STARBUCKS

Strategic Management Analysis on Starbucks



Table of Contents

Introduction1

Discussion1

Strategic Fit3

Competitors and Competitive Positioning6

SWOT Analysis Overview9

Business Trends10

British Café Culture11

PESTLE Analysis of the Starbucks12

Now we would conduct a Pestle analysis for Starbucks and highlight the various political, economical, social, technological and legal challenges the organization is faced with.12

Five Forces Analysis14

The power of buyers14

Threat of new entrants14

The threat of substitutes14

The power of suppliers14

Competitive Rivalry15

Critical Issues15

Industry Impact15

Conclusion18

Strategic Management Analysis on Starbucks

Introduction

Starbucks is the top coffee retailer of the world. It has more than 17000 shops in more than 36 countries. In 2011 Starbucks Corp changed its signature logo - zooming in on the mermaid and removing the phrase “Starbucks Coffee”. This move came alongside the announcement that the company wanted to move beyond being just a coffee company to expand to being a total retail brand. In addition to hot drinks, the company also has its brand name on products such as ice cream, liqueur and ready-to-drink coffee beverages. To assist in this transition, Starbucks took control of its own retail coffee distribution, effectively ending its distribution agreement and relationship with Kraft Foods. (Dalgic 2010, 31-42)

Starbucks enjoys Market Share of 35.6%. Starbucks started operations in 1971 and is both a specialty fresh-ground coffee retailer and a coffee-shop operator. It sells coffee, pastries, coffee accessories and, recently, breakfasts and sandwiches. The company was publicly listed in 1992. At the end of fiscal 2011(September that year), total company stores numbered 17,003, compared with 16,858 in 2010. (Starbucks Official Site, 2012)

Using appropriate analytic tools, this paper evaluate conditions in the market environment that Starbucks occupies. It also evaluates the internal environment of Starbucks, and highlights its thresholds and unique resources and its core capabilities/competences.

Discussion

Following a trend that took shape years before, 2011 was also the year when consumers became increasingly aware of new brands, formats and flavours in tea. A new and more sophisticated consumer is moving away from the traditional cuppa. The same situation is occurring in both coffee and other hot drinks, particularly hot chocolate. Starbucks can gain advantage from this trend by strengthening its products in the UK. Starbucks has good financial position to go into UK market. Over the past five years, revenue is expected to grow at an average rate of 7.2% per year, with an expected increase of 13.6% in fiscal 2012 to total $13.3 billion. US-specific revenue is anticipated to grow 5.2% per year to $9.9 billion over the five years to fiscal 2012.

If we analyse the financial statistics of Starbucks for the year 2012 (refer to Appendix I), it can be ascertained that Starbuck's revenue per share was 17.09, while the total assets per share were 10.94. It clearly indicates that the company's long term strategy of expanding business seems to be perfectly employed in its everyday operations. As of the financial statistics of 2012; the company seems to be doing well.

Similarly, an analysis of Starbuck's net income and revenues for the past five years reveals that the company; apart from a short decline ...