Starbucks corporation - Essay Example

Download file to see previous pages In relation to the study the company which has been selected is Starbucks. Founded in 1971 and operating in more than 50 countries worldwide, Washington based Starbucks is the largest coffee retailer in the world at present. Starbucks has more than 16000 outlets all over the world. Out of these 16000 stores, nearly 12,000 stores are located across North America, South America, Europe, Middle East and the Pacific. In America, they have coffee outlets virtually in every corner. In other words, America is a saturated market for Starbucks now and they are looking for overseas markets as part of their expansion. In addition to coffee, Starbucks has other products such as tea, cake, cake filling leather goods, beverages, food, confections, coffee related machineries such as expresso machine, stainless steel coffee filters etc. Starbucks Corporation is a profitable organization, earning more than $600 million in 2004. The company generated revenue of more than $5000 million in the same year. Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. In 1992, Starbucks listed on the stock exchange. Since then, its growth was phenomenal. Its annual average growth rate is 20% and profit growth is around 30%. Its share price marked a record 3500% increase, since its listing on the stock exchange. In other words, the market value of Starbucks shares from increased from $400 million to $15 billion recently. Starbucks is a reputed company with huge brand value and enormous resources. Its major strength is the ability to forecast market trends correctly and to make changes in business strategies. It should be noted that Starbucks was one among the few American companies which was unaffected by the recent recession. Starbucks top management team is extremely smarter in guiding the company even in unfavorable market conditions. Not even a single management decision went wrong for Starbucks in the last decade. Satisfied employees are another strength of Starbucks. “They always treat the employees as their partners as mentioned earlier. Firm strategy, executive compensation and the performance of the firm can be divided into different streams and fit between firm strategy and compensation system is one among them” (Rajagopalan, n.d., p.4). Moreover, Starbucks is a socially committed company which gives something in return to the communities in which it operates. They are eager to recycle all industrial wastes produced by their activities. Smart business strategies, good suppliers, efficient leadership, talented employees are some other major strengths of Starbucks. Through the selling of coffee-related products such as brewing equipment and accessories, many consumers can enjoy high quality coffee at home rather than traveling out of their way. The equipment available includes Expresso machines, stainless steel coffee filters, and Starbucks cleaner and canisters. This is another example of how Starbucks is meeting the needs of current customers as well as increasing its attractiveness to potential customers (Kembell, 2002). Weakness “Starbucks products are expensive compared to their competitor’s products (Starbucks Swot Analysis, n. d)”. One of the major weaknesses of Starbucks is the heavy pricing of their products. Starbucks never bothered to reduce the prices of their products irrespective of the market conditions. They do believe that for quality products, heavy pricing may not affect the customers very much. Starbucks is trying to implement the same price which they charge in America for coffee products, in international markets also. They are forgetting the fact that America is a wealthy country and the per capita income of Americans is more than that of the people in other countries. In other words, they are thinking that same product needs same pricing everywhere in the ...Download file to see next pagesRead More