Business Health Check Report: Starbucks - Factors and Improvements

This report provides a comprehensive business health check of Starbucks Corporation. It begins with an introduction to the company, outlining its mission and objectives, and then delves into an analysis of both internal and external factors affecting its operations. The PESTEL analysis examines political, economic, social, technological, environmental, and legal factors, while Porter's Five Forces model assesses competitive rivalry, buyer power, supplier power, threat of substitution, and threat of new entrants. A SWOT analysis highlights Starbucks' strengths, weaknesses, opportunities, and threats. The report further explores potential improvements and changes to business operations and processes, including the application of the Ansoff matrix for market growth strategies. Finally, it evaluates the current skills of management and staff, and suggests plans for skill development. The report concludes with recommendations for Starbucks' future growth and development.

Business Health Check

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ...........................................................................................................................................1
1.1 Objectives of business ..........................................................................................................1
1.2 Factors that affect process of business .................................................................................1
1.3 Improvement and changes to the business operations and processes...................................6
M1 SMART objectives .............................................................................................................6
D1 Analyse how Ansoff Growth Matrix helps in business improvements.................................7
TASK 2 ...........................................................................................................................................7
2.1 Effectiveness of the business................................................................................................7
2.2 Develop plans to improve business and define their values ................................................8
M2 Evaluate the impact of business areas of the organisation ..................................................9
D2 Critically analyse development of plan in improving the business ......................................9
TASK 3 .........................................................................................................................................10
3.1 Current skills of management staff ....................................................................................10
3.2 Plans for the development of skills for management and staff .........................................11
M3 Analyse the current experience, abilities and skills of management and staff ..................13
D3 Methods that can used for developing skills of management and staff .............................13
CONCLUSION .............................................................................................................................13
RECOMMENDATION ................................................................................................................14
REFERENCES .............................................................................................................................15

INTRODUCTION
Business health check is defined as present comprehensive evaluation of important
factors of business. This is an assessment which which includes capacity of manager who is
running a business. The business health check is divided into two parts, in part one answers are
present for a succession of business and in the second part includes the review report. The
company which is considered in this report is Starbucks Corporation. This is an American coffee
company that was started in the year 1971. Starbucks is the main representative of second wave
coffee that differentiate it from coffee serving venues in United States. This report consists of
various external and internal factors that affects the business operations and process of the
company by using PESTEL analysis and SWOT analysis. An Ansoff matrix growth matrix is
discussed for improvement of business. At last, current skills of the managers is evaluated for
increasing the skills and development of management and staff.
TASK 1
1.1 Objectives of business
The main mission statement of Starbucks is to inspire and nourish the human spirit by
offering the best coffee to one person, one cup, and one neighbourhood at a time. Starbucks has
around 33% percent market share for coffee in the US. This company sells coffee and fast food
and the target customers are high class and medium class people. The main objective of this
company is to increase it's market share and expanding business by increasing the number of
loyal customers (Akter, and Et. AL, 2016). This company ensure to build it's image in image in
market and becoming a status symbol. Another objective of Starbucks is to earn more profits and
providing a good customer service and experience.
1.2 Factors that affect process of business
PESTEL Analysis of Starbucks Corporation
Starbucks corporation was founded in the year 1971 and since then it has experienced
internation growth. It is the world's biggest coffee house company. The PESTEL analysis helps
in identifying the various macro factors that affects the operations and processes of Starbucks. It
is important for this company to succeed by overcoming all the negative forces that impact
business activities and processes. The PESTEL analysis of Starbucks is discussed below-
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Political factors – The political factors affect the functioning of a business. This includes
the affect of government policies and rules on business. The various political factors that affect
business environment of Starbucks are regional integration of markets, improvement in
governmental support for infrastructure and bureaucratic red tape in the developing countries.
The regional integration is an external factor that determines opportunity for Starbucks to expand
it's business across the world. Different government around the world have improving
infrastructure that helps Starbucks for accessing more suppliers and markets.
