Starbucks Strategy Report: Business Environment and Stakeholders

This report provides a comprehensive analysis of Starbucks' business strategy, encompassing both internal and external environmental factors. Part 1 delves into the external environment using PESTEL analysis, Porter's Five Forces, and the industrial life cycle model to assess market opportunities and threats. The internal environment is examined through VRIO model and value chain analysis to identify strengths and weaknesses. Recommendations are provided based on these analyses. Part 2 presents a stakeholder report, evaluating Starbucks' relationships with its stakeholders. The report concludes by summarizing key findings and insights into Starbucks' strategic positioning and future prospects within the competitive coffee industry. The analysis aims to understand Starbucks' approach to achieving its organizational goals and objectives.

Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................4
External environment analysis.....................................................................................................4
Internal environment analysis......................................................................................................7
Recommendations......................................................................................................................10
PART 2..........................................................................................................................................11
Starbuck’s Stakeholder’s report.................................................................................................11
Conclusion.....................................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
The business strategy is defined as the integration of different strategies and plans for
achieving the organisational objectives and goals. There is need for companies to adopt the
effective strategy for their business so that it is possible for attaining goals in specified time
frame. The development of strategy is important as it is helpful for maximising the profits and
money earned by an organisation. It is done effectively by analysing market properly and
managing the functions of company. The following report is presented upon Starbucks and it is a
coffee organisation which provides coffee and other food items across the world. There are two
parts of this report. The part one includes internal and external analysis such as PESTEL
analysis, VRIO model, value chain analysis and Porter’s five forces model. There are
recommendations developed on the basis of above models. The part two includes Starbucks
report.
Starbucks is a coffee company which operates in different countries. This organisation operates
business in various countries since many years by providing quality products and services. This
company was started in the year 1971 and the headquarters of this company are located in
Washington, UK. It is essential to develop good brand image and reputation so that company can
sustain in market for long period. This company has revenue of approximately US$24.71 billion
in the year 2018. Starbucks is required to have effective marketing strategy for enhancing sales
and profits in market. Starbucks corporation is an American multinational chain of coffee houses
as well as Rose reserves. This company is the main representation of second wave of coffee
culture. T Starbucks is one of the largest coffee House across d world and the third wave coffee
makers have always targeted quality minded coffee drinkers which are are able to afford a good
amount of money for purchasing lighter roasts of coffee beans.
Starbucks is facing amplified competition from their competitors that is McDonald’s. In
2018, the firm have 291,000 employees and on the other hand McDonald’s have 210,000
employees which is less. The net profit margin of Starbucks is 14.57%, but of Dunkin Donuts it
is around 23.55% and McDonald’s this is 17.34. This clearly specifies that firm faced high
competition within the industry. This also denotes the reason for aggressive market strategies of
Starbucks is zeal to survive and sustain.

Starbucks uses automatic Espresso coffee nowadays. The main objective of Starbucks
used to provide high quality coffee across the world. Starbucks offer hot and cold drink, whole
bean coffee, instant coffee, espresso, cafeee latte, etc. Best companies in world to attract a lot of
customers towards its services and products. Starbucks has cleaned increase in price due to de
rising labour and non coffee commodity costs. The price hike in Starbucks is list and third of
their beverages and it targets different regions. This company is master of employing value based
pricing and maximizing sales and profits of company.
PART 1
External environment analysis
Companies conduct external analysis for that it is easy to analyse and evaluate opportunities
that company is having within market. It is very important for companies to analyse their
strength and weakness for making plans and strategies that will help in achieving organisational
goals. External analysis is conducted for enhancing the knowledge and performance of company
within marketplace. external environment analysis also provides support in development of
different growth strategies of Starbucks. External analysis of companies is important for the
marketers so that they can develop effective strategies and plans to overcome the hurdles that
will occur within marketplace. Different organisations have to analyse various models before
entering into market and enhancing market share. There are various models which are helpful in
analysing external environment for Starbucks. These are pestel analysis, photos five forces
model and industrial life cycle model.
Pestel analysis
Starbucks is a company which is operating in different countries of the world. Why doing
business, this analysis helpful for developing a clear knowledge about how to run successful
business in different countries. Pestle is framework that carry out analysis of fix factors and
evaluates how these factors creates an impacts the operations and other affairs of an organisation.
Elements of pestle analysis are described below – Political factors- this is associated with adopting of strict regulations and policies which
are given by government for operating any business. In context of Starbucks, they are

