Analysis of Starbucks Business Strategy: A Comprehensive Report

This report offers a comprehensive business strategy analysis of Starbucks, examining its operations through various frameworks. It begins with an introduction to business strategy and its importance, followed by an analysis of the macro-environment using the PESTLE framework, considering political, economic, socio-cultural, technological, ecological, and demographic factors influencing Starbucks. The internal environment is then evaluated using SWOT and VRIO analyses, identifying strengths, weaknesses, opportunities, threats, valuable, rare, inimitable, and organized capabilities. The report also applies Porter's Five Forces model to assess the competitive landscape, including the threat of new entrants, substitutes, and the bargaining power of buyers and suppliers, and competitive rivalry. Finally, the report applies strategic planning theories and concepts, offering insights into how Starbucks can maintain and improve its market position. The report provides a detailed overview of Starbucks' strategic approach to business.

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Impact and influence of the macro environment on an organisation....................................3
TASK 2............................................................................................................................................5
P2 Internal environment and capabilities of the given organisation...........................................5
TASK 3............................................................................................................................................7
P3 Evaluating and applying the outcome by analysing the Porter's Five Forces model.............7
TASK 4............................................................................................................................................8
P4 Applying the theories, concepts with models and interpret and devise strategy planning....8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy refers to understanding the course of action which includes the sets of
decision which helps the businessman to achieve their objective and goal. It is said to be a master
plan which helps the management of the company to secure the position in the market. Here,
Starbucks has taken as an organisation where the discussion is based upon the strategy which
includes the macro environment analysis, SWOT analysis, VRIO analysis, porter's five forces
through which you may be able to use this for getting the advantage in the marketplace for
getting higher productivity as well as higher profitability (Untari 2019) (Song 2017).
TASK 1
P1 Impact and influence of the macro environment on an organisation
No any company is alone in the business market where they can easily rule for the business.
There are many competitors which are having their business and are able to give them the
competition. There are six forces of macro environment which have the effect on the business.
These forces are PESTED which are Political, Economic, Socio-Culture, Technological,
Ecological and Demographic forces. These forces are discussed further on the company
Starbucks.
Political Forces
Each and every Business is affected or influenced by the political environment of that
country where the business is running. They involves the government agencies, laws and
pressure groups which they are used to restrict and influences the society or any individual.
Therefore, market decision is strongly affected by the change in political environment. In context
to the Starbucks, they are also affected by the political environment which are having their
business in that country. Due to having the international brand they have many branch in
different countries which they are most effected by the political environment in each country in
which they are having the business. Starbucks is most affected by this factor due to import of
their raw material form the different to the different countries (Zahra 2016) (Balasha 2019).
Economical Forces
This is the another factor which affect any business more. Due to having the high
economic growth and declining unemployment rate of the developing country created the
opportunity for the Starbucks to get more revenue from different market from all over the world.

The rising cost is a threat for the Starbucks for getting the high labour cost. The per capital
income of the country also effect the Starbucks business which are making their customer more
or less. So the economic factor have the biggest effect on the brand business (Jeger and et. al.,
2017).
Socio-Culture Forces
The Starbucks called themselves as the Starbucks Shared Planet which makes them to do
their best for the planet and people both for them. Starbucks is trying its best in context of
impacting the environment, reducing the climate change due to them, and also influencing other
to inspiring about this. There are growing middle class which can be the opportunity for the
Starbucks as their customer by reducing the price of their speciality coffee and aware their brand
to the rising middle class. This will help in increasing the revenues of the brand.
Technological Forces
This is one of the most important factor in present time where the whole world is
experiencing new and different technology in their daily lifestyle. Here, in context to the
Starbucks, they are using the market strategy by using the discount promotional coupons which
is given to the apple users which are the target customer for the Starbucks. The strategy of giving
the Wi-Fi facility they are able to attract their customer to spend more time by surfing the web
while sipping their coffee. They are also using the fuel-efficient equipment in sense of reducing
the gas emission. They are also delivering their product by using the online services as the
mobile app as the online coffee store (Taran and et. al., 2016).
Ecological Forces
Ecological and natural forces are important in the macro environment because they are
about the natural resources which are generally needed as the raw material for the business unit.
Here, in context to Starbucks they also need to use the natural resources and need to have it
without leaving the negative effect on the environment because in recent years, the
environmental concerns has grown strongly.
Demographic Forces
This one is related with the study of human population which includes the age, gender, density,
size, occupation and many more statistics. Due to continue increasing in population, the study of
people is important for the businesses. Here in context to the Starbucks they need to study there
target market which will be their future customer and the strategies accordingly. In this time the

