Comprehensive Starbucks Business Report: Strategies and Analysis

This report provides a comprehensive analysis of Starbucks' business operations. It begins with an introduction to the company, followed by an in-depth examination of the external environment using PESTEL analysis, considering political, economic, social, technological, environmental, and legal factors impacting the coffee giant. The report then delves into an internal analysis of Starbucks, assessing its strengths and weaknesses. Based on these analyses, the report offers strategic recommendations for Starbucks to maintain and enhance its market position. Finally, a stakeholder report is included to provide a detailed overview of the various stakeholder groups and their interests. The report concludes with a list of references.

STARBUCKS BUSINESS
REPORT

Table of Contents
INTRODUCTION...........................................................................................................................3
EXTERNAL ENVIRONMENT ANALYSIS.................................................................................4
INTERNAL ANALYSIS OF THE STARBUCKS.........................................................................8
RECOMMENDATIONS...............................................................................................................12
STAKEHOLDERS REPORT........................................................................................................14
REFERENCES..............................................................................................................................17

INTRODUCTION
The Starbucks is a coffee company or we can say a coffee shop chain running in various
countries in the world. It is one of the most well known coffee shop which is considered to be the
best coffee maker organization in the world. The Starbucks is an American organization founded
on 31 march 1971 (Aliyah,and et.al., 2019). the headquarter of the organization is in the
Washington, U.S. The organization was founded by the three people and their names were
Gordon Bowler, Zev Siegel and Jerry Baldwin. The products offered by the Starbucks are the
sandwiches, baked goods, tea, smoothies and of course coffee beverages. The organization's
main aim is to become the best coffee seller in the world by providing the best quality food and
beverages to their customers. By year 2018, the organization expanded their business in around
30,000 across the world wide. In the early 1980's the demand for the plain coffee started
decreasing among the customers of the coffee shop but with this decrease the demand for the
speciality started increasing at a very high rate. With this increase in the demand of special
coffee, the Starbucks came with the innovative and new ideas which made the taste of their
coffee different from other compete ting organizations coffee. In this innovations they made
changes in the ingredients and the offerings such as cold coffee, cold coffee with ice creams and
whipped creams, cappuccino etc. which made a huge demand among the customers of the
Starbucks (Bacon and et.al., 2019). By these offerings and innovations the organization made an
comeback in the coffee market by innovative way.
The competition of the Starbucks in the market are the Costa Coffee, Cafe Coffee Day,
McDonald's, Barista Coffee and the Caribou Coffee. The marketing strategies and the product
offerings were different but the base of the organizations offering the coffee's are same. As
mentioned above in the early 1980's the demand for the coffee has been decreased in they world.
This made the Starbucks to stop their business for a while and come back with new innovative
ideas and technologies which will attract the customers towards the purchasing of coffee from
the Starbucks (Boone, 2017). In that time the market position of the Starbucks has been fallen
down and the organization was about to stop their business in the market. But with changing
market scenario the organization made some strategies which kept them alive in the market . To
remain stable in the market the Starbucks found a nice market where they were offering their
products and services which can meet the customer demand. According to a survey the
customers were getting dissatisfaction from the quality of they coffee so the Starbucks offered

the best quality coffee beans which were used to make the coffee. The Starbucks did many
researches among the customers which included their taste and preferences and their
expectations from the coffee shops (Deligöz and Ünal, S., 2017). After this survey the make a
solution in which they tried to gave that taste which the customer has expected from the
organization. The Starbucks used the roast beans for making the coffee and the pricing strategy
of the premium so that the products offered by them give a sense of royalty to their customers.
Starbucks is the leading firm that is serving to large consumers globally. Its main agenda is to
fulfil needs of consumers by offering them variety of coffee products.
EXTERNAL ENVIRONMENT ANALYSIS
The external environmental analysis includes the PESTEL analysis of the Starbucks.
 Political
The political factors which effected the business of the Starbucks were the government of the
UK and US made many rules and regulations on the import of the raw materials which were
needed in making the coffee in the market. In these rules and regulation the high taxes were
imposed in the import of the coffee beans from other countries. The coffee industry faced many
problems in paying the taxes because the organization was already facing a huge loss because of
the changing market situations and fall in demand of coffee among their customers. The business
es in industry was not even able to recover the cost of production in the business in the 1980' s so

