SWOT Analysis
Strengths
The Starbucks Corporation is a very profitable organization. It has grown its small six coffee shop into a multinational cooperation with over 21,000 stores in over 40 countries. They have a strong emphasis in America followed by a growing market in China. Starbucks is expanding its tea brand Teavana, and it is being positively received in China, compared to Starbucks rival companies. Starbucks has been consistent in maintaining in the top 100 companies to work for by Forbes,(Forbes, 2015) and is listed in Ethisphereas being one of the most socially responsible companies operating today(Ethisphere, 2015). According to Starbucks2014 was their most profitable year in Starbucks history(Starbucks, 2015). This is attributed to operating efficiency and strong growth leading to superior financial performance. They consistently maintain a wide variety of coffee choices with excellent customer service, brand awareness and reputation leading to customer loyalty. Starbucks takes pride in having direct ownership of nearly 50% of all stores, Starbucks customers enjoy a loyalty program and effective mobile application to speed up the purchase process and encourage repetitive patronage. The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in all facets of our business.' (Starbucks, 2015)
Weaknesses
Starbucks has a reputation for developing and implementing new products, however, this makes them vulnerable to the fact that this approach may falter after a while.
Starbucksstrongest presence is the America's segment, U.S., Canada, Brazil, Puerto Rico, Mexico and other South America countries. A total of 73% of the company's total sales in 2014 relied solely on this segment. A high profit of revenue coming from just one segment can weaken a company as the change in consumer tastes; environment and economy can give influence.
Starbucks did add about 1500 new stores in other countries, however, in Europe there were only around 100 new stores opened. Starbucks will need to revisit its company's business model in order to be more competitive.
In addition to poor marketing in Europe, another contribution to its slow growth is the negative tax evasion publicity in the UK. While the tax methods were not illegal, it did cast a negative light on Starbucks in the European segment.
Starbucks main competitive advantage is coffee and the retail of coffee, however, this can inhibit it's performance to diversify into other sectors, if need be.
Due to the popularity and revenue of Starbucks coffee, other major establishments have started to serve coffee as well, but for a cheaper price. Other companies can exploit this.
Opportunities
Starbucks is very good at taking advantage of opportunities and making opportunities.
Promote new products and services that can be retailed in their cafes, such as Evolution, La Boulange, and Fair Trade products.
The company has taken the opportunity to expand its global operations. There are new markets for coffee in the India and Pacific Rim beginning to emerge.
Expanding the Teavana store network as a tea market is growing and has grown Teavana to 395 stores in the US with plans for continued growth in 2015.
Tea markets are strongest in the Asian countries; therefore, Starbucks is looking to acquire Arizona or Gold Peak ready to drink tea brand, to successfully promote them within Starbucks.
Continued development of the My Starbucks Rewards (MSR) system has been extremely popular amongst customers.
Starbucks mobile payment system integrated with MSR and has increased its customer service in faster more positive experience.
Investment into their partner's future by teaming with Arizona State University to pay 100% of their partner's education, regardless of the degree program.
Starbucks diligently invests into programs that strengthen communities promoting positive marketing and ensuring future opportunities in these communities.
Established a number of opportunities into water conservation awareness and utilizing these programs coffee processing.
Threats
The price of coffee beans can rise due to serious weathers issues. Starbucks profit margins are dependent to an extent on the price of coffee beans.
The exchange rate of the US dollar affects Starbucks with only bringing in 37% of its revenue from the overseas market
Slow recovery in Europe and slow growth in china could affect the chain's expansion
Top executives are reaching retirement age, and rival companies can see the future of the company as a weakness.
Society is trending towards more of a healthier lifestyle, while this does not directly affect Starbucks at this point, there could be a point where this can have an impact on Starbucks has been the lead company in coffee for many years, rebranding the entire way we look at coffee café's, if proper marketing and development is not continued who knows if the market for coffee will grow and stay in favor with customers.
Starbucks provides the most extensive coffee list; to maintain that they will need to continue to purchase and invest in top quality product, if the economy dips this will affect business.
This company continues to set the standard in many roles for competitors to meet, the longevity of staying number one in some markets can be exhausting if there is not a continuous fresh perspective.
Due to the negative representation over taxes in the UK, this may cause the company to end up taking a loss if they do not revamp marketing.
Starbucks target audience is mainly for breakfast, they do have a high demand for evening customers, since there isn't anything for them to purchase, to maintain relevancy they will need to expand their menu to a nighttime crowd.
Since the beginning, Pike Place Market, Seattle in 1971, Starbucks' success has lead to many competitors and copycat brands that can pose a potential threat.