Comprehensive Business Report: Starbucks' Analysis and Recommendations

This report presents a comprehensive business analysis of Starbucks, examining its position within the coffee industry. It begins with an introduction to the company, its history, and market value. The report then delves into an external environment analysis using PESTLE and Porter's Five Forces models, assessing political, economic, social, technological, legal, and environmental factors. The internal environment is analyzed, followed by recommendations for future strategic direction. Part 2 focuses on stakeholders, their interests, and power dynamics. The report highlights the company's strengths, such as premium coffee beans and brand recognition, while also acknowledging competitive pressures from companies like Costa Coffee and McDonald's. The analysis considers the industry lifecycle, from start-up to potential decline, and offers insights into Starbucks' strategic positioning and market challenges. The report is a valuable resource for understanding Starbucks' business operations and its approach to navigating the competitive landscape.

STARBUCKS BUSINESS
REPORT

TABLE OF CONTENTS
PART 1............................................................................................................................................3
Introduction............................................................................................................................3
External environment analysis...............................................................................................4
Internal environment analysis.................................................................................................7
Recommendations................................................................................................................11
PART 2..........................................................................................................................................12
A) Internal and external stakeholders...................................................................................12
B) One priority Starbucks stakeholders................................................................................12
C) Power and interest of the stakeholders groups................................................................13
REFERENCES..............................................................................................................................14
APPENDIX A................................................................................................................................16

PART 1
Introduction
Present report is based upon the case study of the Starbucks which carry the renowned
brand name in the field of the coffee chains. In the year 1971 Starbucks was founded by Gorden
Bowker, Jerry Baldwin and Zev Siegle. The company is having its main headquarter in US and
also located in around 30,000 places. They enjoy the trade mark rights in relation to undertaking
the logo and sign which attract the customer towards the business. Starbucks mainly deal in
coffee, tea, baked goods and sandwiches and through this perspective they are earning the
revenue of around the US$24.71 billion (Wang, Liu and Mingers, 2015). The total number of
employees working within Starbucks is around 2,91,000. The main reason of carrying the
famous brand image is the flavours in coffee which they use to serve to customer in their best
possible way. In the report of July, 2019 Starbucks is sharing the market value of around $110.2
billion which is increased by 41% (Starbucks marketing, 2019).
Due to having continuous success of the Starbucks coffee they had expanded the business
globally and in 2019 they opened their biggest store in Chicago which is located in Magnificent
Mile. The business is opened from 7 days a week and also such business is carrying by around
200 employees. In relation to enjoying the famous brand image in market, it also results in facing
huge competitors in business. The major competitors which is faced by Starbucks is relating to
Costa coffee, McDonald's, Cafe coffee day and Dunkin' Donuts. The main strategic planning
which is used by Starbucks is relating to setting the competitors pricing. As they set the pricing
due to maintain their stability in market and also beat competitors through managing at the top
position.
The main positive point which the Starbucks is carrying is relating to carrying the
premium coffee beans which is rarely available and also not similar to the Arabic coffee beans
which is used by other coffee shops. As the main differentiating in Starbucks products and other
coffee products is relating to the preparation and serving of the coffee (Eskerod and Jepsen,
2016). As most of the coffee shops are serving the coffee to customer in form of grinding the
coffee beans with adding milk on it. But Starbucks is serving the coffee in form of crunching the
coffee beans and than putting it in coffee. So that the fragrance of the premium coffee beans is
splintered in whole coffee and customer can feel attractive while smelling that fragrance. Thus,
through this manner they manage to build the large customer base towards the business.

The logo which is carried by the Starbucks is relating to the image of the Twin tailed
mermaid or siren. As he reason behind choosing this logo is that the siren are mainly shipwreck
in the coast of the islands in south Africa. As this is also known to be the Starbucks island. And
thus, from this perspective, the concept is undertaken regarding choosing this logo on the
company products.
External environment analysis
It is very important for organization to analyse the external environment because the
business exist in dynamic environment and for this it is very necessary for Starbucks to evaluate
the environment which is external in which it is operating. For this the company uses different
models and tools which are discussed in the following points-
PESTLE analysis- this is a tool which is very helpful for the business in analysing the changes
going on within the external environment and the impact of these changes on the business. Political factors- this is the most important factor impacting the business and its
operations. It includes all the changes taking place in the government and political
background of the country (Rastogi and Trivedi, 2016). This includes changes in the
political parties, changes in government policies, interference of the government and
many other related factors. For Starbucks currently, there is political stability which help
the company in doing business in good manner. For Instance the in all the countries the
working condition are good and because of globalization there are not much political
restriction and hence, Starbucks is able to manage operation in all countries. Economic factors- this includes changes taking place in the economic condition of the
country like changes in the foreign exchange rate, income of consumers, inflation,
deflation, interest rate changes and others. Currently, the income or the purchasing power
of the consumer is increasing which is an opportunity for Starbucks as now consumer
will more prefer the goods and services of top brand. For example if the consumer is
having good income then the people will spend that money in leisure activities like
having coffee at Starbucks and this will increase the sales of company. Social factors- this includes the changes in the values, attitude, behaviour, perceptions of
the people of the society and the consumers. In the present era the consumers are
changing their perception and the trend is increasing towards the coffee. Thus, the
consumers and people of society are developing interest in coffee and they are thinking