paying high tax rates to the government was next to impossible for the organization under this
industry (González, 2015). There was a lot of political instability in the coffee market (Zhao,
2017). The reason behind this was the laws and regulation made on the employees working in
the coffee shops by the government of the UK. Government is providing support to coffee
business as future demand is high hence these companies are getting support from government
that encourage the Starbucks and raise its profitability as well. In this the rules and regulations
the employees have to be educated and must understand all the languages and even signs and
symbols by which they can easily communicate with their customers and make good sales in the
market (PESTLE Analysis of Starbucks, 2015). The laws and regulations also included the norms
and conditions which the employees have to follow in the industry. These laws and regulation
also made decrease in the income and salaries earned by them by working for the same working
hours and playing the same roles and tasks in the organization (Wahyuni, , 2019).
 Economic
The economic factor which we effected the business of the Starbucks was the global economic
recession which has been occurred in the year 1980 when the organization was already facing a
huge problems and issues in the market. In this recession time, the GDP of the UK and US got
disturbed which effected on the incomes and earnings of the people living in the UK and US.
The organization has faced many negative impacts because the products produced by the
organization were best in quality and having the premium rates which cannot be afforded by the
people (Hossain, and Islam, 2015). As the economy of the nation got disturbed the industry faced
many issues because the customers were moving towards cheap products which were having low
prices. They found the prices of the Starbucks very high and unaffordable at the time of
economic crises. As the industry was not making any kind of profit in the market, the cost of
operation and the salaries paid to the labours which were also known as labour cost were very
high, so they stopped their work so that they don't have to bear those costs. The local currency
exchange rate has been fallen which caused the downfall in the value of the currency of the UK
and US (Hossain and Islam, 2015). As the value of the currency falls, the customers do not
purchase the high priced products. The economic environment of the other countries where this
industry business was also facing problems because of the recession in the market. So earning
profit from those countries was also not possible (Kenny, 2017).

People of UK are consuming coffee as luxurious item hence sales is boosting. Increasing
demand of coffee items are rasing sales and boosting performance of Starbuck in the future.
 Social
The social factor which effected the business of the Starbucks were the prices of their products
and the income so the customers. At one stage the organization decided to scarify in the quality
of the products and services offered by them in the market so that they can increase their sales.
The low quality product will be sold at cheap prices or low prices, but this will be helpful in
increasing the sale of their products in the market. The organization also faced the issue while
using the low quality products because these products were not matching with the taste and
offerings given by the organization to their customers (Sari and Hunar, 2018). There were many
issues related to the manufacturing of the final good or product. As the cheap quality products
were not considered to be the best for the image of the organization the Starbucks finally
dropped this idea, and they remained constant on the production process and use of the best
quality raw materials for the production of their final products. The customers demanded for the
Green and Ethical Chick products from the organization. This was done to maintain the social
and environmental stability in the market (Hutt, 2016). These products were made from the
organic raw materials, and they were not causing any kind of health issues or diseases to the
customers. The major social factors which effected the industry were the preferences of the
consumes, changing family pattern in the countries like UK and US. There were many changes
made in then working patterns in the coffee business across the world. The value for the coffee
also changed as many people found tea to be cheaper in price and giving same satisfaction which
the coffee was giving to their customers across industry (Koapaha, and Tumiwa, 2016). Socio
cultural factor affect the business, people have choice form such kinds of luxurious coffee item
hence it is opportunity to firm and encourage sales.
 Technological
The technological factors which effected the business of the Starbucks was the use of mobile
apps which helped the customers to place the order of the coffee online. By the use of this app
the customers were getting many discount coupons and offerings on their next purchase from the
Starbucks. The use of credit cards and debit cards also played a major role in making profits for
the business (Kenny, 2017). There were many gift vouchers and reward points provided to the
customers at the time of doing payment by the cards. The Starbucks provided the WI-FI facility

