FOR PROF washington watson
Running Head: THE ANALYSIS OF STARBUCKS COFFEE CORPORATION 0
The Analysis of Starbucks Coffee Corporation
University of Phoenix
05/13/2017
Starbucks majorly competes and operates in snacks and retail coffee store industry. In 2009, Starbucks experienced a major shutdown because of the changing customer tastes and crisis which increased the need for the company to embrace effective SWOT analysis to prevent the unpredicted shortcomings.
The internal analysis of Starbucks coffee company
The core competence of Starbucks
The Starbucks core competence has been the company’s capacity to effectively leverage the strategies for differentiating their cornerstone product through the provision of high quality premium mix of coffee products including beverages and snacks. The company’s brand quality is established on selling high-quality coffee and the related products and as well through the provision of unique Starbucks Experience to each customer. The unique experience is derived from the well maintained and clean stores and supreme customer services that reflect the community culture in which the company operates. This helps the company in establishing a high degree of the loyalties of customers with a cult following. The Starbucks’ key competence is the value based approach to human resource management build adamant external and internal supplier relationships (Wu, n.d., p. 82). This helps in driving successful deployment of the company’s expansion strategies to global markets, horizontal integration through alliances and smart acquisitions that enable the company to maintain its long-term strategic goals and objectives which are grounded on the production of product brand which is respected and recognized globally.
Starbucks SWOT analysis
Strengths
Starbucks has strong global brand recognition and market position. The company has a substantial geographical presence globally and has maintained a market share of 37.7% in the US and operates in more than 62 nations globally. Starbucks brand is also the most recognized in the coffeehouse segment and 2013, and the company was ranked position 91 in the international finest brands of products. The firm is effectively leveraging the equity of its rich brand by offering license of its brand logo and merchandising its coffee products (Locasto, Triplette, & O’Rourke, 2011, p. 146). Such effective market position global brand recognition enable the company to gain the substantial competitive advantage as it expands to global markets and also enables it to register high growth in both global and domestic markets. During the past few years, Starbucks has accomplished broad economies of scale with substantial supplier relationships and distribution channels.
The other strength is the production of products of high quality. Starbucks gives products’ quality the first priority and avoids quality standardization even during higher production input. This has helped the company to enhance product differentiation which is a competitive advantage.
The company’s strategic location of its stores and aesthetic appeal of the stores. The stores of the company are located in strategic and prime places across the globe. The management targets high-visibility, high-traffic and premium locations near various settings such as suburban retail centers and downtown, university campuses, office buildings and highways across the globe. This has earned the company substantial competence and advantage of being capable of penetrating prime markets and tap into consumers convincing factor. Starbucks’ stores have cool factor attached to them also visually appealing to reflect the company’s unique character to the customers served ("Leading change at Starbucks Coffee Company," n.d., p. 92).
The company also has an effective human resource management. The firm’s highly knowledge base workers are the company’s main assets, and the staffs are offered with great benefits such as healthy culture, retirement accounts and stock options. Also, Starbucks strong customer loyalty base which is as a result of the company’s loyalty base program that helps in driving loyalty with Starbuck Card and Starbucks’ Reward Programs (Wu, n.d., p. 85). The Starbuck card has the capacity to increase the visits to stores by the cardholders, support gifting and improve customers’ convenience. Lastly, the presence of mobile outlets and the company’s use of technology such as the development of Starbucks App for Android and Apple has led the company to make significant investment since several customers can access the services offered by the company easily.
Weaknesses
The first weakness of the company is the high products’ costs. While the company undertakes the products differentiation with the provision of high-quality products, the customers usually switch costs to affordable products from the competitors such as Dunkin’ Donuts during economic sluggishness. The premium costs of Starbucks product may affect the operations of the company in third world nations.
Self-cannibalization via overcrowding. Through high saturation because of overcrowding and aggressive expansion, there are high chances of self-cannibalization that limits the opportunity to meet the long-term goals of the company. This is experienced mostly in the US where Starbucks operates more than 8000 stores. The company is also over depending primarily in American markets due to self-cannibalization, and the company can adversely be impacted in case of economic downfall in the United States. Also, the generalized standards of the company products make them less aligned to some markets’ cultural demands. The Starbucks businesses are easily imitable based on café ambience and products. Therefore the company has to innovate to deal with such weaknesses particularly the imitability problem.
