Starbucks Strategic Analysis: Applying Models for Market Positioning

This essay provides a detailed analysis of Starbucks Corporation's business strategy, examining key concepts such as uniqueness, profit competition, and strategic choice. It highlights the importance of strategy in planning, understanding organizational strengths and weaknesses, and environmental scanning. The essay differentiates between internal and external analysis, emphasizing the significance of consumer perspectives in evaluating strengths and weaknesses. It identifies and explains two strategic positioning models: PESTLE and Porter's Five Forces, evaluating their usefulness with pros and cons. Applying these tools to Starbucks, the analysis reveals challenges related to raw material acquisition, competition, and pricing strategies. The essay concludes by highlighting findings related to pricing strategies, political factors influencing raw material acquisition, and the need for Starbucks to adapt to changing consumer preferences and economic conditions.

Running head: UNDERSTANDING THE STRATEGY 1
Understanding the Strategy
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UNDERSTANDING THE STRATEGY 2
Understanding the strategy of a business organization
Part A
Introduction
The various business organizations create different services and products to offer the best
services to their consumers(Strategy, 2008). Strategies will enable a business organization to
stand out regardless of the changes experienced within the market environment. This piece will
be based on chosen business organization, and for this case, I will be analyzing the Starbuck
corporation. This is an American organization established in the year 1971 within Settle for
marketing and a retailer of coffee around the globe(Babbie, 2010).
Strategy
1. Being unique and not the best
Business strategy is all about being unique and not the best in the market. Trying to
Compete to be the best in the business is one of major misconceptions within the market.
Many business organization leaders have taken the business in the world of the sports. In
a single market, you can find various organizations trying to beat the average each with a
different strategy. Therefore, the worst thing one can find in this particular strategy is
individuals copying each other(Soetanto & Jack, 2016).
2. Competing for the profits
This second kind of strategy is based on the company that can produce the largest share
in the market or developing fast than the other(Wiser, 2013). Its all about making more
money than the other. Such things do not occur independently but through the
organization’s management. However, growing is not a business strategy but the

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consequence. Although, that does not prevent the business owners from using the word
growth. Growth can be used when referring to some of the key areas to exploit and
maximize the profit(Zahay & Griffin, 2010).
3. Choice.
This is one of the simplest word that can be used in defining the strategy. Every business
organization needs to make a choice of who they are going to serve and how they are
going to serve that particular person(Hwang, 2014). The choice is all about the business
organization connecting with the external world, the demand and the supplying side. The
choice demands a business owner or a company to target certain portion of the
individuals. Thus, the innovation of strategy is the criteria of making a choice(Gravetter
& Forzano, 2010).
The importance of strategy
There are different perspectives which be used in explaining the importance of the Strategies in
the business.
1. The fist perspective is the planning. Tracking the how the business is progressing is an
essential part for any business organization. The only thing remaining is the link this
planning has for the future of the business(Vorhies, Morgan, & Autry, 2009). The current
state of the business at the present year and where it should be in the following year or
years are all good intentions for the organization. Lacking a clear picture of where the
business might be in the future it will look less proactive(Wit & Meyer, 2010).
2. The second perspective is the weaknesses and the strengths of an organization. No one
know the business better than the owner(Zott & Amit, 2008). It’s the business
management that can only determine the competitive advantages and disadvantages of an

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organization. Thus, strategy establishes a high level of knowledge and offers the
company with information that will make it more successful(Schaltegger & Wagner,
2011).
3. Thirdly, the scanning of the environment. A number of business leaders do not take their
time to understand the external surrounding of their organizations that could have
negative or positive influence on their performances(Prahalad & Hart, 2010). The big
question is how are they able to conduct their analysis? This brings a conclusion that they
must comprehend with the changes before they occur. Hence strategy enable the
management to be prepared of possible shifts within the market that offer some
opportunities to take the right measures before the events happens(Reeves, Love, &
Tillmanns, 2012).
Explain the difference between internal and external analysis
The weakness and the strength of business can be monitored by the organization and self-
evaluation.The internal analysis of a business focus on the internal aspects that provide the
organization with specific disadvantages and advantages in order to meet its target in the market
environment(Bouranta, Chitiris, & Paravantis, 2009). Internal analysis therefore, provides an
organization focus on the clients because the analysis can only make sense if it assists the
company in meeting the need of their consumers. The main issues analyzed are the weaknesses
and the strengths examined from the perspectives of the consumers since the clients can perceive
the strengths and weaknesses which company cannot see(Kratzer, Meissner, & Roud, 2017).
According to (Schot & Geels, 2008) all business organization should tier all their strengths and
weaknesses to consumer’s needs. The areas which the company should focuses on while
evaluating itself internally are; resources which are constituted by the sales, quality of the

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products, profitability, employment ability and the product’s portfolio. Secondly the capabilities;
which is composed of the goals that are able to examine the strategic weakness, problems,
uncertainties, constraints and the strengths(Hagedoorn & Wang, 2012).
On the other hand, external analysis, focuses on the threats and the opportunities that exist within
the company’s environment. The threats and the opportunities are both independent from the
company(Fulghieri & Sevilir, 2009). Opportunities are the factors that establish a favorable
environment and produces rewards to the organization. Any organization that wants to earn from
the opportunities must act quickly on them. Threats are those limitations within the business that
prevent it from achieving its objectives(Aguinis & Glavas, 2012).
Identify & explain two strategic positioning models/theories
The PESTLE
Being one of the most prominent coffee organization, for example, the Starbucks is continuously
leading in the industry of coffee marketing. This success is associated with the ability of the
company in addressing the external PESTLE aspects. The PESTLE technique is used in showing
the critical impacts on the company concerning macro-environment even though the current
management of the Starbucks is obliged to continue in controlling its market environment.
Therefore, this approach is useful in examining how the company has been able to satisfy these
needs. By addressing the external aspects identified in the PESTLE, it will continue to strive
despite the challenges in the market environment. The company's management is closer in
dealing with the external factors within the PESTLE(Minefield, 2012). These factors are the
following
The political factors

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Economic factors
Social factors
Technological factors
Legal factors and the environmental factors.
The porter’s five forces
The competitive forces in a business organization are the combined effects associated with the
external aspects contained in Porter's five forces. Concerning this analysis, the company factors
to consider for it to stand out are; bargaining power, rivalry, and the threats. Although the other
remaining forces remain influential as well(Srdjevic, Bajcetic, & Srdjevic, 2012). The following
are the five forces surrounding the market environment of the company
1. The rivalry. The company is experiencing competition from the other companies offering
food and coffee services.
2. Threats. The Starbucks company experiences the moderate forces on the new entry
threats. The force is associated with effects from the new competitors in the coffee
industry. The factors which contribute to the new entries are; the moderate capital of
conducting the business, reasonable cost of supplying cost and the weak cost of
moderating the bland.
3. The bargaining power of the consumers. This force has been established on the individual
consumers and various groups of the clients on the international market environment.
4. The bargaining power of the suppliers. These forces are like the size of the suppliers
which is moderate, the high variety of the supplier is weak, and the massive overall of
suppliers is generally weak(FME, 2011)

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5. The threats of the substitute products to Starbucks. The danger experienced by the
organization, in this case, is the competition of the substituted services and products from
other industries.
Evaluate usefulness of models, discussing pros and cons of these
The porter’s five forces technique
The pros cons
The model can provide a hit of where to find
the threats and challenges in an organization
through the analysis of substitutes.
It’s a good model which can be used when
organizing and researching on the market
structures.
It can act as a guideline when thinking on the
positioning, response and the context of the
organization
Help in strengthening the strategic thinking.
The model provides some reasonable
guidelines when examining the competition in
the market.
Changes of the technologies are taking place
and can cause disruptions to the market which
cannot be detected by the model.
When the structure of the market remains
static, the model has to change radically in
order to retain its position in the market.
The model is not able to offer the best method
of taking the preventive cautions.
The model might quickly become outdated
since it was designed to give a snapshot of a
given market.
It’s difficult to define the state of the market
using the model.
It’s mainly used in analyzing the competition
ideas.
The model can only be used in examining
simple structures of the market.

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The PESTLE tool
Pros Cons
The model can provide a hit of where to find
the threats and challenges in an organization
through the analysis of substitutes.
It’s a good model which can be used when
organizing and researching on the market
structures.
It can act as a guideline when thinking on the
positioning, response and the context of the
organization
Help in strengthening the strategic thinking.
The model provides some reasonable
guidelines when examining the competition in
the market
The quality information from the external
user is usually restricted.
Organization restricts the researchers due to
cost and consideration of time.
The users might oversimplify the information
collected during decision making.
Part B

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Introduce your organisation in the context of strategy
The Starbuck company mainly works in the retail of snacks and the coffee store business. This
business had faced some challenges which led to it the slowdown in the year 2009 facilitated by
the change in consumer's preferences and the crisis in the economy. The economic crisis resulted
in decreases in revenue in the United State by 6.6%. Before the financial crisis, the business had
developed at a high rate. The demand for the snacks and the coffee products are facilitated by the
number of aspects constituted by the rate of consumption, the state of health, demographics and
the prices in the market(Porter, 2010).
Apply the 2 previously discussed tools to your organisation
The PESTLE can be used in showing the significant political aspect is all about acquiring the
raw materials. This has been identified with the politicians from the western countries that
provide these sources. Due to this, the Starbuck company is forced to stick to the environmental
and social norms of the countries where they are operating.
With respect to porter’s five forces, the Starbucks organization has a considerable number of
competitors of various sizes. The match is witnessed in cases of the price switching where the
customers tend to the advantages of low-cost commodities — for instance, the circumstances in
which the minimal number of clients transfer to other organization offering the coffeehouse
services(Dobbs, 2014).
Highlight the findings from your analysis

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1.Starbuck sell its products at a lower price through the quality will be very poor. This is because
the company will be forced to adjust the level of its consumers to include the middle and the
lower-class consumers. This is one of the biggest challenge faced by the company.
2. The political aspect is all about acquiring the raw materials. This has been identified with the
politicians from the western countries that provide these sources. Due to this, the Starbuck
company is forced to stick to the environmental and social norms of the countries where they are
operating. Starbucks is will to adhere to all the sourcing strategies and the fair-trade standards.
3. The emerging of the mobile waves is a big opportunity for the Starbucks in positioning its
business. Starbucks has partnered with the Apple in developing a mobile App by proving its
customers with discount coupons hence attracting some clients.
4. Many operations within the Starbucks are more concerned with international and activist's
advocacy teams. The customers have also expressed a lot of concerns hence the company must
take the various matters seriously for the sake of establishing its trust with the customers. The
other environmental characteristics which the organization should take care about are the
environmental concerns in the international level, the disasters, and the environmental
regulations and policies.
5. The Starbucks organization should make sure it doesn't interfere or violate the regulations and
rules from the countries in which they were getting their raw materials from in their home
country. The company must also be aware of the introduction of caffeine extraction and
production policies by the health institutions.
6. The competitive forces in a business organization are the combined effects associated with the
external aspects contained in Porter's five forces. Concerning this analysis, the Starbucks

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company factors to consider for it to stand out are; bargaining power, rivalry, and the threats.
Although the other remaining forces remain influential as well. The following are the five forces
surrounding the market environment of the company.
7. The Starbucks company experiences the moderate forces on the new entry threats. The force is
associated with effects from the new competitors in the coffee industry. The factors which
contribute to the new entries are; the moderate capital of conducting the business, reasonable
cost of supplying cost and the weak cost of moderating the bland. For instance, the operation cost
of the small store is higher when compared to the cost of operating the great coffeehouses.
Likewise, the little cafes have minimal supply requirement than the larger cafes.
Analyse and critically evaluate the findings from your analysis
The Starbuck company has established district managers to oversee the regional stores who
should report the concern to the higher corporate management. In every store, the store managers
act as the chief supervisor to monitor other junior supervisors (shift supervisors) whose role is to
perform the store managers when the principal managers are not around. Under the shift,
supervisors are the other workers known as the baristas. The company has prioritized its
workforce within its organization social responsibility capability. For any stakeholder or
employee to work effectively, they require a better working environment, appropriate salaries,
and security at the workplace. Thus, Starbucks' has emphasized more on the attitude of
employees' attitudes towards work. The workers are provided with wages higher than the legally
mandated minimum income. In the year 2014, the company increased its corporate social
responsibility (CSR) performance for their stakeholder team through offering employees with
scholarships. Concerning this, the company pays about 56% of the tuition fees for its senior and
junior workers at the University level. The effort of Starbucks in addressing the performance its

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workforce has established a big room for improvement. In individual states like New Zealand,
the company has offered minimum salaries to the juvenile employees. These are the kind of the
employees who are usually criticized hence the organization has used this opportunity to increase
it CRS (Corporate social responsibility performance)(Dälken, 2014).
The customers
The Starbucks organization has highly valued its customers as its senior stakeholders. The vital
interest of these stakeholders is the quality of products and services like coffee and other related
beverages. The company is on the most known specialty of drinks and coffeehouse chain; the
company has been able to address these interests effectively.
The suppliers
The coffee farmers and the wholesalers constitute the company's suppliers. The primary
objective of this team to grow and compensation demands from the company. Coffee farmers'
main aim is to boost the yield of coffee to generate high revenue.
The government
Starbucks has been able to comply with these regulations and rules. Although, the organization
has faced different criticism for evading the tax in Europe.
Recommendations to improve competitive advantage