BIZ202 Module 2: Starbucks Micro Environment Analysis Report

This report provides a comprehensive analysis of Starbucks' micro-environment, focusing on the impact of consumers, rivals, and new firms on the company's performance. It examines the challenges posed by intense competition from companies like Costa Coffee and McDonald’s McCafe, as well as the threat of new entrants in the coffee shop industry. The report delves into the factors influencing Starbucks' revenue and the pressures of adopting innovative strategies. Furthermore, it suggests ways to resolve the issues, such as reinforcing brand awareness, maintaining coffee quality, and developing products for a wider consumer base. The conclusion highlights the importance of addressing internal and external forces to achieve success in the market.

Running Head: BUSINESS ENVIRONMENT 0
Business Environment
(Student Name)

BUSINESS ENVIRONMENT 1
Table of Contents
1.0. Introduction...........................................................................................................................2
2.0. Analysis of Micro Environment Factors...............................................................................2
3.0. Micro Environment Impact...................................................................................................3
4.0. Way to Resolve the Issue......................................................................................................4
5.0. Conclusion............................................................................................................................5
6.0. References.............................................................................................................................6

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1.0. Introduction
Starbucks is the international coffee shop that has achieved great success in the market. It
has huge level of coffee house chain which spread all over the world. The company has its main
chain in Seattle, Washington. It is one of the leading companies that are considered as the
prevalent coffee shop in the global market. It has prolonged its business in the form of
approximately, 21000 stores which is set up in more than 60 countries. Starbuck is considered as
one of the leading companies, its innovative marketing strategies made them successful and
competitive in the global market efficiently and effectively company (Dorn, Messner & Wänke,
2016).
In the further portion of the report, there will be comprehensive analysis of the marketing
strategist that is adopted by leading giant Starbucks and the impact of micro environment on the
complete recital of the company.
2.0. Analysis of Micro Environment Factors
Analysis of Consumers
Customers are the end user of the product. The companies make efforts to target the end
users therefore, it play an essential role in the success of the company in an effective manner.
Satisfying the need of the consumers is the main objective of the organization. Thus, the giant
company Starbucks is facing the challenge of surviving in the market due to high competition
that showcase that lots of the option are available for the consumers towards particular product.
In the recent scenario, the consumers are already well informed and also understand their
choices. The customers simply switch to other brand while any company or Starbucks is
planning to enhance its prices. In the recent, Starbucks is covering more than 200 consumers per
hour the company has total turnover of around $13.29 billion till the year 2012 (Winchester,
Arding & Nenycz-Thiel, 2015).
Analysis of Rivals
There are various companies that give tough competition to the leading company
Starbucks. The company has already gained its presence in the market. However, some of the

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other co[anise provide the similar product at low price that give huge competition to the
Starbucks to the certain extent. the major competitor are Costa Coffee, McDonald’s McCafe as
well as Dunkin Donuts. While analyzing the Costa Coffee, it has also cover second largest
position as the coffee house in the global market. It has covered more than 30 countries for its
business with over 3000 stores. Cost Coffee has earned more than £ 150 billion with the revenue
that exceeding £1.167 billion. Costa Coffee has set a slogan for advertising its café “A Coffee for
Every Mile” who’s main aim to target maximum number of consumers for coffee. It enhance
level of competition or Starbucks to the certain extent (Varzaly, 2015).
Entrants of New Firms
In the industry of coffee, the threat of new firms to enter in such market is high. In order
to refer to the industry of coffee shop, the market to penetrate is fairly easy that give an
opportunity to the new small firms to enter in such market more efficiently. Such industry
requires less investment which make possible for the new firms to enter in such market. There
are numerous cafes that entered in the Australian market which enhance huge competition level
to the Starbucks. However, the company already made strong existence in the marker that make
tough for the new rivals to attract new-fangled consumers (Adams, Gans, Hayes & Lampe,
2018).
3.0. Micro Environment Impact
 The overall revenue of Starbucks is greatly influenced by the negotiating power of the
customers to the certain extent. Therefore, it is essential for the Starbucks to control over
the prices of its product to win the heart of consumers. Such situation greatly affect over
the revenue of the firm.
 The general cost of the business greatly affected due to the pressure of innovative
strategies that need to be adopted by Starbucks. Therefore, it enhances the overall cost of
the product to the certain extent.
 To compete with the rival of Starbucks, the company is force to adopt effective
promotional strategies that increase the pressure level among the staff of the company to
perform well in the organization else they will get negative return (Pollifroni, Giacosa,
Cortese & Fiandrino, 2016).