providing high quality products and drinks to customers. This company follows all the
regulations given by distinct government in various countries it is operating.
1. Opportunities: UK is politically stable and have split national as well as local
administrations which will aid Starbucks to deliver their services as per the
requirements of public.
2. Threats: Starbucks is facing issue due to quality of the coffee beans as well as the
price that is offered is high due to which firm have to sacrifice their profitability. Economic factors- these are known as elements which have negative impact on
Starbucks activities and business operations. At time of recession, Starbucks has problem
in operating in some countries as the price of raw material is high and error less number
of suppliers.
1. Opportunities: UK has large population which means that it will act as strong
profitable aspect for the Starbucks.
2. Threats: Starbucks is leader within the Coffee industry due to economic recession
there will be a pessimistic influence on their operations and firm might have to bear
higher taxation. The change within currency exchange rate will also have negative
influence. Social factors- the social factors includes providing of high quality coffee and other food.
The products offered by Starbucks are as per the requirements and demands of customers.
The café culture is followed around the world and people are more prone towards visiting
cafes other than which restaurants for casual meetings.
1. Opportunities: Due to the increase within awareness for health consciousness, people
opt for organic coffee. This will act as opportunity for Starbucks as they can provide
their customers with variety in 3 years.
2. Threats: Demands for organic coffee or healthy consumables are threats at present
time. Technological factors – Starbucks is having higher opportunities in terms of
technological factors as it has opportunity to use digital media techniques and tools for
increasing the number of customers. Starbucks is providing Wi-Fi facility so that it will
be easy for customers to utilise full benefit while enjoying in the Starbucks café.

1. Opportunities: Starbucks renders Wi-Fi facilities for their customers and are also
technology friendly. This creates an affirmative influence the consumers of
organisation.
2. Threats: This will be costly for Starbucks as it is not possible to have all the latest
technologies like robots serving their customers adequately. Legal factors - these are associated with the legal regulations and rules which have to be
followed by Starbucks while executing different operations and activities across the
world. It is important for Starbucks to follow all the legal regulations and rules so that
they do not have any problem while operating business in different countries.
1. Opportunities: In context of opportunity, legal factors will aid them to acknowledge
needs of their customers and employees in amplified manner.
2. Threats: Alternations within any kind of laws will be threat for the Starbucks as it
becomes difficult to have relevant knowledge related with all the legal concerns. Environmental factors - these are associated with environmental regulations and rules
which are given by government. Starbucks has to dispose all the plastic waste in proper
manner and avoid the use of plastic wherever possible. The plastic straws used in the
shops are disposed off properly.
1. Opportunities: Starbucks need to make sure that they have adequate options through
which they make use of easily decomposable resources.
2. Threats:Ineffective waste management will act as threat in case if this is not
maintained adequately.
Porter’s Five forces model
The Porter’s five forces model was given by Michael porter in the year 1980. This model
was developed for analysing the industry in which company is operating. In context of
Starbucks, operating in coffee industry and porter analysis of this industry is described
below- Competitive rivalry - the coffee industry has low competitive rivalry as there are less
number of organisations which are of ring good quality coffee within market. Starbucks
is one of the most popular coffee shop across the world. It provides good quality coffee
as well as food items and service provided by this coffee shop is well recognised across
the world. The Speciality Coffee Cafe industry possess higher competitive rivalry. This

