Starbucks Case Study Analysis

Starbucks Case Study

Starbucks coffee company was started in 1971 as a coffee selling company, and has grown as an international brand and world’s biggest and most popular coffeehouse company. It strives to operate as an innovative and sustainable business within the coffee selling industry, even though it is heavily guided by the ongoing global economic recession. However, a recent market case study shows that there has not been a decline in though the rate of consumption of coffee among the steady customers of Starbucks, thus making it intriguing for the analysts and researchers to dig deeper into the internal and external environmental analysis of the brand and find out how it has stood the test of time and global recession, especially now during the COVID-19 pandemic. 

SWOT Analysis

Strength 

• The strong brand image of Starbucks takes it a long way, thereby making it the most popular and biggest coffeehouse brand in the world. In 2019, it had a brand value of $11.7 billion.
• It bears a strong financial backbone having an annual revenue collection of $26.5 billion and a profit-making of $3.6 billion in 2019.
• It has opened around 31,256 stores as of 2019 around the world, thereby having a massive international presence. 
• An incredible international supply chain is what keeps the brand going along with maintaining a steady quality and unique customer experience through its products.
• Starbucks maintains high quality and prioritises customer experience by ensuring to get their feedback from time to time. 
• The brand runs lucrative loyalty programmes to attract consumers and make them visit time and again. 

Weakness 

• High pricing has always been an issue with Starbucks as compared to its competitors like Coffee Club, Gloria Jean’s coffee, Michael’s patisserie, Hudsons coffee, et cetera.
• The lack of unique products offered by the brand is an issue as there have been too many imitable coffeehouse boutiques and cafes that are offering similar products to Starbucks.
• Unethical procurement practices as pointed out by environmental activists, who have claimed that the brand has been procuring coffee beans at an extremely low price the poor farmers from third-world countries while selling the beverages at an excessively high price.

Opportunity

• Adoption of a price differentiation strategy could help the branch to capture more consumers from the middle-class section of the society by introducing their products at a lower price, along with keeping a premium range for its old consumers. You can use the plagiarism checker tool to check the plagiarism.
• Business expansion in developing markets could help the brand grow its international presence even more. 
• The introduction of new products in the existing market, as per the season and availability of raw materials could be profitable for the brand, like seasonal fruit-infused cold brew coffee. 
• Partnership or joint venture with other well-known international brands could strengthen its global presence and market share in any given territory that has a promising coffee-consuming consumer base

Threat

• Competitive disadvantages with respect to brands offering similar products at a cheaper rate are the most crucial threat that Starbucks faces. 

• High bargaining power of the suppliers Supplying raw materials has become a growing issue for the brand over the years with the growing number of coffee farmers and suppliers. 

• The issue of imitation by new as well as old competitors who have started offering similar products Is a growing threat to the brand.

• Solidarity towards smaller businesses by socio-cultural activists has become a menace for Starbucks, for it has been facing anti-capitalist movements by activists who are in support of local boutique cafes and coffee sellers instead of generating more revenue for multinational chains. 

PESTLE Analysis

Political factors

The key political factor that influences a brand is its quest for sourcing raw materials in any given geographical location. Australia provides a cooperative and steady supply of raw materials along with an encouraging political environment for steady business growth. Government policies in terms of fair-trade practice, cutting down on unfair competitive business strategies, and anti-dumping policies with its choice of political philosophy which is majorly Indicating to a capitalist economy heavily contributes towards an environment of business flourishment and development. Its free trade area agreement with a number of countries also helps to boost businesses sprawling from such regions. However, certain regulatory pressures could negatively impact business activities along with the political agendas of the oppositions who strive to criticize the actions of the ruling party.  Bureaucratic red tape is another negative aspect of the political background that the brand might have to face in spreading its business in Australia. Assignmenthelp.us is offering Starbucks case study help.

Economic factors

The latest data provided by business analyst companies and statistical bureaus have shown that Australia has experienced an economic growth of 1.11%, which was -0.95% in the last quarter. It thus shows that the country has been coping with the global recession, thereby maintaining a steady rate in terms of consumption made by the consumers with respect to different industries. A stable GDP is a positive contribution to the business growth of the brand, positively impacting the purchasing power of the consumers that shall not challenge the brand's revenue collection even during the global economic recession. However certain economic aspects that need to be ensured by the brand that could affect it are:

• The environment or situation of the local economy with respect to different markets around the geographical territory of Australia
•  the local rate of currency exchange
• Taxation policies 

Social factors

The growing coffee culture in the country could be the most positive aspect of the social factor that influences the brand in Australia. In addition, the purchasing power of the people and the growing middle-class section of the country is also an added benefit. The growing demand for specialty coffee could boost Starbucks' revenue thereby giving it the opportunity to widen its business. Also, the increasing health consciousness of the people could need the brand to come out with more calorie-conscious drinks for the health-conscious consumers, thereby widening its consumer base as well in Australia.  Lastly, the changing work patterns and strenuous work schedules along with the changing lifestyle increase the demand for caffeine-based products.

Technological factors 

The advancement of technology requires excessive use of mobile phones and dependence on software applications, thereby demanding the brands as well as the consumers to be more tech-savvy. Consumers now could order their favorite Starbucks drinks from their official websites and mobile applications from the comfort of their homes, without having to go out and queue up in the stores. This kind of facility definitely boosts the sales of the brand along with providing a comfortable consumer facility. From a wider perspective, biotechnological developments and development in agricultural aspects help the brand to receive better quality coffee beans or More flavors of drinks, thereby widening its variety of beverages and alluring more consumers. Improved supply chain efficiency which is heavily based on improved and advanced technologies is now helping coffee farmers to grow and supply raw materials to the brand. However, increasing production of coffee from genetically modified plants which is a sign of advanced technology could be threatening for Starbucks as it leads to the rising number of new coffeehouse ventures that may even offer specialty coffees of good quality at a cheaper rate. 

Legal factors

Food and beverage safety regulations of Australia shall majorly impact the legal factors that shall influence the business. Strict customs and trade regulations of the country shall also have certain impacts on the business along with the licensing regulations of the industry. Steep labor laws, which are however good for the working class of people, could affect the business from freely accessing human resources and building labor policies for its employees. Laws relating to supply chain management and basic corporate laws of Australia shall also have an effect on Starbucks's business within the territory. Our law assignment help services will help you with legal problems.

Environmental factors

Environmental sustainability is the key to developing business in modern times in any given geographical area, especially with stringent environmental awareness and risk of climatic change. The brand shall have to make sure to source its supplies responsibly keeping the balance of nature in mind, thereby respecting environmental impacts. Starbucks shall be liable to support environmentally friendly products, which shall certainly open its doors to environmentally conscious consumers, thereby helping it expand its business further. For example, recyclable packaging, seeking consumer contribution to bring back glass bottles on their next purchases, raising funds for environmental sustainability, et cetera could be an opportunity for the business to make sustainable changes to its business model in Australia. 

The aggregate evaluation of those SWOT and PESTLE analyses thus concludes a positive opportunity for Starbucks to spread its business across Australia, which is offering a stable external environment for the brand. Moreover, its international brand value is the biggest USP to spread across different regions despite a global economic recession, in addition to the fact that people would rarely lower their consumption of caffeine products given the stressful time of the COVID 19 pandemic. You can get study help.

Conclusion

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