Business Health Check Report: Analysis of Starbucks' Performance

This report presents a comprehensive business health check on Starbucks, evaluating its operational performance and strategic positioning. The analysis begins with an overview of Starbucks' objectives, including its mission to provide high-quality coffee and maintain a strong brand image. The report then delves into the external and internal factors affecting the business using PESTLE and SWOT analyses, examining political, economic, social, technological, environmental, and legal factors, as well as strengths, weaknesses, opportunities, and threats. Porter's Five Forces model is used to analyze the competitive landscape. The report also applies the Ansoff matrix to identify potential growth strategies, such as market penetration and product development. Finally, the report assesses the current skills of management and staff, and proposes plans for skill development to enhance the company's capabilities and overall business health. The conclusion summarizes key findings and offers recommendations for improvement.

Business Health Check

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
1.1 Objectives of business......................................................................................................3
1.2 Factors that affect 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 method used by various organisations in order to evaluate
factors which affect business organisation and develop strategies according to the changes for
running business in a smooth manner. It is also known as an evaluation process in which
managers need to examine all the factors which directly affects the profitability, sustainability
and growth of the company (Akter and Et. AL, 2016). In this report, Starbucks is chosen as the
base company. It is an American based coffee company incorporated in the year 1971 and its
headquarters is located in Washington. It is one of the biggest leading company as it operates in
more than 30,000 countries across the world. This report includes all the external as well as
internal factors which have direct impact on business operations by doing PESTLE and SWOT
analysis. Along with this, the report includes Ansoff matrix in order to improve the growth of
business at the competitive marketplace. At the end, this report includes an evaluation of current
skills in order to enhance the skills of management team of the company.
TASK 1
1.1 Objectives of business
Starbucks is one of the biggest leading company and deals in all over the world. In
addition to this, it is the company having strong brand image at the marketplace in international
as well at global level.
History of the company
In case of Starbucks, objective of the company is that they want to increase their
profitability and market share by satisfying the requirements of customers. In addition to this,
other objective of the company is to provide high quality of services to their customers and retain
them for a long period of time. Mission statement of the chosen company is that they nourish and
inspire human being by providing one of the best coffee. It has been identified that Starbucks is
having almost 33% market share. Company mainly focuses on targeting high class people by
offering fact food as well as best quality coffee across the world (Campbell and Helleloid, 2016).

Short term goal: In case of Starbucks short term goals of the company is to satisfy
requirements of customers by offering them high quality of services.
Long term goal: On the other hand, long term goal of the company is to maintain their
sustainability at the competitive marketplace by retaining loyal customers.
1.2 Factors that affect process of business
PESTEL Analysis of Starbucks Corporation
Starbucks is one of the biggest coffee company across the world. PESTLE analysis is a
model used by companies to enhance their knowledge about various macro factors which affect
the business operations of the company. With the help of PESTLE analysis management team of
the company will be able to develop strategies and plans according to the market situation. In
order to conduct the business health check-up effectively, PESTLE analysis is discussed in
detail:
Political factors – Political factor includes various government policies, laws and
legislations which directly affects the functioning of business enterprise. Different political
factors which affects the operations of business includes bureaucratic red tape in developing
countries, regional integration of markets and many more (Clinton and Whisnant, 2019).
Regional integration refers to an external factor which identifies various opportunities in order to
expand business functions. Along with this, government of different countries develop the
infrastructure which aid Starbucks for performing its functions effectively.
Economical factors – Some of the economic conditions affect the business operations in
both positive as well as negative manner. For instance, if a country having high economic growth
rate, they develop employment opportunities with the help of which individuals can improve
their standard of living. Also, economic condition of UK is very strong which helps in
maximising profitability of the company. Another element which highly influence the business
functions of Starbucks is high labour cost.
Social factors – This is the factor which includes buying behaviour of customers. In
today's world, demand of coffee is increasing day by day which creates opportunity for
Starbucks. In addition to this, company can also provide healthy drinks to their health conscious
customers by identifying their requirements. It is also very important for company to examine
current market situations and trends before offering products and services to their customers
(Dälken, 2014).

