Business Health Check Report: Starbucks Business Analysis

This report provides a comprehensive business health check of Starbucks, examining its objectives, external and internal factors, and strategic planning. The analysis includes PESTEL, Porter's Five Forces, and SWOT analysis to assess the company's strengths, weaknesses, opportunities, and threats. The report further explores the Ansoff matrix to identify growth strategies and improvements to business operations and processes. Additionally, it evaluates the current skills of management and staff and suggests plans for their development. The report concludes with recommendations for Starbucks to enhance its competitive position and achieve its business goals.

Business Health
Check

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Objectives of business......................................................................................................3
1.2 Factors affecting the process of business.........................................................................4
1.3 Improvement and changes to the business operations and processes...............................7
M1. SMART objectives..........................................................................................................8
D1. Analyse how Ansoff Growth Matrix helps in business improvements...........................8
TASK 2 ...........................................................................................................................................9
2.1 Effectiveness of the business............................................................................................9
2.2 Develop plans to improve business and define their values...........................................10
M2. Evaluate the impact of business areas of the organisation............................................11
D2. Critically analyse development of plan in improving the business...............................11
TASK 3 .........................................................................................................................................11
3.1 Current skills of management staff.................................................................................11
3.2 Plans for the development of skills for management and staff......................................13
M3 Analyse the current experience, abilities and skills of management and staff..............14
D3 Methods that can used for developing skills of management and staff..........................14
CONCLUSION..............................................................................................................................15
RECOMMENDATION.................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Business health check is a critical assessment of a business environment by which
potential weaknesses. This is useful in making competitive position of the entity stronger in the
market so that it can survive the challenges and sustain in the long run. It is a continuous process
of evaluating elements that may have impact on the business. It involves reviewing of factors
which have been affected in a negative way(Bernardini and et. al., 2011). The company chosen
in this report is Starbucks which is a popular American coffee company and coffee-house chain.
It is based in Washington, U.S. It was founded by Jerry Baldwin, Zev Siegl and Gordon Bowker
on 31st March, 1971. The changes that it made in United States is considered as “second wave
coffee”. The report covers external and internal components of a business environment and
operations. Furthermore, the changes that can be taken place in business strategies and functions
have been provided. In addition to this, significance of a preparation of plans which ca be
implemented in the company have been explained. At last, the report marks closure with a detail
discussion in respect to skills and capabilities of workforce which can contribute to growth and
profitability.
TASK 1
1.1 Objectives of business
Starbucks is a world famous company providing coffee of premium quality which is liked
by huge number of customers because of high satisfaction. The main objectives of this company
states the main focus in obtaining leadership in coffee industry and coffee-house market. Level
of competition is rising with the time which forced it to use techniques and strategies for gaining
competitiveness. Apart from this, it also wish to co-ordinate the vision with overall mission so as
to reduce the level of wastage in time as well as in money(Blakely and Leigh, 2013). Mission
statement contains the words “to inspire and nurture the human spirit- one person, one cup and
one neighbourhood at a time.”
Statistics of revenue generation shows an amount of $24.72billion as of 2018. This has broken
the records of all past revenue. Its objectives focus on cultural development, innovation, high
performance and accountability. In addition to this, its aim is include diversity in the company
through more favourable policies. Apart from this, expansion is also included in the list of its
objectives and goals by which it plans to exceed its market shares and business. The other area

on which it wish to focus is personal growth of people working in the organization and to have
multicultural teams of individuals with diverse perspectives and insights to ensure company's
growth and improve service delivery for customers. The other objectives are to build closer
relationship and have increased interactions with suppliers, employees and customers.
1.2 Factors affecting the process of business
An organization's business is affected by variety of factors which is necessary to analyse
in order to know the positive as well as negative positions which as follows:
PESTEL Analysis of Starbucks
Political factor: This impact of political factors is huge and can not be reduced easily.
The main problem is that, the politicians in West countries have their attention from where the
raw materials are obtained, due to which Starbucks is under a pressure to abide by social and
environmental norms and conduct business activities in a fair manner(Brown and et. al., 2014).
This is because of entrants of global corporations.
Economic factors: The main factor of this is the continuous recession at global level
which is affecting its profit and growth. Apart form this, people are becoming healthy because of
which they have lowered down consumption of coffee. Furthermore, the beverages of Starbucks
are highly priced which encouraged people to choose substitutes which are cheap. Furthermore,
they import their raw material from different countries therefore, the tax on imports have to be
taken care of.
Social factors: Starbucks is called as “Starbucks shared Planet” because of its
commitment of doing activities which will benefit the people and planet. For this purpose, they
have started using reusable cups and emphasized on the development of community as per the
goals. Furthermore, it has shifted to utilise cheaper alternatives without compromising the quality
of the product. Also, the policies have re-designed to include people from the category of low
income to be able to but its products(.Campanotti and et. al., 2016.).
Technological factors: Starbucks has adopted new and innovative technologies for
including improvisation in its services. This has reduced the cost of labour also saving time
which can be used in something more productive. Along with this, it has introduced a card to get
the attention of customers in huge number to enable them to visit the outlets in quickly. Also, it
has started to fuel-efficient equipment to reduce the emission of harmful gases.

