Strategic Management Report: Starbucks Business Environment Analysis

This report provides a comprehensive strategic management analysis of Starbucks Corporation, examining its business environment through a PESTLE analysis. The report identifies and explains changes in the political, economic, social, technological, legal, and environmental factors affecting Starbucks' operations. The political environment is deemed stable, offering opportunities for global expansion, while economic growth and rising labor costs present both opportunities and threats. Social factors, such as increased coffee consumption and health consciousness, are analyzed for their impact. Technological advancements, like mobile applications, are highlighted as opportunities, alongside the threat of home-based coffee makers. Legal and environmental considerations, including product safety and CSR practices, are also discussed. The report concludes with recommendations for Starbucks, including event organization for societal discussions, promoting newly promoted cards, product innovation, differentiation, and the strategic utilization of its ethical brand image. The analysis provides insights into how Starbucks can maintain its competitive advantage and navigate the complexities of its business environment.

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Strategic Management
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Executive Summary
The report has helped in analysing the general environment of Starbucks Corporation which
is present in the United States economy. From the PESTLE analysis, it can be analysed that
the company is operating in the stable political economy and it helped the manager in
understanding the general and specific environmental factors which could have impacted the
business activities negatively or positively. The health consciousness among the customers
have increased largely due to which it will be creating high level of opportunities for them in
the competitive business environment.

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Table of Contents
Introduction................................................................................................................................3
Identification and Explanation of Changes in General Environment........................................3
Conclusion and Recommendations............................................................................................8
References................................................................................................................................10

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Introduction
The report throws light in analysing the importance for making the managers
understand external forces who are acting on them and the entire company. As commented by
Papke-Shields and Boyer-Wright (2017), the business environment is defined as the
collection of different internal as well as external factors which includes employees, needs
and expectations of customers, trends in the market, economic changes. These are the
different factors which will be affecting the function of organization and how the company
works in a direct or indirect manner. Moreover, as commented by (), the general environment
consists of the political, economic, social, technological, legal and environmental factors
which can be affecting the organization direct or indirect manner. On the other hand, as
opined by Nickols (2016), the specific kind of environment is unique to that the industry in
which the company is operating can directly affect the manner in which they try to conduct
the day to day activities. The main aim and objective of the assignment is to understand the
importance of understanding the specific and general environment objectives in case of an
organization.
Identification and Explanation of Changes in General Environment
In the respective assignment, the company that has been selected is Starbucks
Corporation which was founded in the year 1971 and it has now been grown in the
international brand. Moreover, in the current scenario, the company is still growing and
continue to lead the entire industry in the sustainable type of business along with innovation.
However, there are different kinds of factors or changes in the general environment in which
Starbucks has been operating their business which is described as follows:
Political Analysis- It is the first and foremost aspect wherein regional integration is
the current trend which should be known by the managers of the Starbucks Corporation as it
can be presented as the opportunity for Starbucks. It will be helping Starbucks in expanding
their business in the global manner (Johnsen 2018). In the United States market, the political
aspect is stable and the governmental institutions are helpful in improving the infrastructure
that will be the other opportunity which should be known by higher officials of the company
for accessing more markets or suppliers. However, on the other hand, the bureaucratic red
tape is persisting in most of the countries which can be considered as the threat for Starbucks
Corporation especially in the different developing countries. Due to the same, the company

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needs to follow the different rules as well as regulations in the different developing countries
from wherein Starbucks buy different raw materials.
Figure 1: Mobile Payment to Masses
(Source: Jafari and Eslami 2017)
From the respective graph, it can be seen that Starbucks is bringing the mobile
payment to the masses which will be helpful for improving the growth of the company. In
case of Starbucks, the managers of the company need to use the political stability as their tool
to improve their business operations and generate high rate of success and profitability in the
market appropriately.
Economic- The high level of economic growth of the different developing nations
along with decline in the rate of the unemployment are the two major opportunities which
need to be identified by the managers of the Starbucks Corporation for creating opportunities
for Starbucks and earn high level of revenues in a suitable manner (Dillaway, Lysack and
Luborsky 2017). On the other hand, before expanding their business in different developing
nations, the rise in the labour cost is required to be checked as it will be threatening the
performance of the company to a large extent. In such scenario, the company needs to look

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into the different rising operational costs as it will be helpful for them in improving their
effectiveness.
Figure 2: GDP per person in USA
(Source: Comino and Ferretti 2016)
Social- The social factors are the other criteria which should be analyzed by
Starbucks Corporation as it will be providing them high level of opportunities as well as
threats. Firstly, there is high rise in the coffee consumption culture among the different
individuals that will be beneficial for Starbucks in increasing their revenues successfully
(Braysher 2017). On the other hand, the company Starbucks can be capable of widening their
scope in the invention of the different healthy food products as there has been rise in the
health-conscious customers who will be the main target market of the company. The baby
boomer generation is retiring and it means that the spending by the different old customers
will be decreasing. In such scenario, Starbucks need to tap the Generation X and the
millennials as their customers as it will be assisting them in generating profitability and
improve their performance in comparison to the other competitors present in the market.

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Figure 3: Number of Stores of Starbucks Global
(Source: Bedford et al. 2016)
Technological- Starbucks has the high level of opportunity to improve the mobile
application and linked services for gaining high level of revenues through the mobile related
purchases. The company can be having the high level of opportunity in improving the
effectiveness of the supply chain management process which will be mainly based on the new
technologies. On the other hand, there is a major threat for the company Starbucks wherein
the first and foremost aspect is related to the availability of the home-based coffee makers
which are used by the company. In such scenario, there is availability of different substitutes
present in market of providing coffee to the customers (Ax et al. 2016).