in each outlet operated by them across different countries. The organization was also accepting
the mobile payments which helped the customers to do payment easily and directly by their
accounts. The organization under this were emerging the new innovative technologies and bio
technological developments which helped in making the business activities more easy and cost
efficient. The organization in these industry could made the contribution in the agriculture sector
of the country by providing them funds to use best technologies for the agriculture (Aliyah, and
et.al., 2019).
 Environmental
The environmental factor which effected the business of the Starbucks were not using the plastic
cups to the plastic glasses which will affect the environment negatively. The organization always
produced the Eco friendly products and those products which were not harming the environment
in any ways, so they maintained the environmental stability in the market (Koapaha and Tumiwa,
2016). The industry should follow all the environmental rules and regulation strictly while doing
the production of their products and services in the market. Even when the countries which
exports the coffee beans to Starbucks were facing the environmental disasters, the organization
maintained the quality of their products and services in the market (Kumar, 2016). The industry
took care of the global warmings and other global environmental issues. The industry must
follow the sustainable practices into the business so that they can have co9ntirbuite to the
country as well.
 Legal
The legal factors never effected the business of the Starbucks because the organization has never
made any kind of violations in the rules, regulations and policies implemented by the
government of the UK. The organization in these industry had always worked in the organized
manner and never broke any rules or policies of the government. As the health authorities of the
country has passed the rule sand regulations regarding the consumption of quality products, the
organization never failed in maintaining the best quality product for their customers (Bacon, and
et.al., 2019). The introduction of caffeine has made the organization in these industry more alert
and compete ting in the market. The other legal factors which effected the businesses in industry
were the introduction of trade regulations and the custom duties imposed by the government. The
licensing of regulations related to the industry has made the organization to take permission or

the legal license from the government before opening the outlets across the countries (Kumar,
2016).
Porter's five force Model
 Competitive Rivalry (Strong Force)
There was large number of competition in the market. The variety of firms was moderate and the
switching cost were very low. Costa coffee, Cafe coffee day are the major competitors of
starbucks
 Bargaining power of customers (Strong Force)
There were a large number of substitute of the products produced by the Starbucks, so the
customers were having a large option to choose the best product at reasonable rates.
 Bargaining Power of suppliers (Weak Force)
The bargaining power of the suppliers were very low because there were large number of
suppliers who were ready to supply the raw material at low cost. The size of individual supplier
was very low and the overall supply of raw materials of the Starbucks was very high (Lee, 2017).
 Threats of substitute products (Strong Force)
The availability of the substitute products were very high which were giving the same
satisfaction from their consumption.
Opportunities and Threats of External Analysis
 Opportunities
The opportunities of the external analysis was the that the organization was increasing the
employment rate in the country by providing various jobs in the Starbucks to the unemployed
people. The developing countries were making a great growth because of opening of Starbucks
outlets.
 Threats
The threats of the of the Starbucks was that there was a lot a competition with the big coffee
brands which were well established in the market from a long time (Mathers, Wang and Wang,
2017).
INTERNAL ANALYSIS OF THE STARBUCKS
The internal analysis of the Starbucks includes its SWOT analysis and Porter's 5 Force Model.

SWOT analysis of Starbucks
Strengths
The strengths of the organization were the strong brand image which attracted the
customers towards their products and services. The organization made this strong image by
giving the best quality products to their customers. Another strength of the organization was the
best supply chain system which was making the availability of all the products and services in
the various countries in which the business was operated. The supply chain of the organization
was so strong that they never made unavailability in the outlets of the Starbucks. The
organization was also having the moderate diversification because of the subsidiaries in the
market (Ponce, and Cordelier, 2015). By this they were providing the best roasted beans and
purest form of water in the production of the coffee. The Starbucks was having the loyalty of
their customers which made them strong and stable in the market (Peiritsch, 2019).
Weakness
The weakness of the organization were the high prices of the products of the
organization. The Starbucks was providing the quality products at very premium rate which were