is threat for the Starbucks as this industry will become more competitive in upcoming
years. Bargaining power of customers or buyers - Starbucks is operating in coffee industry and
the power of customer is high. While operating business in market, Starbucks is not able
to provide products and drink without considering the competitors. The customers of
coffee have lot of options in market and so it is important to provide the food items and
coffee at affordable prices. The substitutes that are available are high and switching cost
is less which brings in monopoly situations that aids them to have high bargaining power.
This also acts as enhanced threat for Starbucks and due to this reason they might need to
decrease their prices in upcoming years. Bargaining power of suppliers – the bargaining power of suppliers in context of
Starbucks is hello as there are numerous suppliers of raw materials required in this café.
Starbucks is not getting raw material from one supplier then it has a number of options
from which material can be bought. Bargaining power is low due to the reason that there
are large number of independent suppliers that can be substituted easily. This will act as
an opportunity for Starbucks as through this they can have supply chain management that
will lead to lower down this cost. Threat of substitutes - the coffee and other food items offered by Starbucks are available
at other reputed organisations and restaurants too. Thus, it is essential for Starbucks to
provide good quality coffee and food items so that other competitors can be overcome.
The industry that is Specialty Coffee Cafe have higher competitive rivalry as the firms
can be substituted. This factor is high Starbucks as they need to aggressively brand their
market for sustaining in up coming years.
 Threat of new entrants - this is defined as the factor according to which Starbucks will
be having threat from the new entrants within market. There are various companies
starting coffee e shops in today's era and it creates thread for this company to work within
market. This factor has moderate impact on the coffee industry as while entering within
the competitive market high skills as well as funds are needed due to this reason new
firms hardly enter within this market. This provides Starbucks with an opportunity to
innovate their products in upcoming 3 years.
Industrial Life cycle Model

Industrial life cycle model is defined as a process which have different stages associated
with the lifespan of business within market. The different stages involved in business are start
up, growth shakeout, maturity and decline. The coffee industry has to perform well for sustaining
in market for long period. Starbucks is an organisation which considers all the factors for
improving the performance and increasing market share of the company. These stages are
mentioned below – Startup stage- this is defined as an initial stage in which the business is started in market.
Starbucks provided coffee and other items at affordable prices to customer at initial level.
They are analysed names and commands of customers for the products and started
innovating their project for providing good quality products to customers and clients. Growth stage- this is defined as the level at which business starts to grow its market
share. This is the time when new ideas and strategies are implemented with them
company for enhancing the company. There is need of having proper plan and strategies
for growing business effectively in Starbucks. Maturity stage - this is defined as the stage in which organisation is able to analyse the
needs and demands of product offered by Starbucks. At this stage, Starbucks has the
opportunity for adding flavours to the drinks and coffee it is serving to customers. This is
helpful in attracting customers and enhancing the profits earned by the company.
 Decline stage - this is the last stage in which there is need for the organisation to
innovative products and services so that customers are not bored and they are able to
utilise the products and services offered by company in effective manner. In context of
Starbucks, there is need of innovating the drinks and food items offered for increasing the
market share of the company and enhancing growth in business.
Internal environment analysis
VRIO model
It is essential for different business organisations to take effective decisions which are
helpful for the company to enhance market share. While evaluating the market, it is easy to
assess various capabilities of organisation within market and this provides guidance in evaluating
the internal capabilities of an organisation. This also provides help in in knowing how a company
can attain organisational goals and objectives in specified time frame. when organisation is able

to analyse its strength in effective manner, it is easy to to analyse the factors helpful for
achieving the organisational goals. VRIO analysis as a common analysis used for understanding
the competitive advantage of a company within market. In context of Starbucks, the four
elements value, imitability, rare and organisation are described below –
Factors Valuable Rarity Inimitable Organized Competitive
Advantage
Upscale cosy
environment
✔ Realised
temporary
competitive
advantage
Special coffee ✔ ✔ Realised
competitive
parity
Strong global
presence
✔ ✔ ✔ Sustainable
competitive
advantage
Employees ✔ ✔ ✔ ✔ Competitive
Advantage
Valuable:
 Upscale cosy environment – The firm is present within upscale location in which
population has capability for spending on coffee. Stores of Starbucks renders upscale
cosy environment for their customers that enables them to enjoy and relax within the
restaurant premises. This competency of the firm is regarded as valuable as this enables
them to attain profit.
 Special coffee – This is crucial resource for Starbucks that is being rendered by them
that is liable for generating value for the organisation. Firm is known for their non-
substitutable taste for coffee that is produced by them and this enables them to attract
wide range of customers.