Environmental factors: Starbucks have encountered number of environmental issues for
using paper cups. Due to this, it has started to use biodegradable material instead of plastic which
can be recycled easily. Now, it includes environmental efficiency goals by focusing on water and
energy conservation. For this purpose, it has invested into such activities which reduce the
carbon footprints and wastage. This has increased customers' loyalty towards it and it should
continue to follow all such norms.
Legal factors: Starbucks is very particular about working in an ethical manner by
complying with applicable laws and rules. It has given the training as required by the laws.
Furthermore, it make sure that company does not indulge in legal hassles which can give rise to
numerous legal obligations(Colpan and Hikino, 2010).
Porter's Five Force Analysis
This unique type of analysis tool mainly consists with five forces, that aid a business
organisation to evaluate overall intensity that the industry is having related to competitors. This
external analysis tool basically aid a business organisation in improving the profit ratios. M.
Porter was the individual who basically propounded this analysis tool and it was done in the year
of 1979. This model basically consists of five key competitive forces that majorly impacts upon a
company or on the whole industry. In present context, Porter's five force analysis of Starbucks is
done underneath: Competitive Rivalry- Basically, Coffee House Industry in present time consists with
ample number of famous business organisations, which means Starbucks could face high
rivalry. Here, it is essential for Starbucks to develop a range of strategies in order to
sustain with in the market for a longer period of time and to deliver high rivalry to its
rivals. Dunkin Donuts, McCafé, Costa Coffee are said to be some of rivals of Starbucks
that are giving competition to it. Bargaining power of Buyers- Since the buyers carries high influence on a business
market, it can easily be said that bargaining power basically stays strong(Ellis and
Abbott, 2013). On the other side, there are a range of factors like low switching cost,
substitutes of coffee products are some of the crucial elements that majorly shifts the
interest of customers and this is why it is high within the Coffee-house industry. Here, if
it is talked about Starbucks, then company could effectively produce some sort of unique
coffee products in order to reduce the high bargaining power of buyers.

 Bargaining power of Suppliers- Due to small number of suppliers, which Starbucks is
having, it consists with a low bargaining power. On the other hand, if it is talked about
Costa Coffee, then it basically consists with high number of suppliers that are much
effective in nature. Therefore, it can easily be considered as a threat for Starbucks. Threat of substitution- This factor lay down major impact on profitability of company as
there are many substitutes available to customer's at marketplace. If it is talked about
Starbucks, then there is high number of substitutes present in all over the world, which
means threat of substitution is high and majorly affects company's reputation and profit
margins at the same time(French and et. al., 2010).
 Threat of new entrants and new entry- If it is talked about Starbucks, there is high range
of threat is available for the company and it is because, at local or domestic level new
companies basically offers different unique tastes within the coffee industry. This impacts
heavily upon both productivity and profitability of Starbucks.
SWOT Analysis of Starbucks
Strengths
 Starbucks basically got valued around
$4 Billion and this could be considered
as a crucial strength that this company
is holding.
 Product portfolio of Starbucks is much
effective in nature.
 Brand image of Starbucks is high in all
over the world, due to its presence.
Weaknesses
 Promotion strategies of Starbucks is not
that effective in nature
 All different range of categories
 Starbucks has low degree of
sustainability in case of competitive
advantage.
Opportunities
 Costa coffee has opportunity to pursue
aggressive marketing strategy for
expansion.
 This company can also focus on
developing healthier and low caffeine
products.
Threats
 There is threat to increase in prices of
raw material for coffee beans.
 Now, customer's consider coffee as
unhealthy beverage.
 Also there is increase in indirect
competition for Starbucks.