Technological factors – One of the biggest technological issues for Starbucks is high
level of technological advancement. Due to easy availability of coffee machines at home,
customers hardly visit to cafes like Starbucks. In order to attract large number of customers,
management team of Starbucks should adopt high technology for offering coffee. Along with
this, managers should use mobile application technologies and also offer cash back through
online order.
Economical factors – In order to maintain their sustainability at a longer period of time,
management team of Starbucks should adopt CSR activities. As a result, they can attract large
number of customers as they use technologies which is less harmful for the environment. Also,
managers decide to reduce wastage and scrap in order to develop clean and healthy environment.
With the help of this, they can enhance their profitability at the competitive marketplace (Heaton,
Linden and Teece, 2014).
Legal factors – By adopting all legislations within the company in an effective manner,
managers can perform its business functions effectively. It is the factor under which Starbucks
follows all the safety measures while providing high quality food services. Along with this,
Starbucks follows each and every legal formalities effectively which aid them in order to retain
their employees as well as customers for a long period of time.
SWOT Analysis
Starbucks is one of the biggest international company serving fast food and coffee in
large number of countries across the world. With the help of SWOT analysis company will be
able to examine their internal strength and weakness as well as external threats and opportunities.
Starbucks is one of the biggest organisation and before expanding business it is essential for
them to examine their strength and opportunities. The SWOT analysis of Starbucks are described
in detail as follows:-
Strength Weakness
 One of the biggest strength for the
company is that they have strong
financial position which aid them in
order to bring innovative products at
the marketplace (Mason, Cole and
 Major drawback of the company is that
they offer expensive food products to
their customers which is affordable by
only upper class people.
 On the other hand, coffee offered by
them is not accepted by each and every

Goza, 2017).
 With the help of innovation, company
will be able to attract large number of
customer across the world. In addition
to this, this brings high brand image of
the company at the marketplace.
country across the world.
Opportunity Threats
 Company is having wide range of
opportunities as they can expand their
business in different countries by
examining their market trends.
 Starbucks can adopt online booking and
cash back offers through which they
can attract ample number of customers.
 Starbucks can offer different flavour of
coffee according to the requirements of
customers (Mathooko and Ogutu,
2015).
 Due to competitor companies such as
Dunkin Donuts and McDonalds,
company face large number of
competition.
 In addition to this, day by day price of
coffee beans is increasing. Therefore,
cost of coffee is also enhancing offered
by Starbucks.
Porter's Five Force Analysis
It is a model used by large number of companies for gaining knowledge about rival
companies working within the same industry. With the help of this, managers will be able to
develop strategies and plans according to the competition. Also with the help of this, weakness
as well as strengths can also be identified within the same industry. Also, managers will be able
to identify level of competition. Starbucks managers use porter's five force method which are as
follows:
Competitive Rivalry – In the present context of Starbucks, company is facing strong
competition as there are large number of rival companies available at the marketplace. Reason
behind this is that large number of companies offer same products to their customers within low

price. For elimination or reducing competition, managers of the company should adopt
collaboration approach (Mkude and Wimmer, 2015). With the help of this, they can attract large
number of customers and maintain sustainability for a longer period of time.
Bargaining power of Buyers – In the present context of Starbucks corporation,
bargaining power of buyers are very high. Reason behind this is that large number of companies
available at the marketplace provide products which is high in quality and affordable by them
easily. Therefore, customers can easily switch to other brand. In order to gain attention, company
might provide unique features to their customers within low cost.
Bargaining power of Suppliers – Starbucks Corporation is one of the biggest leading
company who have large number of suppliers. Therefore, bargaining power of supplier is low as
there are large number of suppliers available at the marketplace. If suppliers do not provide raw
material according to the cost of company, managers can easily switch to other suppler
(Schaltegger and Wagner, 2017).
Threat of substitution of Products – According to this element of five force model, there
are large number of substitutes available at the marketplace. Starbucks offer coffee which is very
expensive and therefore not affordable by everyone. Other substitutes such as Dunkin Donuts
and McDonalds, provide high quality of coffee at very low cost. As a result, substitutes available
at the marketplace directly affects the probability of the company in a negative manner.
Threat of new entrants - At last, this five force model includes threats of new entrants
which is very high in this industry. Reason behind this is that this is the industry which generate
more revenue and attract large number of companies. There are large number of competitor
companies available at the marketplace, which includes Cafe Coffee Day, Mc Caffe, Costa
Coffee and many more.
1.3 Improvement and changes to the business operations and processes
Ansoff matrix is developed by H. Igor in the year 1957. It is termed as a marketing plan
with the help of which managers can develop their strategies in order to maintain their growth at
the marketplace (Sholihah and et. al., 2016). This theory includes four different stages or
elements, with the help of which company can increase their profitability, quadrants. These
elements include market penetration, market development, product development, diversification.
These strategies of growth are discussed in detail, in context of Starbucks:

