Business Report: Starbucks - Contemporary Developments Analysis

This report provides a comprehensive analysis of Starbucks, focusing on the company's contemporary developments in business and management. The executive summary highlights key challenges, including globalization, environmental concerns, competition, economic recessions, and legal compliance. The report delves into primary external influences like globalization, environmental factors, competition, economic recession, and legal aspects. It further examines demographic factors influencing Starbucks' policies and decision-making, such as sex, age, education, income, and lifestyle changes. The report critically evaluates the company's responses to these influences and suggests areas for improvement, including pricing strategies, local market alliances, and product diversification. Overall, the report offers insights into Starbucks' strategic operations, challenges, and potential for future growth in a dynamic business environment.

[Year]
Starbucks: Contemporary Developments in Business and Management
[Document subtitle]
Stephen Omoroghomwan

Running Head: Business Report
Contents
Executive summary.....................................................................................................................................3
Introduction.................................................................................................................................................5
Task 1..........................................................................................................................................................6
Primary external influences.....................................................................................................................6
Importance of External influences to the Organization..........................................................................10
Task 2: Demographic Factors....................................................................................................................12
Influence of Demographic factors on Policies and Decision-making within Starbucks.........................13
Critical evaluation of the effectiveness of the company’s response.......................................................15
Areas of improvement in the responses.................................................................................................17
Conclusion.................................................................................................................................................18
References.................................................................................................................................................19
Appendices................................................................................................................................................23
Appendix 1: Company Profile...............................................................................................................23
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Executive summary
(there should be a brief intro before going on to talk about the problems
and your findings and recommendations should not be bullet pointed
but rather in a full sentence)
Problems
The company is striving to become a global brand and for this it has tripled its revenues over the
past 5 years. To increase the pace of the growth the country has not only targeted all sorts of
markets in its homeland, but has also amended its taste to meet the needs of the customers
outside the US. Different nations have a different Environmental laws and policies to which a
foreign company adheres in order to deliver its services without any hindrance.
The company’s success highly depends upon the type of Coffee beans it is supplied with and if
an Environmental disaster hits a country in the coming future hen it may have a drastic impact on
the quality of the coffee beans being supplied to the outlets. The quality and production of
Coffee may also be hampered by the Global warming issues prevailing in the world.
Starbucks is currently leading the Coffee retail market by selling its products at the premium
prices to increase their profitability. But the emerging competition in the Coffee industry is
posing a great threat to the existence of the Starbucks in the current and potential markets. The
economic recessions in a country are also accompanied by the low-priced coffee offerings at the
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Running Head: Business Report
fast-food stores. In order to remain in the top position, Starbucks has to ensure that it does not
violate any laws and regulations of a country. This applies both for the home market as well as
the foreign markets.
Key findings
 The demographic factors present in the markets that influences the working of a company
includes sex, age, education, marital status, income level, religion, family size,
geographic region, etc.
 Coffee plays a pivotal part of everyday life in the US and other foreign countries.
According to a recent report, more than 60% of the US households use either whole or
ground coffee beans at home.
 The customers are the major asset for a business and their perceptions keep on changing
with time. The company needs to align its operations and strategies with these changing
behaviors.
 Starbuck is known to serve its customers with premium-priced coffee products which
could not be afforded by the people falling under medium to low-levels of income.
 The Lifestyle of people in European and Asian countries is changing with time. At
present these changes include long working hours in offices and homes. This change has
made coffee, the most desirable drink of such people.
 High caffeine content often increase pulse rates and may lead to myriads of heart-related
issues, hence it is recommended by doctors to patients with high blood pressure and heart
ailments to avoid caffeine in daily uses.
Recommendations
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 The company could respond to the income levels factor by introducing some low-priced
food products and beverages
 Starbucks could also work on its pricing strategy so that it could target all sorts of
customers in myriads of markets.
 Targeting different types of consumers with a single product will definitely give a great
experience to the company’s employees to evaluate
 The company could seek alliance with the local marketers and experts who already have
a great knowledge of their domestic markets.
