Strategic Management Analysis - Starbucks in US - Essay Example

Starbucks initiated its business from United States but has extended it exponentially into other regions as well, however the United States remains its major market. Current political issues faced by it in US surround its strategic alliances, agreements with vendors, taxes and government policies. Starbucks has been importing its raw material mainly coffee beans from other parts of the world. The quality of the coffee beans serves as a critical factor for Starbuck’s success and an advantage over other competitors.

Government tariffs and political relations between the US and other countries have a direct impact on the whole beverage industry and in extension on Starbuck’s business performance. A thorough analysis of various indicators below, exhibit and inquire the performance of Starbucks as a business entity.  Few economic factors having the tendency of affecting Starbuck’s survival and development in United States; these factors are consumer ability to purchase, tariffs, exchange rates, and industry environment.

Like stated earlier, Starbucks has strategic alliances with a substantial pool of suppliers but most of them are from other countries. The always fluctuating exchange rates result in higher costs passed on to the consumer or reflected in the form of lower profit margins. Furthermore, overall economic scenario has a direct impact of its business. In 2008, consumer’s buying potential reduced substantially although Starbucks did not sustained heavy losses due to it but profits were also not very encouraging as compared to previous years.

With the ongoing economic recovery, consumer’s buying capability is improving however the risks are still realistic in a fragile economic environment with consumers not willing to spend on routine luxury consumables. In United States, Starbucks runs various segments in the form of coffee shops serving hot beverages, snacks and other consumer goods offered in customer friendly stores. The performance of Individual segments has a direct impact on its financial performance. In 2008 Starbuck’s lost on revenues and had to cut many jobs and close its loss incurring stores and franchises in other countries although since the reappointment of Schultz and restructuring initiatives the economic indicators show positive signs with an increase in a plummeting stock price.

Furthermore the Starbuck’s expansions in to India, China and other Middle Eastern countries are improved the finances of the company and even better results are expected in future.