youngster are high attracted towards the Starbucks which makes them proud for being their
customer. This type of high class feeling attracts more customer. Such type of strategy can be
developed more for attracting more and more customer for their business (Chumphong and et.
al., 2020).
TASK 2
P2 Internal environment and capabilities of the given organisation
SWOT Analysis
Strength
 Starbucks having the strong financial
performance.
 Occupied first choice in exclusive and
premium coffee and beverages retailers
in all over the world.
 Starbucks having the value more than
$4 Billion which is very high in
reference to their competitors.
 Customer serving ability is higher
which attracts their customer to avail
again their services (Schatten and et.
al., 2016).
Weaknesses
 Starbucks is totally dependent on its
main resource which is here the coffee
beans which can after the business
profitability and cost of production.
 High prices of their product which is
not affordable by the middle rising
class which affects the profitability of
the business.
 Starbucks need to diversify the range of
its product to compete with the their
competitors like McDonald's and
Burger king in the breakfast segment.
Opportunities
 Starbucks need to increase the range of
their row material supplier which can
give them the opportunity for having
the different choice for getting the raw
material.
 Starbucks need to diversify their
product range which can give the
competitive advantage in the food and
beverage retails (Song and et. al.,
Threats
 Starbucks is facing threat due to rising
the prices of coffee beans which can
effect the profitability of the company.
 Company needs to expand its business
in the emerging market because the
ongoing recession due to COVID effect
has made tough for many retailers.
 Starbucks is having the threat of
scarcity of their supplier which can be

2018). the biggest threat for the company.
VRIO Framework with the capabilities
Brand Quality
It is one of the most important and core strength for any brand in the market. It is the
biggest advantage to knowing and differentiating your business in the market like how better
your customer experience your brand in comparison to other brand. Starbucks have all the factor
right for build its brand value and the quality of their product which together creates the brand
quality. Starbucks is able to manage the all factors in right way so in resultant is in higher
demand and having the stronger customer loyalty. It does depends on the marketing strategy
rather than that it makes the quality product which create the brand value in front of their
customer (Ahmad and et. al., 2017).
Customer loyalty
Competition is growing continuously in the market and others are also focusing in the
quality product, marketing strategy and the customer service for the customer base. The brand is
highly focused in the high service quality to their customer which attracts the customer to being
loyal towards the Starbucks.
Premium product quality
It is the speciality of the Starbucks to provide their customer the premium quality product
which has brought a large range of product for offering in snacks and coffee. This premium
quality product has made the brand in high demand this is the one of the reason for their loyal
customer.
Customer service
Starbucks is highly focused on the customer service and due to this also called as the
customer centric brand. To maintain the high customer service the brand provides the training on
time to time of their staff to giving the high quality service which makes the brand reputation on
another level.
Supply chain
Bringing the best quality product for their customer is the speciality of the Starbucks.
They sources their cocoa from the best suppliers within the world. Famous Arabica coffee is

from the farms which are located at higher altitudes. They are having the limited number of
supplier which need to increase in future for getting advantage.
Global presence
Starbucks is giving its presence globally which is also an important strength which
creates the higher revenue and helping the company to get the higher customer base. It is having
about 24.058 stores all over the world which is high impressive. UK is one of the primary market
for Starbucks (Ahmad and et. al., 2017).
Capabilities Valuable Rare Inimitable Organised Outcomes
Brand quality Yes Yes Yes Yes Competitive
advantage
Customer
loyalty
Yes No No Yes Temporary
advantage
Premium
product
quality
Yes Yes Yes Yes Competitive
advantage
Customer
service
Yes Yes No Yes Temporary
advantage
Supply
chain
Yes Yes No Yes Temporary
advantage
Global
presence
Yes No No Yes Temporary
advantage
TASK 3
P3 Evaluating and applying the outcome by analysing the Porter's Five Forces model
Porter's Five Forces
Threat of new Entrants
Starbucks is having the moderate threat of new entrants. Starbucks is not a very high
barrier which others can not able to pass through it. New entrants are able to compete with this

brand at low cost or prices. Starbucks has achieved the high market share on the basis of
infrastructure, product quality and efficiency. Due ot lower switching cost rivals are able to
attract their customer for their business (Ojala 2016).
Threat of substitute
There are various number of substitute product in the market which range form the juices
to tea, with alcoholic to non-alcoholic products which are in large number in the market. Apart
form the excellent customer service and premium quality coffee they are also selling the
premium packaged coffee and coffee makers.
Bargaining power of Buyer
The bargaining power of Starbucks customer are very low. The purchase is small for an
individual and single buyers are not holding enough influence. Starbucks is known for its high
quality and the premium prices with the high customer services which enables the brand to
maintain the high range which leads to low to moderate in bargain power to the buyer.
Bargaining power of suppliers
The bargaining power of the supplier is about low to moderate. Due to having own
supplier diversity policy which they uses to select the suppliers. The brand is having the different
are from the supply is done so the brand is having some ethical property which is used to gain
the high control over the supply chain.
Competitive rivalry
Due to having the monopolistic competition and there are so many industry which are
fighting for the high market share which created the moderate to high rivalry in the industry. Due
to having the high market share of the Starbucks is the main factor for having the moderate
rivalry. Starbucks need to maintain its brand value which make their customer attract towards
them.
TASK 4
P4 Applying the theories, concepts with models and interpret and devise strategy planning
Porter's Generic Strategies
Cost Leadership Strategy
It is the strategy in which calls for having the low cost producer in the market with
maintaining the given quality level. Here the business need to sell their product on average