that it is a good way of spending quality and leisure time. Hence, this is an opportunity
for Starbucks and this will increase its sales and revenue. For instance, if the people are
enjoying having coffee in free time then they will have more time in Starbucks and this
will increase the revenue of the company. Technological factors- this refers to as the changes taking place in the technology sector.
It is very necessary for Starbucks to take this into consideration as if the company do not
consider the advancement in technology to simplify the work. thus, this will increase the
efficiency of the company and will higher the profits for the company. This is helpful and
rewarding because this use of technology will result in more effective products and this
will attract more of the consumers. Thus, this will result in the better marketing of
company. Legal factors- this includes the laws and rules and regulations which are applicable on
the business for effective and efficient working. Hence, it is necessary for Starbucks to
consider all the laws and rules and regulations applicable to ensure that the working of
the company is ethical and correct. The compliance with laws is crucial as the company
deals in beverages and food products so it is essential to provide quality food so that it
does not harm the health of the consumers. For instance, Starbucks is having different
laws in UK and might be possible that these laws are not applicable if it operates in
Australia. Hence, they have to keep a record of all the laws applicable I different
countries. Environmental factors- it is very necessary for Starbucks to take care of the environment
because it is of top most priority in this competitive world. It is majorly due to the fact
that company exist in the environment and takes raw material from the environment.
Thus, it is the duty of the company to take care of the environment. Also, consumers are
getting more concerned towards the protection and safeguarding of the environment and
for this company is also taking measures for improvement. For example, Starbucks is
trying to avoid use plastic cups and also is rewarding the consumers which protect the
environment.
Porter five force analysis- this is a model which is used by the company to analyse its position
within the market or the industry. The competition is very high and to ascertain the competitive
position within the market Porter five force analysis is used.

 Competitive rivalry Strong force: Starbucks is face strong force competition because in
this industry have hire level of competition. The large number of firm is an external
factors which intensifies competitive rivalry. The company have great and different sizes
of customers. Bargaining power of customers Strong force: Starbucks company have experience of
the strong force of bargaining power of customers. In the market place have ample
number of substitute products and services (Mathooko and Ogutu, 2015). Through that
customers have higher bargaining power because through that they are move from others. Bargaining power of Suppliers Weak force: This is very weak force for company. In the
external market company have moderate size of individual suppliers which imposes a
moderate force on company. However, the high variety of suppliers are the weaker force
of bargaining power. Threat from substitute products strong force: The company is experience the strong
force of threat from substitute products and services. In the market place have various
products and services or have higher switching cost which affect to customers and their
force. Through that are easily moved towards others (Starbucks Coffee Five Forces
Analysis, 2019). This creates the higher threat from substitute product for Starbucks
company. The major substitute of Starbucks coffee is tea, juices, soft drink and also
coffee of other brands. Threat of new entrants moderate force: Starbucks company is faces moderate force or
threat of new entry. This refers the new entrants in the market are affect to company and
its sales of products in negative manner. The moderate cost of doing businesses is
associated with the variability of the actual cost of establishing and maintaining
operation. Most of new entrants are come up with innovation and innovative thinking
which affect sales of company. But the Starbucks company have great and effective
market image then new entrants are not affect to growth of company.
Industry lifecycle model- this is a model which is used by the company in order to understand
the different stages in which the company can run within the industry. The different stages
through which Starbucks can move is discussed in the following points- Start-up- this is a stage where in the company starts or initiate its business. At this stage
the demand for the product of company is low as the consumers are not much familiar