Market penetration – On the basis of this growth strategy, company can maintain success
at the marketplace along with profitability. This can be done by using existing products and it is
less risky. Reason behind this is that, it does not require huge investment as managers use their
existing resources in best manner. In context of Starbucks, this type of strategy is not very useful
as it does not help in increasing profitability.
Product development- In the second strategy which is product development, company
launch new product and services and then launch it in the marketplace. With the help of this,
company can attract large number of customers towards their company. In case of Starbucks,
company can retain their customers by satisfying their needs and attract new customers by
offering unique products and services. This can be done through identifying current market
trends as well as customers’ requirements. This type of strategy is quite beneficial for the
company as it will aid them in increasing their market share.
Market development- Under this growth strategy, management team of the company sell
their current or existing products at the new marketplace (Song, Sun and Jin, 2017). It is one of
the risky strategy as it requires huge amount of investment in order to establish their products at
new market. In context of Starbucks, they offer fast food and coffee to their customers, but on
the other hand company having opportunity to launch its product in new market. It is a risky
strategy as if customers of different countries does not like the drinks or coffee they offered to
them cause huge amount of financial loss.
Diversification - Under this strategy, managers of the company develop new products
and services at new marketplace. It is highly risky for both product and for market. In order to
reduce the risk, management team of the company need to identify current market situation as
well as taste and preference of customers. In context of Starbucks, this strategy create huge
financial loss to the company.
M1 SMART objectives
The SMART objective of the company is that they increase its probability and
performance of Starbucks. SMART objective of the company is “To enhance their sales within 8
months by 45%”.
D1 Analyse how Ansoff Growth Matrix helps in business improvements
Ansoff matrix includes four main elements in order to identify different growth
opportunities for the company. In case of Starbucks, managers of the company use product

development strategy. With this strategy company will be able to attract large number of
customers, which as a result increase profitability of the company (Takata, 2016).
TASK 2
2.1 Effectiveness of the business
In order to smooth running of a business organisation, it is very essential for a company
to work effectively and efficiently. With the help of which they can enhance their performance
and profitability of the company. There are different organisations available at the marketplace,
which have various effectiveness as well as results at business environment. Effectiveness plays
very essential role in each and every aspect of a business organisation, because it shows the
value of a firm in front of customers effectively (Wach and Wehrmann, 2014). With the help of
effectiveness of the company, managers will be able to complete their task in an effective
manner and within the given time period. In the present context of Starbucks, managers of the
company use different type of strategies in order to achieve competitive advantage. Some of the
major effectiveness of an organisation are as follows:
Marketing: Marketing department of an organisation helps in managing various tasks
and activities which is related with promotion of products. In the present context of Starbucks,
marketing department of the company adopt various strategies which is beneficial for them in
order to satisfy their customers as well as to maintain strong customer relationship. In addition to
this, company offers various offers and discounts to their customers in order to retain them and
attract new customers.
Product and services: Starbucks is one of the biggest company provide coffee to their
customers all over the world. Main objective of the company is to provide high quality products
and services to their customers. Starbucks offer various kinds of products to their customers
which includes cold coffee, hot coffee, smoothies, ice-cream and many more. In addition to this,
it is very important for the company before launching new products to identifying market
situation, trends and preference of customers.
Finance: Finance is one of the main element required by every organisation in order to
run smoothly. In context of Starbucks, company adopt pricing technique in order to attract large
number of customers towards their company (Akter and Et. AL, 2016). Also, company use