 It is enjoying competitive advantage
from its new parent company.
1.3 Improvement and changes to the business operations and processes
The Ansoff matrix was given by H. Igor Ansoff in 1957. It is used as strategic planning
tool for the businessman's, leaders and marketers for high growth of organisation. This is applied
in an organisation for market development and success of the company like Starbucks. There are
various Ansoff strategy are describe with the reference to Starbucks(Fukuda-Parr and Lopes,
2013).
Market penetration –
Marketing penetration is that situation where a businessman started his new business with
existing products and services at existing market. In this market entrepreneur or existing business
provide same things to customer at same place with some new strategics. These changes are done
by Starbucks for its growth. There are some strategies that are following-
 Launch special offers for the promotion of the company.
 By developing new strategies like recruit new employees for more work and develop the
workforce of organisation for new business. By encouraging more customer to buy company's product(Hopkins, 2017I).
Product development-
Product development is that situation where a businessman start business with new
product at existing market or it is also used by a business organisation like Starbucks and here
some strategies like-
 New and attractive packaging of product.
 Provide some new varieties of the product at same market.
 Provide extra services for customer and development of new products. Provide good quality at same price.
Market development-
Market development is that situation where a exiting product is launch in a new market.
Here Starbucks is targeting a new market with new strategies. Some strategies are using in this
and those are following(ngram, and et. al., 2015).
 Target new market according to the age group and focus on youths generation because
they purchase more products.

 Create a easy way for purchasing that products like online ability of that products with
some interesting offers. Use some promotion activity where people are aware with the products.
Diversification-
Diversification is too much risky situation because here both thinks are new like new
products are launched in new market. Here Starbucks provide new product or services for a new
market. When an individuals want to expend his own business but in this situation risk will
increase. There is not any another way to extend business without any risk(Kaneko and Andou,
2010).
M1. SMART objectives
The major objective of Starbucks is to provide better and appropriate services to the
potential customers. This will lead to increase in creating value for money among the customer's
and organisation in a more effective manner. This objective is related with the SMART criteria
because it will lead to increase in market share of the organisation by 20%. This objective will be
measured by knowing number of customer's attracted within a specific period of time. This will
lead to increase in sustainability and performance of the organisation in external market
conditions. This objective will be achieved within period of 1 year(Mitchelmore and Rowley,
2010).
D1. Analyse how Ansoff Growth Matrix helps in business improvements
With the help of Ansoff growth matrix the manger of Starbucks will be able to implement
best strategy for developing the market in a appropriate manner. After selecting appropriate
marketing strategy trust and confidence of the potential customer's can be gained. This strategy
will help the organisation is making necessary changes for enhancing brand image of existing
product or service. By using this method appropriate plans and strategies can be made for
enhancing growth of its business.
TASK 2
2.1 Effectiveness of the business
Effectiveness in organization is important and play a vital role. It refers to the quality
work or performance done by employee's to achieve goals. In other words, doing something
right is effectiveness. In context of company i.e. Starbucks the effectiveness of product and

organization is created by its employee's as well as by the top level management as it has
positioned its brand in market by gaining customer experienced.
Marketing:
Marketing means promotions, its very important for the company to promote product and
its brand in target market. Starbucks uses word of mouth marketing tool for promotion of its
product among customer. As customer likes taste and environment of coffee shop with soft
music, elegant furniture,message on cups(Mor, Morris and Joh, 2011). Organization follows the
culture brand as it connects with religions and counties reason is for review of marketing strategy
and its effectiveness.
Product and services:
In context of Starbucks, it follows uniqueness in its product as master balance the flavour
of rich coffee beans. Coffee is intake form farms on Latin America, Africa and Asia for best
beans. Starbucks offer wide range of products that give maximization satisfaction to customer's.
Coffee, fresh-brewed coffee, hot and iced espresso beverages, frappuccino, smoothies, teas etc.
Finance:
Finance play very important part in each & every organization, it helps in running
business effectively . The manager of Starbucks develops investment plans and budgets as this
will help in long term growth and survival within market place. Also, it helps the company to
carry out their operational functions effectively and efficiently.
Staffing:
Starbucks focuses on the effectiveness of their employee's, where company leads to
affectivity because the organisation has good recruitment and selection process as they hire
professional people(Noe, and et. al., 2017). Company is also providing proper training and
development programmes, directing them about their work and giving information and
knowledge about the rules& regulations, procedure, working environment of company so ,they
can do work effectively and efficiently. Also motivates their employee's by encouraging them
also give incentives and bonus for their good work.
Sales:
Starbucks uses various promotional tools and effective marketing strategies which helps
to attracts large number of customer's which leads to increase the sales, profitability as well as
wealth maximization which shows effectiveness of company at global level. As they are