with the products and services of the company (Nan and Li, 2017). Thus, they do not
trust the products of the company to a great extent. Growth- this is the stage wherein the company is at the direction of the growth. This is
majorly because of the reason that now the consumers get interactive with the goods and
services of Starbucks. Also, the company takes measures for promoting the goods and
services through various medium and also offer different discount to the consumers so
that they are attracted towards the products of company (Indris and Primiana, 2015). Shakeout stage- this is a stage of consolidation of industry wherein some of the business
eliminate form the industry due to lack of growth. At this stage the company is nit able to
earn much revenues, no cash flow or are acquired by the competitors. Maturity- this is a stage wherein the company has reached to the maximum of its
efficiency and is the leading company in the industry. At this stage the company is
earning maximum profits and is at its saturation point. Here the product of the company
become popular among the consumers and blindly he consumers like the product and
services of Starbucks.
 Decline- this is the last stage of the industry analysis model wherein the company is in
the position of closing or shut down. This is majorly because of the reason that the
competition is at its peak and may be possible that the company is not able to meet the
requirement of high competition. Also, there are high changes in the market and the
demand of the consumers. If the company is not able to meet the requirements then the
company is at position of decline.
Source: (Stages in industry life cycle, 2020)

Internal environment analysis
Swot Analysis
SWOT analysis is a strategic planning technique used to help a person or organization
identify strengths, weaknesses, opportunities, and threats related to business competition or
project planning
Strength: The biggest strength of the company is the brand value of the Starbucks in the
market. Starbucks is able to maintain the good name of the brand in the market. This helps the
company in attracting the eye of the customer toward the product of the company. As consumer
are loving the brand to consumer there product (Stoyanova and Angelova, 2018). Another
strength is the quality of the product which has been offered by the company in the market. The
company used to offer the premium quality of coffee in the market which used to increase the
cost of company but people are accepting the same. As most of the company in the market used
to offer the Arabic coffee in their shop. Starbucks used to innovate with the product on regular
basis to attract the eye of the customer.
Weakness: Weakness which is linked with the Starbucks is the price at which the product
of the company is offered in the market. As company used to offer the product with the premium
pricing strategy which sometime makes it difficult for the middle class family to have a product
of the company. Another weakness is the increasing cost of the company. As the cost of the
company has increased from 18.6 billion dollars in 2017 as comparison to 17.5 billion dollars.
This has eventually forced the company to cut down some of their operation. As a result it has
been find out that the company has to cut down the marketing activity in the organization.
Different opportunity and threat on the basis of external analysis
Opportunities: There are many opportunities which are in front of the Starbucks, one of
such is the expansion to the growing market Starbucks can expand their business to new and
developing market. Starbucks used to already operate in total of 75 countries. Starbucks is
looking to enter more Asian market. Another opportunity in front of the Starbucks is to use the
digital platform in their marketing. As explained in above section as well that Starbucks not used
to market the product that competitively. Digital platform can help them in same.
Threat: The biggest threat for the company is the amount of the competition which is
present in the market. As price of the company product is to high in the market, other company

used to be a big obstacles as they used to offer the product at low rate (Sholihah and et.al 2016).
Another big threat for Starbucks is the legal compliance, as company used to dealt in more than
one country in the world, organization has to change their policy as all the country used to have a
different rules and regulation. Another threat for the company is the amount of the competition
which is there in the industry. Organization is having good competitive position but at the same
time there is good amount of competition in the market. So organization has to make different
policy to overcome the same impact.
As organization is having good brand value in the market and at the same time also used
to offer different product at premium price in the organization which used to lower down the
number of the consumer of the organization. Organization can adopt different operational
management tool to reduce the cost of the company. So that they can sale product at low profit
margin. As organization is having good brand value it will eventually help company in getting
good customer for the same.
Value Chain Analysis
Value chain analysis is a strategy tool which is generality used by the organization to analyse the
internal firm activities of the organization. The purpose of this value chain analysis is to find out
which activity of the organization is valuable for the organization and which need to be
improved by the management.
Inbound Logistic: This element of value chain analysis refer to selecting the best quality
of the coffee beans by the supplier in the market. Company does not outsourced this operation.
Starbucks used to dealt in supply of coffee which used to timely deliver the product in the
market.
Operation: Starbucks used to operate in total of the 75 countries in the world. Starbucks
also uses the different procedure to develop the coffee in the organization. Starbucks used to
operate with the help of the 21000 stores internationally. The main aspect of conducting the
procedure and spreading the fragrance to the customer who are willing to buy the product.
Outbound logistic: Starbucks used to sell the product of the company with the help of
the own store in the market which are licensed and approved from the government of the nation
(Phadermrod, Crowder and Wills, 2019). Also Starbucks in the recent past has started to sell
their product with the help of the online website and apps also in the superstore.