Economical factors – These are the economic conditions of a country that affects the
business of a company. If a country has a high economic growth and decline in unemployment
rate helps in building opportunities of Starbucks for earning more revenue from different markets
of the world (Campbell, and Helleloid, 2016). Another factor that affects business of Starbucks
is increase in labour cost. This company imports coffee from various countries and that rate of
importing also affects business.
Social factors – Starbucks corporation has the opportunity for increasing revenue that is
based on increase in demand of coffee culture. This company has opportunity for widening a
range of healthy products and attract various health conscious consumers towards Starbucks cafe
and services. The different social factors that helps Starbucks to build it's business are growth of
coffee culture, increase of health consciousness and growth of middle class.
Technological factors – The major technological issues faced by Starbucks are increase
in mobile purchases, technology transfer to farmers of coffee and increase in availability of
special coffee machines for home use. Starbucks can increase its value by offering new
technology and techniques in cafes. This will help to attract more number of customers. Different
steps that can be taken by this company include improvement of mobile application and services
that are linked to purchases through mobile.
Economical factors – The business sustainability depends on processes of business
which ensures less impact on environment. Starbucks should focus on enhancing corporate social
activities so that it's image will be developed in society. This company offers products in
recyclable packaging that causes less harm to environment.
Legal factors – This company can improve the performance of business by providing
satisfaction to customers. This may include providing products which are made by following all
safety regulations and safe ingredients. Starbucks follows all legal rules and regulations for
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providing products and services in market. The increase in employment regulations in the
developing countries limits Starbucks coffee's access to labour market. Due to the legal factors,
Starbucks has to invest a lot of money for improving the human resource of the company.
Poter's Five Force Analysis
The Porter's Five Forces model is a business model which helps in identifying and
analysing five competitive forces that helps in shaping each and every industry. This also helps
in determining weakness and strength of an industry in market (Clinton, and Whisnant, 2019.).
The Porter's model is applied to different segment of economy for estimating attractiveness and
profitability of business. This analysis helps in analysing the competency level of business in
market. The porter's five force analysis of Starbucks is described below-
Competitive Rivalry – Starbucks is facing a strong competitive rivalry and competition in
the coffehouse industry and food service. This factor helps in analysing the competitive level of
Starbucks in market. This company has a strong force of competition that includes large number
of firms, moderate variety of enterprise and less switching costs.
Bargaining power of Starbuck's Buyers – The Starbucks corporation is experiencing a
strong force or the bargaining power of customers or buyers. This factor depends on the
influence of customers in the international market. The different external factors that affects
Starbucks are low switching cost, high substitute availability and small size of individual
customer.
Bargaining power of Starbuck's Suppliers – Starbucks Corporation has weak force or
bargaining power of suppliers. Starbucks has a moderate size of individual suppliers and this is
an external factor that reflects a moderate force on this company. Suppliers have different
strategies and competencies which are used to compete against different competitors.
Threat of substitution of Starbuck's Products – This element of the five forces model
determines that substitutes have a strong potential which impacts the business of Starbucks
coffee negatively. There are many substitutes of Starbuck's products in market such as drinks and
beverages, instant beverage powder and purees, energy drinks etc.
Threat of new entrants and new entry - There is always a threat of new substitute for
every organisation. In case of this coffee shop, there are many emerging companies which can
take over this company. Some of the competitors of Starbucks at global level are Cafe Coffee
Day, Costa Coffee, Dunkin Donuts, McDonald's Mc Caffe, etc.
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SWOT Analysis of Starbucks Corporation
Starbucks is a globally recognised organisation that is involved in serving coffee and
beverages in different markets (Cvetković, M.Dälken, 2014). A SWOT analysis is helpful to
analyse the opportunities and strength that a business has if it want to expand in other markets.