 Strong global presence – It is capability of the organisation that allow them within
serving people across the world in relevant manner.
 Employees – They denotes resources of the Starbucks who are given relevant training
through which revenue of firm can be enhanced and this leads to generate high value.
Rarity:
 Special coffee – Starbucks make use of relevant equipments and they possess trained
chefs that are rare to be identified due to this, the final coffee product which is being
provided by them is rare.
 Strong global presence – There exist few firms within the Specialty Coffee Cafe industry
and are spread globally that makes this as a rare resource.
 Employees – Within Starbucks, their employees are trained specially for producing
coffee, serves their guests and attends visitors within pleasing manner. To ensure this
aspect firm provides training to their employees from experts. This makes human
resources of the Starbucks rare as well as difficult to find.
Inimitable:
 Strong global presence – The firm renders their products within almost all the parts of the
world. For having a global presence firm has made years of effort by developing taste for
their offerings among consumers.
 Employees – They denotes resources of Starbucks which have been acquired by them
through enhanced recruitment as well as selection process. The employees of
organisation possess unique skills that cannot be imitated easily.
Organized:
 Employees – They denotes workforce or human resources present within the firm.
Employees within the Starbucks are liable for generation of resources that are rare and
they cannot be imitated. Traits possessed by employees of Starbucks aids them within
having competitive edge.
Porter’s value chain

Primay activity
Inbound logistics - these are the factors which include development of supply chain
management for the organisation. There are several senior executives and higher authorities
within Starbucks which help in procurement of coffee seeds. These are helpful in analysing the
unique product for the customers. It helps Starbucks to provide customer satisfaction by
providing quality product.
Operations - Starbucks is a reputed company which provides quality services and products to
approximately 80 countries across the world. There are two ways by which 10 companies
operating around the world which includes franchise and providing licence of operation. There
are some stories of this company which are self operated and their having skilful staff which
provide effective services to customers. This is helpful in grabbing information regarding
different culture and providing taste of coffee to different customers.
Outbound logistics - there are different organisations which are enhancing the market share by
providing products and services through online medium. It is important for Starbucks to provide
good quality drinks and food items to customers. The products of Starbucks provided to
customers through various supermarkets like Walmart, Tesco, ASDA.
Sales and marketing - there are different medium of channel which is used by Starbucks for
promoting the coffee and other products it is providing. Promotion is the best strategy that a
company can use for maximizing it’s sales and profits. It is important for Starbucks to promote
the products and services effectively so that it is easy to attract lot of customers. Starbucks
advertises its product by using social media. The best example is that Starbucks provides coffee
in plastic mugs and on staff rights name of customer. This is a unique style used by Starbucks for
promoting it's coffee.
Services – Starbucks provides effective services to customers and this is the the key factor in
success of the company. It is concluded that Starbucks is able to provide effective services to
customers by meeting their demands and needs and increasing customer trust and loyalty.
Supportive activities
Infrastructure - the design and ambience of Starbucks is very attractive. Customers like the the
unique infrastructure and ambience which is coffee shop offers. This coffee shop is successful in
attracting lot of customers and providing them good ambience and pleasant time for spending
their valuable amount and sitting in Starbucks café.

Human resource management - employees and staff working in Starbucks is responsible for
providing effective services to different customer and client. Leaders and managers of Starbucks
provide motivation to their staff for working well and attaining the the organisational targets in
specified time frame. The employees of Starbucks are provided both monetary and other
benefits. Employee satisfaction level of Starbucks is very high.
Technology development - Starbucks provides effective facilities to customers like Wi-Fi facility
which helps in providing customers a good experience while enjoying their coffee. This brand is
available in online platform which is used by customers to provide the feedback which is
valuable for Starbucks.
Procurement - Starbucks is a well reputed brand and there are several regulations and policies
which this company has developed for providing good quality services and products to
customers. It is important for Starbucks to maintain the standards and quality it is providing to
the customers.
Resources
Starbucks is using both intangible and tangible resources which are helpful for maintaining
competitive advantage within market. Tangible resources of the organisation includes machinery
and tools. On the other hand, intangible resources consist of employee skills, brand image,
customer satisfaction and employee relationship.
Capabilities
Biggest strength of Starbucks is brand equity. This company is operating across the world and it
is having major global presence. Supply chain of Starbucks is very strong and it is is beneficial
for this company to provide high quality products and services to customers.
Competency Framework
Competencies concept of skills, knowledge and attributes which are used by an employee
who is working within an organisation. this is defined as a framework which is helpful for
leaders and managers to analyse behaviour and attitude of each individual.
Leadership development – HR manager of Starbucks provides motivation to its employees and
staff by providing effective training and development sessions. The main motive of this is to
provide good services to customers.
Recruitment and selection - human resource manager of Starbucks is analysing the process of
recruitment in order to hire talented and skilled employees who can work effectively in café.