Marketing and sales: Marketing and sales both are very important and effective aspects
of company which is help to update customers by getting knowledge about products and services
of company. In that Starbucks invest more effective and superiors quality of product and high
level of customers in their market place. That is very important for gaining more and effective
growth for company in effective manner. However, in that need to based on marketing activity
which carried out by company during the new products and services introducing process.
Services: The services are the most important and effective statement of company
because through that customers are highly attracted and make positive growth at market place.
Starbucks company is already provide best services to their customers because they have aim to
build customer loyalty through providing the best customers services (Starbucks as an Example
of the Value Chain Model, 2019). In the retail market and business services are most important
and effective part. The company is also provided their services by targeting customers place and
era.
VRIO
VRIO is the framework which is used as a strategical tool to help the organization
uncover and protect the resources capabilities that gives them the long term competitive
advantages in the organization.
Factors Value Rare Inimitable Organized
Brand image Starbucks is the
organization
which has drive
the coffee
industry by a
force. As
Starbucks has
changed how the
worlds used to
think about the
coffee with the
help of effective
Starbucks is also
able to maintain
the rarity with the
quality of the
coffee beans used
by the
organization to be
offered in the
market.
Starbucks product
are difficult to
imitate, but it may
happen in coming
future (Gürel and
Tat, 2017).
Brand image is
one of the
important and
prioritized thing
for the
organization. As
they used the
same in their
marketing and
promotion of the
product.

branding.
Supply chain Starbucks is able
to procure the
best available
coco from the
market and used
to offer the good
quality of coffee
in the market.
It is very difficult
for the other
competitor to
match with the
high investment
strategy and
investment of
Starbucks.
It is very difficult
to imitate the
supply chain of
Starbucks.
Starbucks used to
sourced the coffee
by looking at the
different ethical
consideration.
Product quality Starbucks used to
offer the good
quality of the
product in the
market also in
different variance
as well.
Starbucks used to
offer the variety
of the variance
product in the
market with the
help of their own
innovation.
It is not that easy
to imitate the
product and the
quality of product
of Starbucks. But
it can be possible
in coming future.
Unique and
quality beverages
of the company is
very popular and
has a very higher
demand in the
consumer.
Generally it is
because no
competitor used
to offer the same.
Recommendations.
Starbucks coffee company is provide the best and effective products and services to their
coffee lover customers. Starbucks sales best quality of products by performing well and good at
market place. The company is best and fast growing company which required to improve their
performance at market place. The company is required on setting and achieving SMART
objectives as it is helps to company for improve their company performance at market place.
This help to achieve goals and objective as well as attract more customers towards company in
order to increase their sales. For here is made simple process for company, and they need to have
a good practices in order to perform in next three years are as followings:

Specific:
At this stage and for making specific objective, company have to set their business goals
in proper manner which is understandable by each and every people and individuals who are
working in company. Company here is set specific objective through that employees are easily
understandable and make hard efforts for same to achieve. Like: Starbucks company have to set
timeline for completing work and deliver order on time to customers. As well as they should
increase investment on promotional activity to be increased within the period of 4 months. This
is best and specific objective which is follows by employees for achieve business goals.
Measurable:
The company have the biggest coffee chain and which is concerned as measurable. In
that company need to break their goals into smaller parts through that they are able to measure
their progress of work. For instance, Starbucks need to increase the market share by 20 % to
increase the aim of enhancing the sales by 50 %. On the other side, Starbucks need to give proper
training and development through that employee give hard efforts and best outputs which is
measurable. For instance, the cost of training must not increase over and above $400.
Attainable:
The company have to divided work in proper manner which is attained by each and every
people on the time of work. In that Starbucks needs to allocate proper work to employees as per
their field because of achieving proper results of work in an effective manner. With the help of
these employees are highly able to attain all those allocated work in proper manner by giving
hard contribution. For instance, the employees must increased by at least 200 by the end of 2020
and they must leave the organization because of any of the reason. On the other side, they should
post advertisement on social media for updating customers.
Relevant:
The activities are not been achieved only by using measurable and attainable objectives,
because in that relevancy of work is highly matters. In that Starbucks should increase
responsibilities of employees which are directly link with mission of business. Through that
employees are give hard efforts for complete their responsibilities and achieve mission or goals
of company in an effective manner. On the other side, company should evaluate performance of
employees on time to time which help to improve performance.
Time bound: