Starbucks Coffee Company - Essay Example

Table of Contents Table of Contents 2 Introduction 2 Industry Analysis 3 Opportunities 3 Threats 4 External Analysis of Starbuck 4 Environmental Analysis 5 Social/ Cultural Elements 5 Legal and Political Factors 5 Economic Factors 5 Internal Analysis 6 Strengths of Starbucks 6 Weaknesses 6 Core competencies 7 Conclusions and Recommendations 7 Works Cited 9 Abstract A business plan is important for people wanting to start a business, improve, or expand an existing business. A good business plan should be realistic and enable achievement of the set goals. A business plan should depict the short term and long-term goals and how they can be achieved. Starbucks Coffee Company is a leading coffee retailer that deals with roasting and retailing of coffee beans, selling brewed coffee, coffee related equipment’s, Italian-style espresso beverages, other cold beverages and some food items. The company was opened in 1971 as a small coffee shop at Seattle. The company was opened in 1971 as a small coffee shop at Seattle. The company has over 14, 000 outlets across the globe. The main goal of Starbucks is to provide the finest coffee globally in addition to a pleasant environment where the customers can enjoy the coffee. This essay will explore Starbucks coffee retailer company to come up with a plan on how Starbucks can improve on its operations. Introduction Started in 1971, Starbucks was initially owned by Gordon Bowker, Ziev Siegel, and Gerald Baldwin. As aforementioned, the first coffee shop was located in Seattle. In the 1980, Starbucks opened up other coffee shops in various regions but within the United States. In 1996, Starbucks started its expansion outside United States when it opened a coffee shop in Japan. This was followed by opening up of numerous coffee shops within and outside United States. Although coffee remains the major product, Starbucks also sells other products such as coffee related merchandise and accessory, ice cream, branded beverages, premade sandwiches and is increasingly adding other snacks to its sales (Starbucks.com Web). Moreover, Starbucks has recently branched into music business and sells recordings and CDs sold in the different retail outlets. Starbucks deals with a business that entails selling of services and goods. Like will be demonstrated in this paper, the quality of services is crucial and affects the sale of products in retail business. Although Starbucks remains one of the leading coffee retailers, it still has opportunities to improve on its products and services to maximize its sales, which will be discussed in this essay. There are certain issues and challenges facing Starbucks and will be addressed. Industry Analysis The coffee retailing industry is highly competitive. Starbucks competitors include McDonalds and Dunkin Donuts. Competition is mainly driven by the ease of opening retail business, which has led to flocking of retailers into the business. In the past, Starbucks has mainly focused on expansion of its outlets across the globe. However, the vast number of retails shops has resulted in management difficulties. Therefore, Starbucks plans should include improving the management of existing retail shops with reduced expansion. To understand the nature of coffee retail industry and the performance of Starbucks, the threats and opportunities of Starbucks were assessed (Khattab, Aziz and Naguib 1-5). Opportunities The coffee retail industry is expected to continue experiencing competition. Therefore, there if need for Starbucks management to identify the different opportunities. This will enable the company remain a successful competitor (Starbucks.com Web). Since Starbucks has gained wide popularity across the globe, it should focus on further expansion to regions such as Asia where coffee beverages gaining wider acceptance. However, improved management should accompany the expansion. Therefore, Starbucks should consider increasing the management team. This could be through categorizing its stores into regions and creating regional managements. This will ensure that the different regions are managed appropriately. Moreover, enhanced management will ensure that the internal matters affecting the company are addressed. Although the location of Starbucks stores is an important marketing strategy, Starbuck should start focusing on enhancing its advertisement through different media. This will enable the company enlighten the public on the various product it deals with. An additional opportunity for Starbucks is brand extension to include additional coffee products and include more food varieties. This will enable Starbuck widen its market even to regions where coffee is not a popular beverage. Starbuck can also sign licensing agreements with more companies to enhance its product distribution at a reduced cost. Threats The coffee retail industry is increasingly becoming competitive due to the growing number of retailers. Major competitor includes McDonalds, which retails products that are quite similar to those of Starbucks. Another threat regards the quality of coffee beans, which has been greatly affected by increased use of pesticides by growers. There is fear that the excessive use of pesticides might affect the quality of coffee. Additional threat is the change in lifestyle where people across the globe are evading caffeine-containing product such as coffee. This is likely to affect coffee retailing negatively (Paryani, 3-7; Starbucks.com Web). External Analysis of Starbuck The retails industry is characterized by intense competition. The competition is mainly driven by factors such as increased number of retailers. To demonstrate the effects of external factors on Starbucks an analysis of the environmental analysis is important. External analysis include industry analysis and environmental analysis (social, legal, political, elements) that affect Starbucks  Environmental Analysis Multinational companies such as Starbucks are greatly affected by environmental factors, which can be categorized into social, legal, political, and economic elements. One of the major strategies that Starbucks has focused on is creating an appropriate environment for its operations. This has been through signing of agreements and memorandum of understanding with organizations such as Fair Trade Labeling Organizations International. This has enabled Starbucks to get license for its operations as a coffee dealer in the different countries. Additionally, Starbucks has dedicated itself in improving the welfare of countries from which it imports its coffee. This has enabled Starbucks access quality coffee. Moreover, Starbucks is committed to SCORES, a non-governmental organization within United States. Social/ Cultural Elements Starbuck has managed to gain acceptance in different culture and social groups due to its engagement in community projects. Moreover, it employee are from different culture enhancing the acceptance (Khattab, Aziz and Naguib14-16). Legal and Political Factors The increasing tension between U.S and countries in regions such as Middle East is a threat to U.S companies operating in Asia. A good example is on July 2002 when Arab student called for boycott of American Goods including those of Starbucks (Khattab, Aziz and Naguib 16). Economic Factors The recent economic recession affect the performance of Starbucks in countries such as Japan and United States due to declined sales. Additionally, NGOs have been pressurizing Starbucks to purchase certified coffee beans, which must be grown in certain economic and social conditions (Khattab, Aziz and Naguib 15). Internal Analysis There are certain internal factors that affect the performance of any business. To depict the internal factors affecting Starbucks, it is important to discuss the Strengths, weaknesses, resources, capabilities, core competencies, Strengths of Starbucks Starbucks success is mainly attributed to its marketing policy. To be able to serve individuals from different countries and cultural diversity, Starbucks has employed personnel from different diversity. The employees differ in ethnicity, age, as well as social class. Moreover, the different coffee retail shops are structured differently to meet the varying tastes and preferences of customers from the varying cultures. The Starbuck retail shops are located in highly visible locations and the company does not have to use advertisements to attract customers. Starbucks has also created an appropriate external environment for its performance through corporate social responsibility. Starbucks engages in supporting activities such as sponsoring of youth activities and committing itself in activities aimed at reducing climate change (Starbucks.com Web; Paryani 6-10) An additional strength of Starbucks is its early establishment compared to its competitors, which has given it a competitive advantage. Moreover, Starbuck prides itself in selling a wide variety of coffee products, which are of good quality. This has enabled the company gain wide brand acceptance. Weaknesses Starbucks tends to lack focus on the internal matters. Although the company is still performing well, some of the retail shops are facing challenges such as those involving the employees’ welfare. However, Starbucks management has not managed to address these challenges adequately. Instead, the company has been focusing on expanding its operations (The Chartered Institute of Marketing 1-4). The number of coffee retailers has been growing rapidly which poses a threat to Starbucks. The competition might be quite strong since Starbucks tend to sell its products expensively as compared to its current competitors. Another weakness facing Starbucks is the small sized management, which cannot adequately serve the vast number of retail shops. This has result to the poor management of internal matters. Moreover, the number of retail shops is expected to continue growing and cases of under management are likely to increase (The Chartered Institute of Marketing 2-6). Core competencies The major competency of Starbucks is in obtaining the coffee beans, which are the major raw materials for its operations. Like stated in its mission Statement Starbucks is a premier purveyor of the best coffee in the world. This is because Starbucks buys its coffee directly from the growing country. Moreover, the company processes I coffee ensuring that it is of excellent quality (Khattab, Aziz and Naguib 1-5). Conclusions and Recommendations Starbucks Company has emerged as one of the leading coffee retailer though it started as a single small business in Seattle. Starbucks is expected to continue competing effectively, especially to the wide recognition of its products worldwide. However, the retail industry is expected to become more competitive. Starbucks is facing shortage in its management team. However, the direct interaction with the coffee producers has enabled Starbuck access quality coffee beans. Moreover, the quality of Starbucks coffee remains great. However, it would be recommendable if Starbucks focused on increasing advertisement strategies to increase its customers. Moreover, there is need for Starbucks management to focus on the internal problems facing the company such as the lees number of members of management team. Additionally, the Starbucks prices are quite high and the company should focus on other profit making strategies other than cost increment. Since the quality of its product has enabled Starbucks, retain its client the company should ensure that future expansions do not lead to reduced quality. Works Cited Khattab, Taghred, Ehab Aziz and Bassem Naguib. Strategic Analysis for Starbucks. 2005. Web. Read More