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Company Strategic Analysis - Essay Example

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1.0 Introduction Starbucks Corporation, founded in 1985, is an international coffee and coffeehouse chain based in Seattle, Washington, United States. Each store is selling drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks and items such as mugs and coffee beans…
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Company Strategic Analysis
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Download file to see previous pages Starbucks employed approximately 142,000 employees around the world including 111,000 people from US only, according to the statistics up to 27th September, 2009. (Annual Report, 2009) 2.0 Company Analysis Starbucks is in the Coffeehouse or Coffee Shop Industry. Sometimes, it is said to be in Leisure or Specialty Eatery Industry. The company owned an ROI of 22.80% and net income of 945.60 million USD in 2009. ( Starbucks was ranked as Fortune magazine’s #1 most innovative company in the food services industry in 2001. (Fortune Magazine) The major competitors of Starbucks in the industry are Caribou Coffee, Tully’s, Coffee Bean & Tea Leaf and Java Centrale. (Student Resources) Starbucks is also facing the intense competition of coffee manufacturers such as Kraft and Procter & Gamble and distributers like Nestle. Moreover, the brewing battle with McDonald’s has been intensified in recent years. 2.1 External Environment Starbucks’ external environment can be learned better by analyzing its socioeconomic or macro environment covering political, economical, sociological and technological factors as well as opportunities and threats. Political Because of the growing tensions between the United States and the rest of the world, especially in the Middle East and Southeast Asia, the business environment has been becoming increasingly volatile. In July 2002, Arab students from five states initiated a boycott of American goods and service to the alleged close relationships between the US and Israel. (Fisk, 2002) That movement targeted mainly to Starbucks, Burger King, Coca-Cola and Estee Lauder. Moreover, Starbucks is facing class litigation against it. Economical Unfavorable economic situations in the market can negatively affect consumer spending. (Hill, 2008) Starbucks faced criticism from Non-governmental Organizations urging the company to acquire certified coffee bean to make sure that those coffee beans were grown and marketed under certain economic and social conditions. Trading in countries which were in economic recession such as Switzerland, Germany and Japan made Starbucks experienced sales and revenue declines. Social Social factors can also create opportunities or threats for Starbucks. For example, a regional or global health pandemic, an outbreak of infective diseases, could seriously have effects on Starbucks business. (Annual Report, 2009) But, the company’s willingness to make sure its effects on the environment to be as positive as possible can help in building a good name. Technological The company is dependent on its information technology system to perform functions of operational and management level tasks including supply chain, point-of-sale and other transactions. If failure of its system may occur, there are a lot of delays and losses in sales and business process which will finally drive to reduce the efficiency of the company. The technological advancements such as SAP systems offer Starbucks opportunities in managing and controlling its business processes while an abrupt technological shift or security attacks may play an adverse effect on its information system. Opportunities Opportunities are conditions in the external environment through which a company can get benefits to become more profitable. (Hill, 2008) For Starbucks, new products and services can be ...Download file to see next pagesRead More
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