Competitive Analysis of Starbucks: A SWOT Perspective

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Essay: Starbucks
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Contents
Introduction................................................................................................................. 3
Body............................................................................................................................4
SWOT analysis........................................................................................................4
Conclusion.................................................................................................................. 6
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Introduction
Starbucks is the famous brand which was established in 1971 by the partners, Jerry
Baldwin, Zev Siegl and Gordin Bowker, who got to know each other in the university
in Seattle. In the year 1982, Howard Schultz joined the brand at the position of the
director of retail operations and marketing. The strategy, as well as the vision of the
Schultz, resulted in the success of the coffee chain by converting it into a global
brand and in today's time, there are around 27,339 coffeehouses in almost 75
countries. In this essay, the SWOT analysis of Starbucks is been conducted.
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Body
Coffee was termed as a classy drink after the coffee pub culture was pioneered and
introduced by Starbucks. Just like every other brand, Starbucks has its own sets of
weaknesses and strengths. With the help of the SWOT analysis of the brand, it is
easy to find out the obstacles that are faced by the brand, the opportunities that can
be grabbed, things which need improvement in the Starbucks along with the strength
organisation have (Abdel-Basset et al., 2018).
SWOT analysis
Strengths
Starbucks has a unique and different business model which is based on the core
value that was designed specifically to achieve the brittle balance between the social
conscience and profitability. It is important to know the facts about the foundation of
the company which was done in a unique way and this whole uniqueness is
concerned with Howard Schultz (Glowik, 2017). One of the biggest strength of
Starbucks is the precise segmentation of the customers which is an only elite one.
Therefore the company focuses on maintaining the comfort rather than convenience
which makes it worth it for the amount demanded by the brand. Apart from that other
strengths are bundling of services, the ambience of the store along with the good
marketing tactics and strategies (Glowik, 2017).
Weakness
Starbucks is really finding it difficult to get new footfall in the stores, also there is a
decrease in the footfall by approx. 11% in the Starbucks outlet. Other weaknesses of
Starbucks are high price points, products imitability etc. In Starbucks, they follow the
high price points, therefore their profitability is increased but it makes the product
less affordable especially in the areas where the people have low income (Mason et
al., 2017). When it is said that the Starbucks products are imitable, this means even
the café's design and the ambience is imitable. For example, the local coffee shops
can somewhat prepare a similar product instead of the same product. Also,
Starbucks is been struggling to remain in the market and there is a need for them to
come with innovation in almost all aspects (Mason et al., 2017).
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Opportunity
This part of the SWOT model deals with the external factors that provide Starbucks
with the opportunities to develop and grow its business. In the case of the Starbucks,
the main opportunities that are available to them are expansion in the developing
markets as it will help in the enhancement of the revenues (Sholihah et al., 2016).
Apart from the expansion, the brand should also focus on the product diversification
which will help in the improvement of the long term stability of the brand.
Diversification is been classified as the minor growth strategy and it is also
mentioned in the Starbucks corporation's intensive as well as the competitive growth
strategies. Also, the industrial environment can be taken as the opportunity for
making the brand image as well as the existence of the brand image strong by
getting into a partnership or forming the collaboration or the alliances with the other
companies and brands working in this industry (Sholihah et al., 2016).
Threats
When it comes to the international markets, there are many kinds of brands and
firms that are being operated, for instance, the brand has to compete with the
international restaurant chain having a low-cost coffee parlour. Competitions like
these can have a threating effect on the market share of the brand along with the
decrease in the revenue of the Starbucks. Some of the other international brands
that are also giving tough competition to Starbucks are McDonald’s coffee brand,
McCafe, Costa etc. Also, there is an impact of the economic cycle on the pricing of
the coffee (Sholihah et al., 2016).
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Conclusion
When Starbucks is concerned, it has a string market existence in the gourmet coffee
industry. They also have attracted customers with the help of an upscale French
coffee shop which also has a neighbourhood feel. Therefore all are welcome to be
the part of the bandwagon as long as they are ready to price for the premium range
products. The economic state in the present situation, the prices of the products of
the Starbucks have caused their demand to fall as people are not very much
interested to spend their hard earn money on the premium coffees which they can
get at a lesser price in any of the competitors like McDonalds, Costa etc.
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References
 Abdel-Basset, M., Mohamed, M. and Smarandache, F., 2018. An extension of
neutrosophic AHP–SWOT analysis for strategic planning and decision-
making. Symmetry, 10(4), p.116.
 Glowik, M., 2017. 4.7 Case study: Starbucks. Global Strategy in the Service
Industries: Dynamics, Analysis, Growth, p.156.
 Mason, A., Cole, T. and Goza, N., 2017. STARBUCKS: A CASE STUDY OF
EFFECTIVE MANAGEMENT IN THE COFFEE INDUSTRY. Journal of
International Management Studies, 17(1).
 Sholihah, P.I., Ali, M., Ahmed, K. and Prabandari, S.P., 2016. The Strategy of
Starbucks and it's Effectiveness on its Operations in China, a SWOT
Analysis. Asian Journal of Business and Management (ISSN: 2321–2802)
Volume.
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