Starbucks is a big organisation and it is important for this firm to analyse strength and
opportunity in market expansion. The SWOT analysis is done for improving the condition of
business operations. The SWOT analysis of this company is described below-
Strength Weakness
 The major strength that Starbucks has
is it's strong financial performance
which helps company in building a
good reputation and image across the
country.
 Innovation is being used in this
company since years and this helps in
building value and image in front of
customers.
 Starbucks offers quality products and
services.
 The main disadvantage of this company
is that the product if this company i.e.
coffee is sold at an expensive price
range. These products are affordable by
only upper class income group.
 This company's coffee culture is not
accepted by every country such as Asia
and Europe.
Opportunity Threats
 This coffee corporation is not
expanding it's business in different
emerging markets and countries.
 Starbucks is the only coffee company
that is using mobile application for
selling of products.
 Starbucks has launched a new delivery
system known as Mobile Pour.
 There is an increase in competition in
market due to emerging competitors
like Dunkin Donuts and McDonalds.
 The price of coffee beans is increasing
day by day at a high level and therefore
Starbucks cannot decrease it's price.
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1.3 Improvement and changes to the business operations and processes
The Ansoff matrix is defined as the marketing planning model that helps in analysing the
plans and strategies for growth and development of business. This matrix was developed by H.
Igor in the year 1957. This model demonstrates a matrix which has four different quadrants. The
four different part of this matrix includes market development, diversification, market
penetration and product development. In context of Starbucks these four strategies of market
growth are discussed below-
Market penetration – According to this market strategy a company can achieve success
and builds it's profit by using the existing products and services of the company. Market
penetration is a less risky strategy as there is no much investment and company focuses on better
utilisation of existing resources of the company. This kind of market growth strategy is not good
for Starbucks as it cannot help in increasing customer satisfaction.
Product development- In such kind of strategy of business, a new product is developed
by the company and launched n market. The main motive of this strategy is to attract more
customers by the new product and increasing the profit of the company. This strategy is
beneficial for Starbucks as this is an easy way for this company to attract more number of
customers.
Market development- This growth strategy is one in which a business sells it's existing
product in a new market segment. This strategy is a risky way for business as it requires
investment by the company in establishing product in a new market. Starbucks offers coffee and
other beverages and this company has an opportunity to launch product in new market of
different countries (Heaton, Linden, and Teece, 2014). This is a risky job for business as if this
drink and coffee is not liked in new market then this will cause financial loss to the company.
Diversification - According to this marketing strategy, a new product is launched in a
new company. This is the most risky job for business as bot product and market are new for the
company. In the case of Starbucks this will result in great financial loss to the company as this
will be a disadvantage of the company.
M1 SMART objectives
A SMART objective of business is one which is specific, measurable, achievable,
relevant and time oriented. This objective is made for increasing the performance and profit of
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the company. SMART objective of Starbucks is “To increase the sales of Starbucks corporation
by 40% within 7 months”.
D1 Analyse how Ansoff Growth Matrix helps in business improvements
Ansoff matrix consists of four quadrants and these help in determining various growth
strategies of business. The best growth strategy that can be used by Starbucks corporation is
product development. This strategy will help this company to attract more number of customers
and increase its profit. Product development will help This company to grab profit in market
segmentation and increases the value of company by offering new rich coffee to customers.
TASK 2
2.1 Effectiveness of the business
According to the different organisations, the effectiveness of business mention the proper
result which is developed from the tasks and completed through the employer's and workers as
well. In reference to the Starbucks, in order to make their business effective they are using
several kind of strategies to gain the competitive advantage within the business world.
Effectiveness play a very necessary role in the every aspect of business as it shows the firm's
value in front of people in an effective manner (Mason, Cole, and Goza, 2017). There are some
effectiveness of business, which are given below:
Marketing: It means the study and exchange relationships within the management
system of an organisation. In context of Starbucks they are using several kind of strategies in
order to build very good customer's relationship in an appropriate manner. This kind of
relationship is very beneficial for an organisation, with the help of this company can enhance
their marketing growth in a particular manner. Therefore, this is important for the company to
make effective relations with customers.