Opportunities
Expansion into emerging global markets. The self-cannibalization and increased saturation in the market make it easy for the company to exploit the emerging markets. The company has made effective inroad to various nations where it gains the opportunity venture. The expansion of product mix has seen the company recently starting expanding their product mix through venturing into products of fresh juice and tea with smart strategies for acquisition. Technological advances have led the company to integrate technology into its operations. The company has leveraged technology use that has led to the development of Starbucks applications which ease payments for the customers.
The company has the opportunity of expanding to various countries such as Asia and African countries due to its finances and reputation. Moreover, the company can diversify its product mix which is a competitive advantage. Alliances and partnerships can also strengthen the competitive position of the company. Therefore, Starbucks has greater to expand globally.
Threats
The low cost of the coffee product from competing companies such as Dunkin’ Donuts and McDonald’s puts a lot of competition to Starbucks pricey coffee products. Also, the presence of independent coffeehouse movements which opposes the activities of large companies like Starbucks. The increased competition is, however, the greatest threat to Starbucks. Costa Coffee, McDonald's and Dunkin Donuts have increased pressure on the Starbucks because they produce products of low prices. The other threat is the changing lifestyle choices and tastes of the consumers. The customers have shifted their needs to healthy products, and research has demonstrated that coffee is not healthy to the body and this can adversely impact on the future operations of the company.
The most significant strengths of the company are its strong brand recognition and market position. The company has already built a strong reputation because of the quality of its products. Even if the economy changes, the customers will still be willing to purchase from the company because of the trust to its products. This strength is enhanced by the company resources both the tangible and intangible resources. The tangible resources include the well-trained personnel, research and development team and real estate team which work hand in hand to ensure the expansion of the company and the production of quality products. Financial resources include the company investment in other countries as well as expansion activities. The physical resources are several stores strategically placed in various countries, the distribution center and the warehouses. On the other hand, the company is endowed with vast intangible resources including technology: online stores, coffee related equipment and information technology. The other intangible resource is organizational including the Starbucks culture, training programs and brand reputation. The relationship is also an intangible resource and includes interaction with customers, licensing agreements, joint ventures and coffee suppliers. The strongest weakness is the expensive products which with time will drive away the customers. The stiff competition from other coffee companies will ensure the cost of coffee products reduces more and more and if Starbucks fail to address the high cost of its product customers will leave.
The resources, skills and attributes are the most important internal factors since they are the ones that influence the occurrence and the impacts of some of the external factors. Starbucks expects its employees to manage the customer relationship with the company effectively. The staffs are strongly motivated and committed to offer extraordinary services to the customers, product expertise and share coffee knowledge to overcome threats and maximize the opportunities.
Competitors Analysis
The primary competitors of Starbucks Corporation are Caribou Coffee, McDonald, and Dunkin Donuts. Starbucks believes that its clients select among the companies majorly on the basis of convenience, price and service. Recently, Starbucks has been faced by drastic direct competition from the coffee companies based in America. Starbucks has also experienced a well-established competition in the global markets from the ready to drink coffee beverage products. Dunkin’ Donuts was established in 1950 and has introduced the wide range of new products such as sandwiches for breakfast, muffins and bagels. The company has expanded its offerings on coffee to compete favorably with other coffeehouses. Its offerings include flavored hot tea and chocolates, collates, lattes and flavored coffee. McDonald's was established in 1940, and its upgrade in 2006 has made it the greatest competitor of Starbucks. It has installed over 15,000 coffee stores in the US.
