Comprehensive Business Report: Starbucks Performance and Outlook

This business report provides a comprehensive analysis of Starbucks, examining its performance and strategic position in the coffee industry. The report begins with an introduction to Starbucks, followed by an in-depth analysis using PESTLE, Porter's Five Forces, Industrial Life Cycle Model, and VRIO frameworks. The PESTLE analysis evaluates the political, economic, social, technological, legal, and environmental factors affecting Starbucks. Porter's Five Forces model assesses the competitive dynamics within the coffee cafe industry. The Industrial Life Cycle Model examines the different stages of the coffee cafe industry. VRIO analysis evaluates the company's internal resources and capabilities to determine its competitive advantages. The report also includes a stakeholders report, detailing internal and external stakeholders, with a focus on employees. The report concludes with recommendations for Starbucks' future strategies. This report is contributed by a student and is available on Desklib, a platform providing AI-based study tools.

Starbucks Business
Report

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................4
Explanation on PESLTE Analysis..........................................................................................4
Explanation on Porters Five Forces........................................................................................5
Industrial Life Cycle Model...................................................................................................6
Apply VRIO for the source of competitive advantage..........................................................7
Recommendation..................................................................................................................10
PART 2..........................................................................................................................................11
Stakeholders Report..............................................................................................................11
a) Internal and external Stakeholders of Starbucks..............................................................11
b) Employees priority stakeholders group............................................................................12
c) Internet and power of employees.....................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
In present scenario, Starbucks is one of the leading giant in the sector of delivering the
premium services of coffee to its customers. The company was started in the year 1971 where
three entrepreneur came together for the purpose of doing the business with innovative idea. The
founder of the organisation is Jerry Baldwin, Zev Siegle and Gordon Bowher. It is one of the
American company where its headquarter is located in 2401 Utah Avenue South, Seattle,
Washington, U.S. In present scenario company has been performing really well in the market
that even there are no company who can compete them in the sector of delivering the premium
coffee to customers. Still, company faces the competition from number of other coffee delivering
business organisation such as Caribou Coffee, McDonald's Dunkin Donuts and many more. This
are some of the organisation who are giving the competition to Starbucks because even they are
one of the those organisation who delivers the premium quality of coffee to their customers. The
reason for the premium quality of coffee is the process of bean procurement which is being used
by the organisation. The beans which Starbucks uses for the process of preparing the coffee is
from Cordillera mountain range which is located in Columbia (Woodard and et. al., 2013). The
logo of the company has been changed number of times since the 16th century where Norse
woodcut of a visibly topless mermaid. Where in the year 1992 to 2011 they uses the logo of
Nurse wood with her flowering hair afforded. In current scenario, the logo is all about omits the
nameplate from the logo.
The main policy on which Starbucks is following in the current scenario is that how they
can trained their employees so that they can perform better in the market position. It is needed to
be understood that company can perform better only in the situation where their employees will
be able to perform better within the market for the purpose of providing the effective services to
customers. Even they believes in the strategy of sustaining the employees and for that they
provide different benefits, rewards and bonus to meet their basic needs.
As report will be completely based on Starbucks where they conducts various and look at
the requirement of situation internal as well as external analysis has been discussed in the file
which will explain that how company is performing and how they can perform better in future
period of time for the purpose of accomplishing the goals of a company. Looking at the situation
result of internal and external analysis, recommendation will be provided and finally in the
ending segment, business reports will be prepared which will be based on the organisation.

PART 1
Explanation on PESLTE Analysis
PESTLE analysis can be explained as the process the process which will explain about all
of those external factors which can create positive as well as negative impact for the business. It
can easily help business organisation to determine that what are those factor which can create
issues for the business organisation. In current scenario, Coffee Cafe industry is growing day by
day which is simply allowing the organisation to performer better but to continue the stability it
is necessary for them to give a focus upon external factor for effective result. PESTLE analysis
has been discussed below in detail.
 Political Factor: This factor has the direct relations with the daily basis decision which
are being taken by the ruling government parties. It can simply change the whole working
structure of the organisation which can simply enhance the overall expenses. Talking
about the Coffee Cafe Industry, the political situation of UK is stable which is allowing
this sector industry to take long term decision which will directly help to generate more
revenue for the organisation.
 Economical Factor: Due to the effect of Brexit the economic condition were bad as
inflation rate increased, exchange rates were high which was not allowing the coffee
industry to perform better in the market. But, economic condition is improving which is
allowing the customers to spend higher amount of money on the product which they
want. It is one of the main reason that Coffee Cafe Industry can grow their market very
well in the area of UK (Woerner and Wixom, 2015).
 Social Factor: This factor has a link with the culture, believes and taste of the customers
which are connected with the organisation. Coffee Cafe Industry has the option to take
the help of customers about their preferences and according to that they can easily plan
their work to attract customers. But, if in any of the situation decisions are being taken
against the preferences of customers then industry might struggle in future period of time.
 Technological Factor: It is necessary for the business organisation to understand that
technologies can play the crucial role for the development of a organisation. By looking
at the situation it is necessary for the Coffee Cafe Industry that they must keep them
update by introducing new technologies in every short period of time. It will be one of

