Starbucks Corporation which is also popularly known as “Starbucks Coffee Company” has acquired its position to be the largest coffeehouse chain throughout the world. The company had undoubtedly implemented certain business and marketing strategies to achieve this zenith of success. The company also might have certain threats in the recent market environment. There are also many future opportunities which the company is yet to explore. It is also very usual that Starbucks also has many weaknesses like any other business firms. Thus one “SWOT Analysis” is really mandatory to understand all the “weaknesses”, “threats”, “opportunities” and “strengths” of Starbucks within “the coffee industry environment”.
SWOT Analysis
Strengths:
Starbucks has many strong points which serve as the major strengths for the company. These prime strengths of Starbucks are as following:
- Starbucks had made one strong name of itself within the entire coffee industry throughout the world. This strong brand image serves as the most prominent strength for Starbucks. The name of Starbucks makes people recall about its rich quality and excellence. The company had undoubtedly made one dominant position within the overall “coffee and beverages” market worldwide (Gregory 2018). This brand image has also increased with the affordable pricing of Starbucks’ coffee and other snacks. Thus the company had reached the ultimate zenith of the entire coffee industry.
- The company enjoys one extensive supply chain and that too of global dimensions. Thus the company had been able to reach to near about each country and their people. Such a vast “supply chain management” policy of the company had increased its overall sales growth. The overall profitability of Starbucks had also increased consequently.
- Starbucks also includes moderate diversification within its business operation. Such moderate diversification is performed through many subsidiaries of the company. It is another major strength of this coffee company.
- The strong and prominent financial performance of Starbucks serves as a prime strength for the coffee company. Such bold financial statistics had helped the company to occupy the number 1 place within all “Coffee and beverages retailers” throughout the world.
- The overall value of Starbucks might also be regarded as strength for this company. The company is worth $4 billion and such huge valuation is undoubtedly a huge strength for any business organization. This value had helped Starbucks to be way ahead of its competitors within the industry market.
- Starbucks had become the biggest chain of coffeehouse throughout the world both for its high volumes and size. Starbucks also enjoys huge ranges availability. The company could offer its premium ranged products as well as products of the middle tier (Haskova 2015). Such middle tier typed products might able to attract more middle class or college going customers. Thus Starbucks had indulged all typed products within its service.
- Starbucks is also well-known for the “pioneering people management” within the industry of coffee. Such industry like coffee is much dependent upon “soft skills” and “people skills”. The welcoming and positive work environment of Starbucks has made its working force more vibrant. Such a happier customer serving association leads to the ultimate benefit of Starbucks.
Weaknesses:
The weaknesses which Starbucks still have are listed as following:
- A certain customer’s base had complained about Starbucks’ “high price points”. There are issues that the company is not always affordable for the middle-class or college-school oriented consumers. Thus highly priced products of Starbucks might have created certain barriers to all class consumers. Such extra high pricing of Starbucks had made many consumers be more frequent to McDonald’s rather than Starbucks.
- The standard of all the products of Starbucks is rather generalized. Such generalized standards have definitely one huge issue for the company.
- The products of Starbucks are quite imitable that means the products might be duplicated quite easily. The competitors of the company might have the tendencies to copy the products of this company (Ng and Tan 2015). Starbucks needs to look after this particular issue more prominently.
- The company has high dependence upon one major input of the company and that is it’s highly chosen coffee beans. The pricing of these coffee beans also put much effect on the overall profitability of this company. Such determinant of coffee beans’ pricing and their pricing’s fluctuation create huge price sensitivity. It is indeed one major weakness for Starbucks. Starbucks requires enhancing its product ranges’ diversification and thus it could reduce its financial risk associated with such dependence.
- Another major weakness of the company is that it recently had to face some allegation to the procurement practices of the company. Many “environmental and social” activities have protested against Starbucks’ unethical practices of procurement. The accusation is that the company obtains its coffee beans from impoverished farmers of the third world. Another accusation is that Starbucks had violated the mandatory “Fair Coffee Trade Principles” (Sakal 2018). This particular issue although was tackled before few years.
- Companies like Burger King and McDonald’s are ruling the market of breakfast segment. Thus Starbucks needs to diversify its existing products range to stand tall in such onslaught competition. The recent compressed schedules within working consumers had made them more frequent to such fast food outlets. The less popularity of Starbucks than McDonald’s is indeed one burning issue for the company. Such an issue is needed to be rectified sooner to have a more prominent business base within the entire “coffee and beverages” industry.
Opportunities:
Starbucks is yet to explore many future opportunities within the entire coffee industry which are:
- There is a huge opportunity for Starbucks to extend its suppliers’ network. The company might have excluded the mercy of the suppliers who are whimsical by nature. The company rather needs to expand its suppliers’ range more vastly. It would also help this particular company to become much less sensitive with the pricing of changeable coffee beans. The company could also become more resilient against the dreadful risks of the supply chain. This particular opportunity could help the company to avoid its major weaknesses also.
- There is undoubtedly a huge opportunity to expand its business within the existing “coffee and beverages industry”. There are huge possibilities which are waiting in the future prospect for Starbucks within this particular industry. Increase of working consumers serves as one major reason behind such business expansion (Sholihah et al. 2016). Countries like India and China might be considered as the most promising fields for Starbucks. It is because people are having increased tendencies of instant snacks, coffee or other beverages. Starbucks might target these emerging markets of these countries to explore a much greater scope in the industry.
- Starbucks also have the opportunity to expand its business domain to be full-spectrum retailers of “food and beverages”. Thus the company might compete with companies like Burger King and McDonald’s. The company might be exploited to take full advantages of these industries’ future prospects. It is indeed one huge opportunity for the overall business of Starbucks.
- Starbucks might expand its retail store’s networks significantly throughout the entire US. Thus the company could achieve its market segments and market shares. Thus the company encourages its market opportunities throughout the entire retail chain. Starbucks could also be exposed to such new segments of consumers (Wei 2016). The coffee company also might enhance its footprints within the overall US and other global areas also.
Threats:
Starbucks also includes certain threats within the industry and they are as follows:
- The pricing of coffee beans are ever increasing and that too in a rapid rate. It is indeed one major threat to the company. The company thus have engulfed into the risks of the supply chain. The company also faces the risks of key inputs with the fluctuations. The company has the maximum threats with its dairy products and the company had thus generated huge threat to Starbucks’ overall profitability.
- Starbucks has also a significant threat of some lesser-known rival companies who want to piggyback upon Starbucks’ success. Thus there are issues of copyright and trademark infringements with Starbucks. The company had to fight many legal battles against many multi-national retailers which misused its fame and brand logo. Such legal battles for brand infringement are indeed one major threat for the company. (Panmore.com 2019)
- Many local coffee houses are providing much competition to the company. Thus the company is indeed having some issues of attracting more “niche customer segments”. These local stores are much patronized by some loyal clients. Such local stores are also not enamored by big brands. Still, the company like Starbucks is really having tough competition regarding these local fast food or coffee brands.
- Starbucks had also scarcity to expand its existing market within the entire emerging market scenario. It has become really the necessity for Starbucks to make vast expansion. It is because the company could not surpass its existing competitors without such expansion. Recession is also another prime threat for Starbucks within the existing retailer’s group. (Pestleanalysis.com 2019)
- Starbucks also has many challenges to its “global supply chain”. There are also immense disruptions within its supply chain. The local or global conditions are mainly responsible for such disruptions. The company needs to take immediate actions against such weaknesses to rectify them sooner.