not affordable by a common men in the world. These products were considered to be the
products consumed by the high profile people or high people who were having very high
incomes. The organization faced a heavy loss because of the high price criteria in the market.
The products offered by the organization were very limited, and they were not having any kind
of varieties of the products offered by them. The products of the Starbucks have never been
made by targeting the local population or the local market. This was their biggest weakness
which became the reason for the unprofitable market (Deligöz, and Ünal, 2017.).
Opportunity
The opportunities of the Starbucks in the markets was that they got a big chance to
expand their business in the developing markets of the world. It was found helpful in generating
the revenue from the expansion of business (Ponce and Cordelier, 2015). The developing
markets always needs the best quality products which also have a good image in the eyes of the
customers. Another opportunity was that there were many chances of diversifying the business in
the market. The organization was already operating in the UK and US successfully but they also
found a big scope in the diversifying their business in the countries like china, India, Europe,
Australia etc. (Yoffie, and Tahilyani, 2015). Another opportunity for the organization was to do
partnership with other coffee producer businesses so that the customers will get more aware
about the Starbucks and their coffee.
Threats
The biggest threats of the organization was the prim um prices of their products. The
other compete ting firms were providing these products at very affordable prices. This made an
increase in number of customer for those compete ting firms. The organization also faced the
issue of have limited products produced by them. The compete ting business were offering a
huge variety in the products of their organization (Peiritsch, 2019).
Porter's 5 Model Analysis in Starbucks

Competitive Rivalry or Competition (Strong Force)
In this the Starbucks had the low switching cost which had a strong force on the business.
The another was the moderate variety which had a moderate force on the business. There were
many large number of compete ting firm which also had very strong force on the business. In
this, the compete ting firms were offering the same products at very low prices as compared with
the Starbucks. The organization was facing a tough competition in the market and they were also
bearing the high cost of production within the organization (González, 2015).
Bargaining Power of Buyers or customers (Strong Force)
The bargaining power of the buyer and customers have made the customers shift towards
the low cost products produced by the competitors. The individual buyer were very small in size
and it has made the reduction in the number of customers for the organization. There were many
substitutes of the products available in the market by which they customers were receiving the
same amount of satisfaction at lowered prices. The customers were consuming the products of
the start bucks only they want to show royal status. The products of Starbucks are never
purchased in the big amount of quantity because of high rates, whereas the products of the other
compete ting organizations were purchased in a bulk by their customers (Ponce and Cordelier,
2015).
Bargaining Power of Suppliers (Weak Force)

The bargaining power of the suppliers was very less in the business of the Starbucks. The
major reason was that there were lot of suppliers who were ready to supply the raw materials and
other ingredients used in the making of coffee at the low prices. If any already existing supplier
was demanding for more money or the high amount of fees from the producer of the Starbucks
then the producers was having the chance to easily shift from that supplier to the other suppliers.
The high number of the suppliers have made the bargaining power very low in the supply chain
business of Starbucks.
Threats of Substitutes or substitutions (Strong Force)
The of the substitute products was the very high in the market. The organization faced a
lot of problems because of the high availability of the substitute products in the market. As the
Starbucks was producing the best product at the premium prices, the customers moved towards
those products which were not having the best quality but they were having very cheap prices as
compared with products of Starbucks. Mostly customers prefer those products which are low
priced and they do believe more in consuming the cheap quality products (Peiritsch, , 2019).
Threats of new entry or new entrants (Moderate Force)
The threats of new entry or the was moderate in the market. As the Starbucks was already
having many competitors in the market, the thereat of the new entry may not harm the business
of the Starbucks. The new entrant may have the moderate cost for operating their business in the
market. The raw material and cost of production in their business is almost same for all the
coffee producer organization. In the case if the new entrant also believes in proving the best
quality product to their customer (which the Starbucks was doing), the threats may have the
strong force. The cost of supply chain of the business was also moderate because the new entrant
of the business have many suppliers who are ready to supply the raw materials at lowest rate
possible. In this the new entrant may face biggest problem in making good brand image and
reputation in the market. To reach to the level of Starbucks the new entrant have to be very much
innovative and must have fast processing in the business. (Sari and Hunar, 2018)
RECOMMENDATIONS
 Specific
The organization should remain specific with the strategies and the unique selling propositions in
the products and services offered by them. The organization has the USP of selling the best
quality product without making any compromise in the prices fixed by them. The organization