providing offers and discounts to their regular customer to increase the sales(Oja and et. al.,
2011).
2.2 Develop plans to improve business and define their values
Business plan is related with making plans and strategies for achieving the goals and
objectives of the future. With the help of appropriate business plan organisation can easily
sustain in the market for longer period of time. If the manager of Starbucks is successful in
formulating appropriate business plan than its performance and sustainability can be increased
and enhanced. Business planning can be done with the motive of controlling and managing
internal as well as external environment of the organisation. Manager of Starbucks focuses on
implementing plans after evaluating and analysing current and past trends of the market. Major
changes in the working structure of organisation can also be done by implementing appropriate
business plan. As with the help of these plans organisation will be able to sustain in the market
for longer period of time. These plans and actions can be related to various activities which are
performed for achieving targeted goals. These types of plans majorly involve-
Financial management system- This plan is related with formulating strategies for
managing fund and expenses of the organisation. The major motive of this plan is to save time
and cost of Starbucks in the appropriate manner. If the manager of Starbucks is successful in
doing this than unnecessary wastage of financial resource can be reduced. Proper financial
management system is made in Starbucks than better competition can also be given.
Roles and responsibilities of staff and management- If the employee's of Starbucks are
assigned with proper roles and responsibilities as per their skills and knowledge than goals of the
organisation will be easily achieved. Employee's with proper skills will contribute better in the
growth and success of Starbucks(Ramdass and Zimmerman, 2011). This is because with the
help of business plan they will know what is expected from the them and how roles can be
performed in a better manner.
Market analysis- This type of plan is related with formulating and evaluating current
and on going trend of the market. With the help of market analysis chances of risk and
uncertainty from the market can also be reduced by the management of Starbucks. This will
directly lead to achievement of goals and objectives in a systematic manner.
Performance monitoring- This type of plan is related with monitoring, analysing and
evaluating the workforce of Starbucks. By monitoring the performance of employee's their weak

and strong points can be analysed in a better manner. This will also lead to increase in
performance and productivity of employee's in Starbucks. New and innovative techniques will
also be suggested to employee's for improving their skills and performance.
M2. Evaluate the impact of business areas of the organisation.
It is very much essential that there are effective business strategies formed by the
management of organisation. As with the help of these qualtity of services can be improved by
the management of Starbucks. There are different activities which are performed in the
organisation for achieving desirable goals and objectives. Appropriate plans for increasing in
sale of product and service, management of finance, knowing the exact need of customer's are
some of the major functions which lays a positive impact in the functioning of business. This
will also lead to increase in brand image and profitability of Starbucks because services were
offered to customer's as per their current need and demand.
D2. Critically analyse development of plan in improving the business.
By formulating proper plans and strategies by the top management goals and objectives
of Starbucks can be easily achieved(Roehl and et. al., 2016). Chances of uncertainty and risk can
be decreased if the management of organisation is successful in making plans in the efficient
manner. It can also lead to increase in market share and achievement of competitive advantage
within prescribed period of time. With the help of appropriate plans and strategies the
management of Starbucks will be able to take logical actions for the future course of action .
TASK 3
3.1 Current skills of management staff.
HRM is related to hiring and selecting the individuals and providing them trainings so
that their overall skills can be improved. Since the major aim of Starbucks is to offer better
services to customer's so this objective can be achieved only if employee's and management of
Starbucks have appropriate set of skills and capabilities. Some of the major skills which manager
of Starbucks must have are discussed below-
Managerial skill- The major managerial skills which are being performed in Starbucks
are mentioned below-

 Planning- This type of skill involve analysing and identifying accurate need of workforce
in Starbucks. With the help of this skill plans can be made for achieving the goals of
individuals and organisation.
 Organising- With the help of this skill work and activities in Starbucks is assigned as per
skills and capabilities of its employee's. Major aim of this is to allocate and assign work
as per their skills and capabilities(Semple and Turley, 2013.).
 Directing- In this appropriate direction is given to employee's so that their potentiality
can be increased. This means it is related with giving instructions to employee's for
improving their performance and also for achieving goals and objectives.
 Controlling- In this the manager of Starbucks ensures and evaluates actual performance
with standard performance. Appropriate plans and strategies are also provided to
employee's for taking corrective actions with the motive of improving performance.
Some of the major operational skills required in Starbucks are discussed in below-
 Recruitment- In this major focus of Starbucks manager is to hire and select appropriate
and skilled candidates. This is because such employee's will put more efforts in achieving
the goals.
 Job analysis- In this nature, skills and qualification of the candidate is analysed. This is
done to assign responsibilities according to the capabilities of the employee's.
Appropriate job structure is formulated to extract better work from the employee's.
 Performance appraisal- Starbucks aims at improving and appraising its workforce for the
better work done.
 Training and development- The major motive of providing training to employee's is to
help them in increasing their current skills and knowledge. As by doing this workforce is
able to perform its responsibilities in a better manner(Wang and Zhao, 2011).
The major technical skills required in Starbucks are discussed below-
 HR information software- With the help of this skill task and activities of every
department in Starbucks can be divided and assigned in a systematic manner. The major
motive of this software is to increase and enhance technical skill of manager in a proper
and systematic manner.
 Applicant tracking system- With the help of this system less time is wasted in short-
listing and selecting candidates. In this type of system the information of candidate is