the way which will allow the business organisation to attract more number of customers
in future period of time.
 Legal Factors: This is one of the field which clearly indicates that company can only
perform better in the market in that particular situation where they are able to follow all
of the rules and regulations. Talking about the Coffee Cafe Industry, it is the factor which
increases the expenses of company as legal law for business sector has the lengthy
process. But, if in any of the situation company doesn't follow the legal laws and
regulations then legal actions are taken. Also, changes is laws and regulation changes the
whole working structure of the industry (Verbeke, 2013).
 Environmental Factor: The factor which has the direct relation with the climatic
condition, weather forecasting as well as use of natural resource. People are very health
conscious due to which is necessary for the coffee cafe industry that they must perform
their work where they will focus that quality of product doesn't decreases and even
environment should not be harmed. It will directly increase the working process of the
organisation.
Explanation on Porters Five Forces
Michael E. Porter is the one who basically introduced five forces that an industry and all
the companies deals with while operating business at national and international level. It was
found in the year of 1980 as well. In present context, this model is being utilised to analyse the
Coffee Café industry of United Kingdom, where Starbucks is performing at both international
and national marketplace.
Competition in the industry : Basically, the number of business organisations within
Coffee Café industry is continuously increasing and this could be considered as something that
may develop high risk for a company like Starbucks.
Bargaining power of buyers or customers : If it is talked about Coffee Café industry,
switching cost of different coffee products is specifically less. But, based on the analysis the
availability of substitutes in relation to the coffee products is particularly high. This is where, it
can easily be said that consumers bargaining power is pretty much high due to monopoly
situation (Slater and et. al., 2011).
Bargaining power of suppliers – Within the industry of Coffee Café industry of United
Kingdom, suppliers plays an effective role but their bargaining power is pretty much low in this

industry and the reason that came in front i.e. industry is holding high numbers of independent
suppliers that can effectively be replaced with others.
Threat of substitutes – Coffee products within Coffee Café industry are being sold by
many of the business organisations, where it can easily be said that threat of substitutes in
relation to the products offered by Starbucks is pretty much high.
Threat of new entrants – This is said to be one of the crucial force that majorly impacts
upon Coffee Café industry, but this force is holding a small or moderate threat only. Because,
entering into a competitive market need high potential and investments to compete with existing
famous brands like Starbucks, Costa Coffee and so on.
Industrial Life Cycle Model
Industrial Life Cycle Model can be explained as the process where different stages are
performed by the business organisation. It simply consists of five different stages and they are
Start-up, growth, shake out, maturity and decline. In context of Coffee Cafe Industry, it will be
important for the organisation to perform better and that can be only done in the situation where
proper planning is being done. The most important thing which is needed to understand that all
of this stages can last for the certain time period so that update is necessary over here.
 Start-up stage: It is the primary stage where major objective is just to settle the business
in the market. Talking about the coffee sector industry (Sia and et. al., 2016), it will be
important for them to understand that in primary stage they are required to sell the
qualitative products at a reasonable price. It can be one of the way which can adopted by
Coffee Cafe industry such as Starbucks, Costa Coffee and many more. Growth Stage: For the purpose of taking growth in the market, company is required to
understand that they must come-up with new plans and ideas where they must followed.
Here, Coffee industry will have the option to adopt various new products which will
allow the company to increase more customers. Starbucks will be able to generate more
revenue with the help of this respective process. Maturity stage- In any of the stages, company will be able to accomplish their only
whenever the demand of the product or service increases. In this particular stage coffee
cafe industry has the option to bring different flavour which can attract the customers.
The maturity stage of Starbucks is very effective which is the main reason that company
is able to earn the profit (Scholes, and et. al., 2014).