Task1
Introduction
Management plays a pivotal role in every organisation as it clearly determines the short and the
long-term goals for the business along with the variety of strategies that could be employed to
achieve them in the given time frame. In the recent times, the researchers in this field are
constantly reporting the presence of a number of interlinked variables that interacts to highly
influence the ways in which a firm delivers its services.
The following report has been written undertaking the discussion over a leading American coffee
company and a coffee house chain, Starbucks. In the first part, the report will closely evaluate
the primary external factors that influence the working of the company. In the second segment,
the report will unveil the myriads of demographic factors that are constantly influencing the
working methodologies, Policies and Decision-making process of this leading giant. In this part
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the responses from the company towards these influences are also critically evaluated along with
the suggestion of areas of improvement.
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Running Head: Business Report
There are a number of factors that could not be voluntarily controlled by the company and at the
same time have the potential to highly influence the internal workings and strategic operations of
the firm. The executives of the firm are required to analyze these factors and evaluate the
strategies that could be readily incorporated to manage these factors in the best possible manner.
This is needed because the nature and impact of these factors are unpredictable and with time
these factors can either be beneficial or harmful. So, if evaluated in a proper way then the
company could use these factors for yielding lucrative results.
Primary external influences
The Primary external influences often remain similar for most of the industries in the market;
however, their level of influence may vary. The leading companies always keep a number of
contingency plans to tackle the ill influence of these factors, but the way in which these plans are
improvised creates a difference.
The crucially identified primary external factors for Starbucks are:
1. Globalization: At present, Starbucks has over 15,012 stores in around 44
countries across the world and this has allowed it to be a Globalization Icon. The company is
striving to become a global brand and for this it has tripled its revenues over the past 5 years.
To increase the pace of the growth the country has not only targeted all sorts of markets in its
homeland, but has also amended its taste to meet the needs of the customers outside the US.
Starbucks has tried to bring American- style coffee sales to international marketplaces
regardless of the volatile political and economic situations of different countries (Bears, 2008).
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The company has not only invested its resources in expanding its business internationally by
gaining customers from all over the world, but at the same time the company has also hired
highly experienced MBAs and Corporate Executives from different parts of the world to
deliver high quality services to its customers. Globalization has allowed the company to
understand different tastes of the people across the world and what all changes could the
company make in its operations to attract the consumers with different tastes (Hart, 2011).
2. Environmental Influences: Different nations have a different Environmental
laws and policies to which a foreign company adheres in order to deliver its services without
any hindrance. The Environmental laws of some of the Asian and European countries are quite
strict and hence any new foreign entrant needs to follow it in a proper manner (MNN Group,
2010).
The environmental policies allow a company to deliver its services in a sustainable manner and
avoid any sort of contribution in the pollution levels in the environment. This also helps in
maintaining a good and respectable position among the competitors and also builds a loyal
relationship with the sensitive target market segments of the society.
The company, at present, is indulging in a number of recycling and waste-treatment activities.
The company has launched the industry’s first hot beverage cup with 10% post-consumer
recycled fiber. The company also started an initiative of using ceramic cups and a good
discount to those customers who bought cups of their own. Apart from recycling, the company
is also concerned with the water use and has announced to reduce the water wastage by 25%
till the end of the year 2016(Corporation, 2016).
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Running Head: Business Report
The company’s success highly depends upon the type of Coffee beans it is supplied with and if
an Environmental disaster hits a country in the coming future hen it may have a drastic impact
on the quality of the coffee beans being supplied to the outlets. The quality and production of
Coffee may also be hampered by the Global warming issues prevailing in the world. The
increment in the earth’s temperature due to Global warming patterns may also change the
duration and occurrence of the Winter Season. As winter is the most desirable season for the
coffee lovers, hence this might lower the sales for the firm in this particular season(Patiyal,
2016).