Product and services: In order to make good process of the business every company is
required to improve their product and services to grab opportunities in accurate manner.
Wherein, Starbucks has several kind of products varieties such as smoothies, cold coffee, hot
coffee, ice-cream and so on. All are offered by this selected organisation in order to fulfil
customer's needs.
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Finance: It is an essential aspect that helps companies to make their accurate budget in a
proper way. In reference to the Starbucks, they always follow the affordable pricing strategies in
order to make effective organisation (Mathooko, and Ogutu, 2015). That's why this is beneficial
for the company to grab future growth. On the behalf of this company is able to increase their
profit and sales in an effective way.
Staffing: For making better effectiveness the management department of Starbucks,
offering lots of training programmes by which their workers can learn about their rules and
policies in a perfect way. Therefore, it shows the effectiveness of this business in a systematic
manner.
Sales: In the Starbucks, it uses several kind of strategies like offers on their product or
buy 1 get 1 offer so that they can enhance the sales of Starbucks across the world. That's why it
shows the effectiveness of this organisation and able to get proper profits and sales effectively.
Therefore, it an be analysed that all stages are much beneficial for this company in order
to achieve their task and goals in a proper manner. On the basis of this they can increase their
efficiency in the business respectfully.
2.2 Develop plans to improve business and define their values
It is known as the written document that observing the goals and objectives, strategies
and various methods which requires to meet with the aim and purpose of business in a proper
way. In context with Starbucks, they are making effective business plan in order to increase the
sales and growth of an organisation. On the basis of this business plan of this company can bring
the innovative product in the marketplace that named as Vanilla pastries, for this they required to
follow some factors, are given below:
Marketing planning: According to this factor, management of this company always
makes effective plan in order to achieve higher level of skills in a proper way. For making better
plan of market they can use different strategies to fulfil their customer's needs and customer's. In
order to do better marketing in the working place than company needs to have some unique ideas
from several websites and social sites like Facebook, Yahoo, Instagram and so on. It will helps
them to develop awareness in the customer's mind in a proper manner.
Sales and productivity: According to this, company will have effective plan to influence
their customer's by using the several kind of tools and techniques as they applied proper
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affordable price on their products. It will enhance the profit and sales of the company by
different online channels as its advertise their product.
Financial management systems: In the Starbucks organisation, management will make
plan in regards with marketing, productivity of goods, sales as well as the management system of
finance. This system is very good in order to manage and control at financial activities for the
actual product (Mkude, and Wimmer, 2015). Now manager of this organisation applied financial
system on the Vanilla pastries in order to control information by using few factors of finance that
is cash flow, ledger, income statement etc.
Roles and responsibilities of staff and management: According to the above
analysation, roles and responsibilities, manager of this company allocate duties to their
employee's in order to generate different kinds of ideas and policies which will help this
company to show their effectiveness in a effective way. As per this the representative of
customer's services has role to resolved the issues of their clients and make them happy and
maintain environment of an organization.
M2 Evaluate the impact of business areas of the organisation
According to the new area of business always makes their contribution in the
development of firm because they always takes participation as well. Services and products are
the effective and very important part of every organisation which makes company effective into
the marketplace. In the Starbucks, they always depend on the various strategies and good
services in order to enhance their profit in the market. That's why the financial system have
contributed in the operations of Starbucks by using few commerce terms like ledger, books
account, cash statements and so on.
D2 Critically analyse development of plan in improving the business
According to the effective business plan Starbucks always applied unique techniques in
order to impress their customer's in a effective way. The manager of this company makes plan in
to execute on their effective products perfectly. With the help of this company can bring different
kind of ideas which makes company's value in front of the consumer's. Therefore, the financial
system is very much effective and essential that brings company at higher level without any
issues within the working place.
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