 Decline stage- There are number of stages where company like to do innovation and
changes which creates unnecessary problem for the business organisation. By looking at
this, it will be crucial for the Coffee Cafe Industry that they must try to find the maturity
stage to perform better in the market.
Apply VRIO for the source of competitive advantage.
It is necessary for any of the business organisation to take effective decision and that can
be easily done by analysing the internal capabilities of the company. Internal capabilities are
crucial because it simply guides that how organisation is required to work and which area they
must target the first. Because if company will be able to work according to their strength the
chances of attaining the goals will be high. VRIO is one of the suitable model which can simply
help the company to find about their resources so that decision making process can become
easier and faster (Spender, 2014). VRIO stands for Value, Rareness, Imitability, Organization. In
context of Starbucks, management is required to determine about their resources so that they can
take effective result through which chances of obtaining the goals can increase in future period
of time. Below, VRIO has been explained in detail on Starbucks.
Value: Whenever any of the VRIO analysis is being done, the first question which arises
is that whether resources add on the value to organisation or not and if not then it will not be easy
for the company to perform better in any of the situation. In case of Starbucks, they simply add
on the value to resources as they have a great market presence which allow their customers to be
connected with the organisation. As companies resources add the value to company they are able
to generate more and more revenue from existing and current employees.
Rareness: It is necessary for any of the organisation to understand that how rare their
products are in the market so that effective results can be obtained. Talking about the Starbucks,
it is necessary to understand that they have a huge global presence which is very rare in other
business organisation. It is one of the reason that company is able to connect the premium
customers to take additional advantage from the market (Johnson, 2016).
Imitability: It is simply explained that how difficult it is for other business organisation
to copy the products of the company or available resource. By keeping in this mind, Starbucks is
one of those rare company where chances of Imitability is very low because they uses latest
technologies and they are confidential as well as expensive too. It is one of the reason that other

similar form of organisation are unable to copy the products of Starbucks and in against
company is able to give tough competition to rivalry firms.
Organisation: In simple words, it is being check by the organisation that how well
company is organisation all of those resources in order to accomplish their goals and target. In
case of Starbucks, looking at the current situation they are able to utilise each and every available
resource in a systematic manner due to which they are able to give tough competition in the
market.
It is one of the reason that company is able to take competitive advantage in the market.
Simply, the rivalry firm are unable to use all of those plans and strategies in the market just
because of its nature as the process which company uses is quite expenses which allows them to
perform better in any of the situation (Ghezzi, 2013).
VALUE CHAIN ANALYSIS
This type of framework basically aid in identifying the benefits and potential areas that
would help a company in operating and creating high values as well in regards to attaining the
competitive edge and this is presented underneath:
Primary Activities
Inbound logistics- If it is talked about Starbucks, then the business company is focusing
over number of opportunities where, it has sourced different products, and it would help firm to
enhance uniqueness of the whole new good that would help Starbucks in maintaining it's
presence at workplace.
Operations: Approximately, 75 are the nations in which Starbucks is performing it's
operations licensed stores. Through this, they observe preferences as well as taste for collecting
information related with tendencies in the market (Boies, Lvina and Martens, 2011).
Outbound logistics: Consumers at international looks forward to purchase goods from
online channels for determined items like tea, bundled espresso and drink-related types of gear.
If it is talked about Starbucks, it is offering customers with 3-in-1 espressos among different
companies like Tesco and so on.
Marketing & sales: Specifically, Starbucks has effectively considered both the elements
and these are social media along with the technology that has helped firm in enhancing the sales
processes through providing actual value to customers.

Services: Starbucks mainly do not rush and mainly looks forward to expand their
business through offering customers with right quality coffee products and services.
Support Activities
Infrastructure: Basically, a pleasant design of the infrastructure has been given by
Starbucks to it's customers and this has helped company in meeting the requirements of
customers.
Human resource management: Starbucks in present time holding a good image in all over
the world because of it's HR department where management mainly offers it's employees with
effective training programmes.
Technology development: In present time, Starbucks is mainly offering it's customers
with free Wi-Fi related services, as value added services. This has helped Starbucks in gaining
loyalty and considering the application, organisation has given company the benefits of meeting
different requirements of customers through taking online feedbacks from them.
Procurement: Starbucks have detailed arrangements along with the policies or rules
concerning choice of their item just as providers quality (Blackburn, Hart and Wainwright,
2013). This has given competitive advancement to Starbucks and has helped company to meet
different goals and objectives.
RESOURCES
In this context, if it is talked about Starbucks then this is said to be one of the crucial
business company that focuses on both intangible and physical resources that specifically aid
them in maintaining their positive presence at international market.
CAPABILITIES
Talking about the capabilities of the company it can be said that Starbucks is famous for
their premium services which various products and services are available. As company is
performing in different part of the world they are able to earn higher profit from the market. The
major focus of the company is to provide the services as per the needs and requirement of
customs which makes them totally different from the rivalries firm. The most important thing is
that company offers higher level of coffee beans which are not being delivered by the other
organisation.
COMPETENCY FRAMEWORK