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Figure 4: Innovation in Starbucks Corporation
(Source: Arcos, 2016)
Legal- There are different kinds of regulations related to the safety of the product is
the opportunity for Starbucks wherein the performance can be improved through satisfying
product safety regulations on the different ingredients from the genetically modified
organisms. In such regard, the Starbucks Corporation is performing well which will be
impacting performance of the company in a positive manner.
Environmental- Starbucks is highly effective in generating and implementing the
different CSR related practices which help them in improving their position in the market.
Starbucks have the high level of opportunity in enhancing performance in the respective areas
that will be capable of making their business efficient and generate revenues and profitability
in the respective regard (Arcos, 2016).
Figure 6: Sustainability Practices of Starbucks
(Source: Arcos, 2016)
From the analysis of the PESTEL Analysis of Starbucks, it has been highly effective
in showcasing the fact that Starbucks is operating in the stable political environment which
will be providing them with the opportunity in improving their position in the developing

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nations. However, on the contrary, the company required to address the different threats
especially the threat which is related to substitution as there has been increased availability of
the home use specialty coffee machines. Moreover, Starbucks cannot do much, however to
avoid the bureaucratic red tape aspects in the company which will be efficient in generating
high level of effectiveness in managing their performance.
Conclusion and Recommendations
It can be concluded that Starbucks is one of the largest companies which have been
helpful for them in generating profitability in the market in a successful manner. The
PESTLE analysis of the company Starbucks have been able to make it clear that the company
is operating in the stable economy, however, there are few issues related to the different
economic and legal issues which will be impacting their growth performance. Moreover,
there are few recommendations which can be provided to Starbucks that are defined as
follows:
Starbucks is operating in the stable environment which is politically sound and is
effective in managing growth of the company as a whole. In addition, Starbucks need to
conduct the different events which will be helpful in discussing the issues related to societal
factors which need proper addressing. It will be appropriate for the company in generating
high level of success and improve their position in the market (Wolf and Floyd 2017).
Additionally, Starbucks should be working towards the allowing of the newly promoted cards
related to Starbucks; it will be capable of bridging the gap between the customers along with
sustainable companies.
Moreover, the Starbucks need to remain competitive through the product innovation
and development as it will be capable of enhancing the business operations in an operative
manner. As Starbucks is performing quite well in the USA market, there can be use of
differentiation strategy for gaining the sustained competitive advantage. The Starbuck’s
experience can be achieved through the well-designed stores with the good ambience along
with trained staffs that will be capable of improving the growth and performance of the
company as a whole (Starbucks.com 2020).
Starbucks is the sole player in the entire competitive market wherein they can be
taking advantage of the same in a positive manner. The company can be implementing the
image of ethical brand through their CSR activities which will be making them in a positive

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manner and it will be implementing the effectiveness of the company as a whole. Therefore,
these are the different recommendations which can be implemented by Starbucks in
achieving competitive advantage over the others and it will be enhancing their performance
and level of performance at the company as a whole and they will be able to take over the
position against the other competitors.

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References
Arcos, R., 2016. Public relations strategic intelligence: Intelligence analysis, communication
and influence. Public relations review, 42(2), pp.264-270.
Ax, C., Bedford, D.S., Bednarek, P., Bruehl, R., Dossi, A., Dergard, J., Ditillo, A., Gosselin,
M., Greve, J., Hoozée, S. and Israelsen, P., 2017. The impact of participation in strategic
planning and action planning on management control effectiveness: An analysis of
independent and joint effects.
Bedford, D.S., Bednark, P., Dossi, A., Ditillo, A., Gosselin, M. and Madsen, D.Ø., 2016. The
impact of participation in strategic planning and action planning on management control
effectiveness: An analysis of independent and joint effects.
Braysher, M., 2017. Managing Australia's pest animals: a guide to strategic planning and
effective management. Csiro Publishing.
Comino, E. and Ferretti, V., 2016. Indicators-based spatial SWOT analysis: Supporting the
strategic planning and management of complex territorial systems. Ecological Indicators, 60,
pp.1104-1117.
Dillaway, H., Lysack, C. and Luborsky, M.R., 2017. Qualitative approaches to interpreting
and reporting data. Kielhofner's research in occupational therapy: Methods of inquiry for
enhancing practice, 228.
Jafari, M. and Eslami, M., 2017. Comparative Analysis of the Impact of the Four Elements of
Strategic Plan on Product and Market Development in Zinc Companies. Journal of Research
in Marketing, 7(3), pp.580-586.
Johnsen, Å., 2018. Impacts of strategic planning and management in municipal government:
An analysis of subjective survey and objective production and efficiency measures in
Norway. Public Management Review, 20(3), pp.397-420.
Nickols, F., 2016. Strategy, strategic management, strategic planning and strategic
thinking. Management Journal, 1(1), pp.4-7.
Papke-Shields, K.E. and Boyer-Wright, K.M., 2017. Strategic planning characteristics
applied to project management. International Journal of Project Management, 35(2), pp.169-
179.

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Starbucks.com 2020 Starbucks coffee company (online) Retrieved from
https://www.starbucks.com [Accessed on 4th February 2020]
Wolf, C. and Floyd, S.W., 2017. Strategic planning research: Toward a theory-driven
agenda. Journal of Management, 43(6), pp.1754-1788.