attractive infrastructure in order to capture attention of customers. All these things, require huge
amount of fund investment. But on the other hand, it increases the profitability of customers.
Staffing: Employees, staff and managers of the company plays very essential role in
increasing the profitability. Staff of Starbucks, provide effective strategies to their customers and
for this managers of the company provide them training session on a regular basis. Also, workers
of the organisation, learn more about their policies and rules with the help of which they will be
able to perform effectively at the competitive marketplace.
Sales: Sales of Starbucks is increasing day by day as they provide high quality of
products and services to their customers. Along with this, they offer variety of offers to their
consumers which aid them in order to retain them for a long period of time. There main aim is to
enhance their sale in every year by 20% and for this they provide various offers to their
customers (Campbell and Helleloid, 2016).
As per the above mention, it can be analysed that all the above elements play very
important role in order to accomplish their task and targets in an effective manner. Along with
this, they can increase their efficiency of business functions attractively and effectively.
2.2 Develop plans to improve business and define their values
Business plan is a written document which consist of goals and objectives of the
company, plans, strategies and procedures in order to run their business functions effectively. In
the present context of Starbucks, management team of the company make proper business plan
in order to increase the sales and growth of an organisation. According to the business plan,
company bring new and innovative products at the competitive marketplace which includes
Vanilla and Mango pastries. For this, company need to follow some common factors, which are
as follows:
Sales and productivity: Under this element, it includes all the methods used by company
in order to attract large number of customers. Along with this, Starbucks adopt some effective
tools and techniques which will aid them to manufacture high quality products at very affordable
price. In addition to this, they can enhance their profitability as well as sales by adopting various
online channels at the competitive marketplace (Clinton and Whisnant, 2019).
Marketing planning: As per this element, marketing management of the company
develop attractive strategies and plans in order to accomplish their pre determined task
effectively. In addition to this, they adopt various marketing plans in order to attract large

number of customers and satisfy their requirements. Company adopt modern marketing methods
which includes social networking sites, websites, Facebook, Instagram and many more. It will
aid them to create brand awareness in customer's mind and grab attention of ample number of
customers.
Roles and responsibilities: In every organisation, managers allot duties, task and
responsibilities to their employees according to their educational background, qualification,skills
and capabilities. In case of Starbucks, managers allot duties to their staff members on the basis of
their efficiency. Representative of customer's service helps in resolving issues and disputes in an
effective manner and maintain healthy, safe and positive environment for their customers.
Financial management systems: In the present context of Starbucks, management team
of the company develop plans in reference to sales, marketing, production and financial
management system (Dälken, 2014). It is one of the best and effective system used by various
organisations in order to control, operate and manage other financial activities. In case of
Starbucks, managers adopt this system while launching Vanilla and mango pastries so that they
can control informations. This could be done by using various factors which includes income
statement, ledger, cash flow and many more.
M2 Evaluate the impact of business areas of the organisation
It is very essential for any organisation who wants to establish their business at new
marketplace, to grab attention of large number of customers. For this, company must promote
and advertise their products and services effectively at the competitive marketplace.
D2 Critically analyse development of plan in improving the business
An effective business plan aid the management team and executives of the company in
order to accomplish their pre defined goals and objectives in an effective manner and within
given time period. In addition to this, good financial system helps in increasing the customer
satisfaction and retain them for a long period of time.
TASK 3
3.1 Current skills of management staff
Each and every individual have their own skills and capabilities in order to perform their
task in an effective manner and accomplish goals and objectives successfully. For enhancing the
performance and efficiency, managers need to develop skills, capabilities and knowledge of the

employees (Heaton, Linden and Teece, 2014). There are some skills which need to be develop by
managers in an effective manner.:-
Technical skills- It includes finance, technological, mechanical, engineering finance, and
many more skills which helps in achieving their tasks effectively. Most important skill is
programming skills, which is required by managers to enhance their performance at the
workplace. In context of Starbucks, management team of the company need to train their staff
members and examine their performance on a regular basis. It will aid the company in increasing
the work quality as well as maintain growth rate at the competitive marketplace.
Operational skills- It refers to those skills which helps in taking decisions, handling
people, conflict management and so on. In the present context of Starbucks, major role of a HR
manager is to resolve conflicts and disputes arise within the organisation and provide positive
working environment to their employees. As a result, it will aid them in order to retain their
potential staff members for a long period of time (Mason, Cole and Goza, 2017).
Managerial skills- This type of skill contains all the management skills such as
organising, planning, staffing, communication, decision making, motivation and many more. In
context of Starbucks, managers of the company create a positive working culture so that
employees feel motivated. They provide monetary as well as non-monetary benefits to their staff
members in order to encourage them.
Current skills- It refers to the trending skills which should be adopted by each and every
employee, so that they will aid them in order to successfully run the business organisation. In the
present context of Starbucks, management team of the company should develop following skills
in an effective manner:
Decision making- In an organisation, it is the duty of a leader and manager to take
decisions. The leader has the power to take decisions in the organisation. In context of Starbucks,
managers of the company take decisions in such a manner so that they can utilise available
resources in an effective manner. With the help of this, they will be able to provide best quality
services and satisfy their requirements.
Problem solving- In any organisation, basic problem arise which affect the productivity
of the company is conflicts and disputes. It can be arise because of miscommunication between
the employees and staff members (Mathooko and Ogutu, 2015). In the present context of