The Starbucks Organizational Structure
Starbucks Corporation is the world’s largest coffeehouse. Its leadership is partially based on the appropriateness of the company’s organizational structure. The corporate structure of a company influences leadership and management and communication deemed necessary for the success of the company. Starbucks Company has evolved and has the organizational structure matching the current needs of the coffee business. It has a conventional typology of organizational structure which has grown with the business. Starbucks has been able to optimize its processes and products’ quality due to its structure. There is four main feature of Starbucks organisational structure: teams, product based divisions, geographic divisions and functional structure. Starbucks Coffee Company is still highly competitive due to its uniqueness and quality products, and this will enable it to remain the most performing in the coffee market. However, its competitive advantage may be affected by the high prices of its products.
References
Leading change at Starbucks Coffee Company. (n.d.). Leading Strategic Change, 86-98. doi:10.1017/cbo9780511488528.009
Locasto, M., Triplette, G., & O’Rourke, J. S. (2011). Starbucks Coffee Company: A New Logo for New Markets. doi:10.4135/9781526404039
Nestle to Battle Starbucks in Chinese Premium Coffee Market - Bloomberg. (n.d.). Retrieved from https://www.bloomberg.com/news/articles/2012-10-16/nestle-to-battle-starbucks-over-chinese-portioned-coffee-market
Starbucks Now Letting Customers Buy Coffee with a Smartphone. (n.d.). Retrieved from http://www.brighthand.com/news/starbucks-now-letting-customers-buy-coffee-with-a-smartphone/
Starbucks Porter’s Five Forces Analysis - Research Methodology. (n.d.). Retrieved from http://research-methodology.net/starbucks-porters-five-forces-analysis/
Starbucks Reveals Long-Term Plans - December 6, 2012 - Zacks.com. (n.d.). Retrieved from http://www.zacks.com/stock/news/88173/Starbucks-Reveals-LongTerm-Plans
Starbucks To Open At Least 3,000 Stores Over Next Five Years, China To Get 1,500 Stores By 2015. (n.d.). Retrieved from http://www.ibtimes.com/starbucks-open-least-3000-stores-over-next-five-years-china-get-1500-stores-2015-1142647
Wu, L. (n.d.). One Company's Perspective on Innovation - Starbucks Coffee. Accelerating New Food Product Design and Development, 73-84. doi:10.1002/9780470277621.ch6
Content | Met | Partially Met | Not Met | Comments: | |
The paper uses the organization selected in Week 1. |
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The paper includes an assessment of the organization’s internal environment. | |||||
The paper includes the identification of the most important strengths and weaknesses of your organization including an assessment of the organization’s resources. | |||||
The paper includes the identification of the most important internal environmental factors in the general, industry, and external analysis in relation to the internal analysis. | |||||
The paper includes a competitor analysis. | |||||
The paper includes an assessment of the structure of the organization and the influence this has on its performance. | |||||
The paper includes a determination of the organization’s competitive position and the possibilities this provides. | |||||
The paper is a minimum of 1,400 words in length. |
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Total Available | Total Earned | ||||
3.5 | 3.5 | ||||
Writing Guidelines | Met | Partially Met | Not Met | Comments: | |
The paper and presentation—including tables and graphs, headings, title page, citations, and reference page—are consistent with APA formatting guidelines and meets course-level requirements. | |||||
The paper and presentation include properly cited intellectual property using APA style in-text citations and a reference slide or page. | |||||
The paper and presentation include major points that are stated clearly, organized logically, and supported by specific details, examples, or analysis. | |||||
The paper and presentation include sentences that are complete, clear, and concise. | |||||
The paper and presentation follow proper rules of grammar and usage including spelling and punctuation. | |||||
Total Available | Total Earned | ||||
| 1.5 | 1.5 | |||
Assignment Total | 5 | 5 | |||
Additional comments: Hello Kayode, You did a great job on the Week 3 individual paper. You covered all of the required areas in the instruction of the paper including:
You presented a Word Document with the information above that included the findings of the internal environmental analysis. You followed the APA rules regarding format, grammar and organization for the paper. You also limit yourself to the word count expected in the instructions (1400 minimum). The paper was organized logically with complete paragraphs that flowed naturally and logically throughout the paper. It was organized in a way that makes sense to the reader and it presents the main idea clearly. You did a great job at using references and trying them back to the main idea or concept of the paper. Keep up the great work, it shows on the results! Thanks Alex Medina Certified Advanced Facilitator |