analysed for taking decisions regarding their selection. By using this system skilled and
knowledgeable candidates can be selected.
 Knowledge of SQL and reporting- In this system the data is arranged in a systematic
manner so that goals and objectives of the organisation can be achieved properly. With
the help of this system complex task of Starbucks can be solved in systematic and
coordinated manner(Zepeda, 2013).
3.2 Plans for the development of skills for management and staff.
The plans for improving and developing skills are mentioned below-
Skills Technique of
improvement
Time required Main target.
Strategy development
(management)
This type of skill can
be improved and
enhanced by
coordinating and
communicating vital
information with the
subordinates in a
systematic manner.
Focus can also be
emphasised upon
considering ideas of
experts, as with the
help of this better
strategies and plans
can be formed for the
future action plan.
Continuous
development
With the help of this
strategy goals and
objectives of the
organisation can be
easily achieved. The
competition level can
also be decreased
because latest tools
and techniques will be
used for sustaining in
the market.
Improvement plans
can also be made for
future course of action.
Flexibility (staff) This type of skill and
knowledge will be
improved by involving
team members in the
Continuous
development
With appropriate
flexible strategies
work of the
organisation can be

decision-making
process. Employee's
can be made aware
about flexible plans
and strategies of the
organisation. By
organising training
programmes
employee's of
Starbucks will be able
to handle complex task
in a effective and
efficient manner.
completed in a
systematic and
coordinated manner.
Better services and
products can also be
offered to potential
customer's because
individuals in
Starbucks will be will
work in a flexible
manner.
If the management of Starbucks is successful in forming appropriate plans and strategies
for the development than overall performance and productivity can be improved within limited
period of time.
M3 Analyse the current experience, abilities and skills of management and staff.
It is very much essential for the employee's to have appropriate set of skills and
capabilities as with the help of this negative impact on the functions of business can be reduced.
Workforce with appropriate skills and capabilities will contribute more in the growth and
sustainability of the organisation. Better and innovative services will also be offered to
customer's if the workforce have appropriate set of skills and knowledge. As with the help of this
current need and demands of customer's can be known and fulfilled. Skills will also help the
organisation in achieving competitive advantage within limited period of time.
D3 Methods that can used for developing skills of management and staff.
Different types of methods and techniques can be used by the management of
organisation for sustaining in the market. These methods majorly include- organising training
and development programmes, making plans as per the need and demand of potential customer's.
With the help of these methods employee's will know what is being expected from them. After

knowing this different plans can be made for increasing the sale and profitability of the
organisation.
CONCLUSION
From the above given report it has been concluded that if the organisation wants to
sustain in the market for longer period of time than major focus can be emphasised on using new
and innovative policies. There are different types of tools and techniques which can be used for
checking and analysing business health check. The analysis can be done for evaluating internal
and external environment of the organisation is a systematic and coordinated manner. With the
help of technical and management skills competitive advantage can be achieved in the effective
and efficient manner.
RECOMMENDATION
From the above report it can be recommended that organisation needs to analyse the
internal and external environment in a proper and systematic manner. If the organisation wants to
increase its sale and profitability than focus can be emphasised on using new and innovative
techniques for satisfying the need and demand of customer's. This can only be done if
employee's of the organisation have appropriate set of skills and capabilities. So training and
development programmes can be organised for the overall growth and performance of the
organisation.

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Online:

Objectives of Starbucks. 2019. [Online]. Available through:<https://www.starbucks.com/about-
us/company-information/mission-statement>.
PESTEL Analysis of Starbucks. 2019. [Online]. Available
through:<http://marketingdawn.com/pestle-analysis-of-starbucks/>.

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