3. Competition: Starbucks is currently leading the Coffee retail market by selling its
products at the premium prices to increase their profitability. But the emerging competition in
the Coffee industry is posing a great threat to the existence of the Starbucks in the current and
potential markets. The major competitors for the company are Dunkin’ Donuts, McDonald’s
and Caribou Coffee(Hawley, 2015).
In the year 2002, Dunkin’ Donuts entered in the business of espresso beverages. For a better
expansion of its business, the company entered into a partnership with Proctor and Gamble to
sell the Coffee in the Grocery stores. On the same line, McDonald’s began to offer premium
coffee at a cheaper price than Starbucks. As Starbucks also offers coffee beans and ground
coffee in retail and grocery stores around the world so there are other competitors too in the
markets including Maxwell House and Folgers. Both of these companies dominate the dry
coffee goods market and hence give a great competition to Starbucks(White, 2016).
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Running Head: Business Report
Competition helps a firm to perform better and deliver better services to its customers even
under great competitive pressure. In the competitive environment, a company utilizes all its
resources in a judicious manner to satisfy its customers in all possible manners.
4. Economic Recession: Starbucks is known to offer premium priced coffees to its
customers, but as the global economy turns sour, people have begun to lose appetite for these
premium-priced drinks. The economic recessions in a country are also accompanied by the low-
priced coffee offerings at the fast-food stores(Clark, 2009).
The company had aimed to open around 20,000 stores in the US and a further 20,000 overseas.
But, the economic turmoil has restricted its overall stores only up to 16,875. The unfavorable
economic conditions in a foreign land often compels accompany to incorporate more of its
resources to retain its customer base and profit rates(Jacob & Ulrich, 2012).
5. Legal: In order to remain in the top position, Starbucks has to ensure that it does
not violate any laws and regulations of a country. This applies both for the home market as well
as the foreign markets. The company serves its customers with the best taste of caffeine, so it
has to keep in mind the rules and regulations of a country specifically related to the production
and consumption of caffeine.
The health authorities of various countries are mostly concerned about what their people are
consuming and whether the foreign entrants are not breaching the laws and standards introduced
by them. Starbucks has faced similar type of legal issues in their home country and even in the
market overseas. These legal complications have compelled the company to maintain its quality
and serve its customers with the best taste of coffee(Murphy, 2012).
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Running Head: Business Report
Apart from the rules and regulations imposed by the health authorities, the company’s internal
operations are also influenced by the level of Customs and Trade regulations of a country. If a
country has strict trade regulations, then the foreign entrants often compromise with its product
quality to gain maximum profits from new markets. The company entering into foreign markets
also faces legal issues associated with licensing and often pays a huge amount to settle such
problems.
6. Technological factors: Starbucks has been always known for using most of the
innovative technological elements. For instance, to promote its products, Starbucks has been
using the social media platform like Facebook and Twitter. Moreover, to reach more and more
customers, the company has also launched its mobile app. The company has also been quite
innovative in making its products. For example, Starbucks has recently purchased the Coffee
Equipment Co. that has launched its single cup coffee maker known as the “Clover” which uses
the technological elements and calculated algorithm to brew coffee within one degree
Fahrenheit to produce an ideal flavor(Adkins, 2016).
External influences to the Organization
The above mentioned external factors have both a positive as well as a negative influence on the
company’s operations. These factors compel a firm to deliver the services in a more enhanced
manner than the competitors in the market. Starbucks has always concentrated on the taste of the
coffee it serves regardless of its premium prices and this strategy has allowed it to maintain its
top position in the coffee industry(Lee, 2011).
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Running Head: Business Report
The political and economic factors often allow a foreign firm to discharge its duties while
adhering to the standards and regulations framed by a company. While remaining under such
pressures, the foreign entrants do not compromise with the qualities of the products it is serving
and even tends to expand its customer base in remote and raw markets.
Globalization has allowed Starbucks to reach other potential segments of the markets for who
only spend their earnings on basic amenities of life. This factor has also allowed the company to
reach out for the coffee lovers in the unreachable countries of the world.
1)
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