Strategic Management: A PESTLE Analysis of Starbucks Business

This report provides a PESTLE analysis of Starbucks, a global coffee company, focusing on its strategic performance, particularly in markets like Australia. It examines the political, economic, social, technological, legal, and environmental factors impacting Starbucks' operations. The analysis highlights challenges such as public health regulations, economic recession, technological advancements, and environmental concerns, which collectively contribute to the company's strategic performance. The report concludes that external environmental conditions significantly influence Starbucks' business outcomes and overall success in different markets. Desklib provides this assignment solution along with a wealth of study resources, including past papers and solved assignments, for students.

Running head: STRATEGIC MANAGEMENT
strategic management

STRATEGIC MANAGEMENT 1
Table of Contents
Introduction...........................................................................................................................................2
PESTLE Analysis..................................................................................................................................2
Political.............................................................................................................................................2
Economic...........................................................................................................................................2
Social.................................................................................................................................................2
Technological....................................................................................................................................3
Legal..................................................................................................................................................3
Environmental...................................................................................................................................3
Conclusion.............................................................................................................................................3
References.............................................................................................................................................4

STRATEGIC MANAGEMENT 2
Introduction
Starbucks is a coffee company and coffeehouse chain that was founded in 1971 in
Seattle, Washington. It operates in more than 23,768 locations around the world including
US, China, Canada, Japan, and the UK. The company is the main representative of "second
wave Coffee" and dark roasted coffee, which is the specialty of the United State in terms of
taste and quality. The company is not much success in the UK in comparison to other
economies of the world (Buisnessstudiesqa, 2017).
The main reasons for the failure of Starbucks in Australia mainly include a
sophisticated coffee culture of Australia, staff differences, aggressive growth strategies of the
company, lack of advertisement, high pricing models, and passive coverage over the market.
It can be understood in a better way by analyzing the macro environment of the company.
PESTLE Analysis
Political
The Department of Public Health is regularly giving the instruction to Starbucks to
provide information about nutritional values and label on its drinks. This can give an
opportunity to the company to provide differentiation to its customers but on the other hand,
it is also resulting in increasing the cost of the product. The company has also been reported
in the Organic Consumer Association for illegally harassing, terminating, discriminating and
intimidation the employees. This news has directly impacted the sales and public image of
the company.
Economic
The recession in the economy has affected the business of the company up to a great
level. The Starbucks has to close more than 600 stores around the country. The recession also
affected the demands of the customers as their demand decreases due to high rates of the
products offered by the company (Analysis, 2015).
Social
The consumption of tea and coffee to a moderate level decreases the risk of suffering
from heart diseases in comparison to the people who do not consume the same. This provides
an opportunity for the company to increase its sales. Coffee is also an effective drink for
improving concentration power and energy of the people because of caffeine.

STRATEGIC MANAGEMENT 3
Technological
The United Kingdom is a developed nation and is open to adopting any kind of new
technological advancements. Considering this, Starbucks installed a coffee machine in some
selected outlets by making a huge financial investment. This machine is known as ‘Clover'
that is used to control the time, temperature, amount of the bean and the need for water for a
cup of coffee. This machine is being used by the company to sever a number of customers at
the time of surge of orders (Vrontis & Kogetsidis, 2008).
Legal
The Australian government has the policy to recycle the waste material to control the
level of global warming. The government also takes care about the ethics and policies to be
followed by the companies serving in the food industry. The company is well aware of these
policies and working accordingly.
Environmental
Starbucks did not have the proper system for recycling the paper cups used by the
customers. Similarly, the company is using natural gas in most of the stores which in
increasing the consumption rate of the natural resources of the country (Guide, 2018).
Conclusion
On the basis of above discussion, it can be concluded that external environmental
conditions of the economy are not in the favor of the company and this is becoming the main
reason for the poor strategic performance of Starbucks in Australia.

STRATEGIC MANAGEMENT 4
References
Analysis, P. (2015). PESTLE Analysis of Starbucks. Retrieved August 3, 2018, from
http://pestleanalysis.com/pestle-analysis-of-starbucks/
Buisnessstudiesqa. (2017). STARBUCKS (Failure in Australian Market). Retrieved August 3,
2018, from http://www.businessstudiesqa.com/2017/12/starbucks-failure-in-
australian-market.html
Guide, M. S. (2018). PESTLE Analysis of Starbucks. Retrieved August 3, 2018, from
https://www.managementstudyguide.com/pestle-analysis-of-starbucks.htm
Vrontis, D., & Kogetsidis, H. (2008). Environmental analysis as a means to
customersatisfaction: the case of Starbucks in Cyprus. Journal of International
Business and Entrepreneurship Development, 3(3/4), 188-204.