they can easily each to goods.
CONCLUSION
This has been concluded that the business plan of action is effective for the improvement of
an organisation. There are diverse strategic tools and techniques that can be implementing by the
management of firms that will help in offering information about the impact of internal as well as
external business environment. Stakeholder analysis also assists in providing information about
the main supporter of the company who assist firm to operate its business in effective manner.
With the help of PESTLE analysis, it can easily be understood that there are different types of
external factors which might influence the overall performance of the company in positive and
negative way. Along with this, by conducting external environment analysis managers can easily
modify their strategies and policies according to the changing situations.
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PESTLE Analysis of Starbucks. 2020. [Online]. Available Through: <
https://pestleanalysis.com/pestle-analysis-of-starbucks/ >.
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