It can be explained as the framework which simply tells that how any of the work is
needed to done. It is necessary for the organisation that their employees must be able to perform
their work with their available skills and capabilities. In Starbucks, competency framework will
guide them that how they can perform differently so that their goals can be accomplished. Here
different levels are available which is explained below:
Leadership development: It is the activity which is being conducted in the Starbucks for
the purpose of improving the level of skills and ability of leaders so that they can work for the
purpose of accomplishing the goals of an organisation (Bharadwaj and et. al., 2013).
High potential talent: Company like Starbucks try to find the ways through which they
can determine that who are those employees who is full of capabilities and talent so that goals
can be accomplished. It will help the company to find the employee's who can contribute in the
process of accomplishing the goals of an organisation.
Recruitment and selection: HR of Starbucks is required to conduct the recruitment
process which will simply allow the organisation to recruit the candidate that contribute in
accomplish the target.
Performance management: Benchmark are established by the Starbucks for their
employees which helps them to perform as per their requirements and expectations. Also this
will help the employees of Starbucks to contribute to the goals of the organisation and even to
improve their own capabilities by enhancing their skills and performance.
Succession planning: With the help of this the management of Starbucks can determine
the gap between the individuals and the teams so that effective strategies can be formulated so
that gap can be reduced. It can be done by way of various trainings and sessions and in addition
to this they focus upon the replacing the leaders who fit better to the situation (Schrader,
Freimann and Seuring, 2012).
Rewards and recognition: To motivate the employees this is effectively be used by the
management of the Starbucks which will enhance their morale for delivering the effective
services. It will contribute in making a comfortable environment for the employees of Starbucks.
Recommendation
In present scenario, Starbucks is performing well in the market but it is necessary for
them to find the ways that how they can enter into the new market where they are still not

delivering the services. They are famous for their taste and by looking at the situation it will
crucial for them to add on different flavours which can be according to area wise. As they are
looking for only premium class of services but to attract more customers they can start the mini
cafe shops at different place where cost is changed at a minimum price which will help to earn
more profit. Even company has the option to develop themselves in the market of different
organic juice and tea which are preferred by most of the age group and juice by specially those
age group who is health conscious (Schrader, Freimann and Seuring, 2012). They are also
needed to focus on bringing new coffee beans which can add the flavour to the company. This
can be the way which can allow the organisation to perform better.
It can be simply recommanded to the management of Starbucks that they can give focus
on the marketing strategy of Ansoff Matrix which allows company to do something different for
the purpose of taking lead in the market. Looking at the plans and policies of a company, it will
be important for the organisation to take the help of SMART objective which will allow them to
accomplish their targets on the specific time period. Additional, increased methods must be used
which is explained below.
 To increase the growth in market by 20% with 2 years using marketing channels and
spending more in improving quality (Khalili Shavarini, and et. al., 2013).
 By the process of increasing the sale of organisation by 20% in the 6 months with the
help of cost effective and better quality of product with the help of several marketing
channels.
In short, SMART objective give the idea that how company is required to work through
which market share can be increased for the purpose of accomplishing the goals.
PART 2
Stakeholders Report
a) Internal and external Stakeholders of Starbucks
Stakeholder Group Internal or External Reasons for considering
them
Customers External With the help of this they can
increase their revenue.
Employees Internal They are one of the most

important resource of the
Starbucks.
Shareholders Internal With the help of this they can
procure funds.
Government External This signifies the the
regulatory bodies which
affect the operation with the
of various policies.
Suppliers External They make the raw material
available with which they
carry out their operations.
b) Employees priority stakeholders group
The employees are the important stakeholders for the Starbucks as with the help of thi9s
they improves their productivity. On the basis of this case study it is analysed that the employees
are motivated with the help of various rewards and recognition but they are based on the
performances of the employees. In addition to this they provides various other perks such as
paid holidays, medical services, stock option plan etc. which is best in the industry. With the help
of various training programs they make their employees retained with them which make them
competitive as their skills are improved by way of such training (Khalili Shavarini, and et. al.,
2013).
The number of employees in Starbucks are around 191000 which offered various services
to the customers and various related services such as rendering support facilities, warehousing
etc. They have both males and females as their employees which reflects that they do not
discriminate among employees on any grounds.