industry prices to earning higher than the competitors or they should sell their product below the
average for capturing the high market share. This creates the price war in the market where the
firms earn less profit but the competitors suffers loss. Here, in the context to Starbucks they are
having the speciality of having the best quality product in the market where this strategy plan is
not able to get success due to having the premier customer. For applying this strategy, they need
to decrease their product prices which is very high due to its brand image and the quality
product. When they decreases the product price which enables them to capture the high market
share but they will loose their premier customer because they like to go there for their quality
and having the high range which other are not able to afford. There is chances of decreasing their
prices very less so the premier customer have no any issue and the rising middle class can afford
it which enable the Starbucks to increase in capture the high market share for their business.
Differentiation Strategy
This strategy is being followed by the Starbucks which is making your product unique in
the market which the customer can able to identify that they are having a different and unique
product which is harder to find their substitute in the market which are selling Starbucks. This
strategy says that you need to make your better enough that non of your competitors can able to
match your quality and which can give your the competitive advantage. Starbucks needs to have
the scientific research in the new product which have the taste which can attracts the customer
towards them. In this strategy customer are not price senstive which mean customer are having
the specific requirement form the company which in the Starbucks there is demand of high and
premier quality product with the high customer services (Izni and et. al., 2020).
Focus Strategy
It is the concept of marketing and business which was first introduced by Harvard
University business professor. Idea behind the focus strategy was to marketing selling and
developing the product in the small market or niche market where there are limited number of
customer. In context to the Starbucks they generally need to focus on the limited geographic area
where the company need to focus on some specific area which are able to afford their product.
Starbucks focuses on the narrow market segment which are said to be the higher class or said to
be high profile society who are able to pay for heir product in easy manner. In this, total focus on
the brand marketing not the product marketing.

CONCLUSION
From the above discussion, you are now able to answer the impact and influences of the
macro environment within an organisation, which also includes the external environment and
capabilities with using the appropriate frameworks where there are different analysis has been
done and there is also the Porter's five model is used for evaluating the competitive forces which
applying the range of theories, concept, models in strategic planning which is described with the
help of Porter's generic strategies.

REFERENCES
Books and Journals
Untari 2019. The development strategy of Betawi Eco-Culinary Tourism as a potential business
in DKI Jakarta, Indonesia. African Journal of Hospitality, Tourism and Leisure, 8, pp.1-
9.
Song 2017. Standardizing the Term" Strategy" in Retail and Business Curriculum. Journal of
Education and Practice, 8(2), pp.1-3.
Zahra 2016. Developing theory-grounded family business research: Some suggestions. Journal
of Family Business Strategy, 7(1), pp.3-7.
Balasha 2019. Drivers of adoption of integrated pest management among small-scale vegetable
farmers in Lubumbashi, DR Congo. American Journal of Rural Development, 7(2),
pp.53-59.
Jeger and et. al., 2017. Pest categorisation of Pseudocercospora pini‐densiflorae. EFSA Journal,
15(11).
Taran and et. al., 2016. Business model configurations: a five-V framework to map out potential
innovation routes. European Journal of Innovation Management.
Chumphong and et. al., 2020. The Resource-Based View, Dynamic Capabilities and SME
Performance for SMEs to Become Smart Enterprises. ABAC ODI Journal Vision.
Action. Outcome, 7(2), p.129.
Schatten and et. al., 2016. A roadmap for scalable agent organizations in the internet of
everything. Journal of Systems and Software, 115, pp.31-41.
Song and et. al., 2018. PREvaIL, an integrative approach for inferring catalytic residues using
sequence, structural, and network features in a machine-learning framework. Journal of
theoretical biology, 443, pp.125-137.
Ahmad and et. al., 2017. Evaluation of the external forces affecting the sustainability of oil and
gas supply chain using Best Worst Method. Journal of cleaner production, 153, pp.242-
252.
Ojala 2016. Adjusting software revenue and pricing strategies in the era of cloud computing.
Journal of Systems and Software, 122, pp.40-51.
Ahmad and et. al., 2017. Strategic Alignment between Competitive Strategy Dimensions and
Supply Chain Strategy Dimensions. FWU Journal of Social Sciences, 11(1).
Izni and et. al., 2020. Proposed Business Strategy for Small Medium Enterprises (SMEs)(Case
Study: Rimbang SMEs of Clothing Industry). European Journal of Business and
Management Research, 5(4).