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 The consumers of Starbucks getting attracted towards the new entrants companies due to
the reason it offer low price product to the consumers that affected overall growth of the
company to the certain extent.
 Starbucks has also introduced innovative lab to compete its competitors that create the
service of value added which mollify the need of customers in more effective way
(Vassallo et al., 2018)
4.0. Way to Resolve the Issue
 The company is required to reinforce and awareness program for brand in the global
market that will provide the competitive advantage and also make the easy for the
company to maintain unique identity in the market more efficiently.
 The company is required to fortify its promises to maintain steadiness in the quality of
the coffee that help in maintain the consistent atmosphere. It will also help in retaining
the employees and its reputation in the competitive market (Levenson & Fink, 2017)\
 While controlling over the overall cost, it can also enhance its range of revenue that can
help the company to provide its product at lower prices to its consumers in an efficient
manner
 In the recent, Starbucks is mostly focus on the market of adult for its product therefore; it
may also develop the products for kids as well with cautious surveillance of the elements
and decaffeinated drinks that will augment the series of customers for the corporation
(Madzharov, Ye, Morrin & Block, 2018).
5.0. Conclusion
It can be concluded from the above analysis that the company Starbucks is considered as
the leading giant however; the internal forces directly and indirectly affected the general
enactment of the business to the certain extent. The internal factors include new entrants,
consumers, as well as other competitors. While analyzing the recent scenario, Starbucks is facing
huge rivalry in the marketplace the majorly competitors are Costa Cafe and McDonald’s McCafe
that affected the general recital and revenue of the firm to the certain extent. Therefore, it is
required for the company to take certain steps to cope up from the challenges and can able to
attain great victory in the marketplace.

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6.0. References
Adams, B., Gans, J., Hayes, R., & Lampe, R. (2018). Does Organisational Form Drive
Competition? Evidence from Coffee Retailing. Economic Record, 94(305), 155-167.
Dorn, M., Messner, C., & Wänke, M. (2016). Partitioning the choice task makes Starbucks
coffee taste better. Journal of Marketing Behavior, 1(3-4), 363-384.
Levenson, A., & Fink, A. (2017). Untangling Engagement and High Performance. Employment
Relations Today, 44(3), 37-46.
Madzharov, A., Ye, N., Morrin, M., & Block, L. (2018). The impact of coffee-like scent on
expectations and performance. Journal of Environmental Psychology, 57, 83-86.
Pollifroni, M., Giacosa, E., Cortese, D., & Fiandrino, S. (2016). The Coffee Sector: how the
Supply Chain Management creates added value for micro-companies. Accounting and
Management of the Agribusiness Industry, 15(2), 151.
Varzaly, J. (2015). The enforcement of directors’ duties in Australia: an empirical
analysis. European Business Organization Law Review, 16(2), 281-319.
Vassallo, A. J., Kelly, B., Zhang, L., Wang, Z., Young, S., & Freeman, B. (2018). Junk food
marketing on Instagram: content analysis. JMIR public health and surveillance, 4(2), e54.
Winchester, M., Arding, R., & Nenycz-Thiel, M. (2015). An exploration of consumer attitudes
and purchasing patterns in fair trade coffee and tea. Journal of food products
marketing, 21(5), 552-567.