Strategic management analysis - Essay Example

The company is the largest coffee chain store in the world and has its operations in 61 countries with more than 20000 stores. The product portfolio of Starbucks includes hot and cold drinks, sandwiches, coffee beans, snacks, pastries, etc. The company has its foundation in Seattle long time back in 1971 as a roaster and retailer of local coffee bean and has expanded to a large extent since then. The company is the market leader in its coffee segment and its basic strategies are competence based strategy and the focus strategy based on which it adds value to its products and establishes the image of luxury and elegance (About Us 2012).

The report presents the strategic management analysis of Starbucks considering its international segment out of the three segments. The country chosen in its international segment is UK. Starbucks entered the UK market in 1998 with the investment of $83 million and launch of more than 60 stores (Lussier 2008). The present coffee shop market environment of UK is very competitive with presence of multiple players in the market including branded coffee shops, independent retail stores and small coffee stores presenting a tough competition to Starbucks (Weston 2009).

The report analyses the external environment of Starbucks with respect to UK coffee market, strategic capability of the company and the strategic fit with the help of suitable models such as Porter’s five forces, value chain analysis and PESTEL analysis. Task A (1): Analysis of Starbucks external environment Macro-environment: PESTEL Analysis Political: Impact 3 of 5- Coffee beans is grown in the developing countries. The major aspects about which the discussions keep going on in the UK political environment are work conditions and child labor.

The political influence is also high through tariffs and taxes (Press Release – Project Cafe11 UK 2011). Economic: Impact 4 of 5-The major business challenge for the industry as a whole is related to the economic recession of 2008. Owing to the recession period, consumers have become much more cautious with their discretionary expenditures due to the presence of high unemployment and debts on individuals (Weston 2009). Socio-cultural: Impact 5 of 5- People in UK spends more and more on coffee.

It is included in their trend to go out and have a cup of coffee. The expenditure on tea by UK people is 623 million pounds, while on coffee it is 738 million pounds. Customers visit the coffee shops not only for having a coffee drink but also for sitting down and have a relaxed time out of their daily hectic routine (The Future of the Coffee Market 2012). Technological: Impact 4 of 5- Technology has become advanced as better as well as cheaper coffee machines are available to make a good coffee at home, for instance Senseo.

Environmental: Impact 3 of 5- There is a considerable increase in the environmental awareness due to which coffee companies in UK have to remain concerned about the way their coffee beans are produced and roasted, the way of the designing of the supply chain and the manner in which they prepare and finally sell their coffee products (Weston 2009). Legal: Impact 3 of 5-