Marketing - SWOT Analysis of Starbucks - Essay Example

Euromonitor International (2004) lists the strengths, weakness, opportunities, and threats:

Strengths:

Globally, Starbucks is number one in specialty coffee and specialty coffee shops

Excellent brand equity and reputation for premium coffee

Concentrates on employee satisfaction and great working environment

 Continues to be the leader in innovation by offering Internet access in its stores, offering a Visa card, and new beverage

• Rapidly gaining success in the international markets
• Health-conscious, ethical, and environment-friendly
  
  Weaknesses:
• Starbucks is still highly dependent on one product which is coffee
• Green coffee costs are still high although Starbucks has locked down prices for a while
• There is no control over the price of milk that the company uses
• Starbucks does have some other menu offerings but it does not have a sufficient selection and offering so its competitors in that area are many
  
  Opportunities:
• Starbucks can continue to enter new international markets
• By adding items such as ice cream, it can expand its retail presence
• Adding more menu items that tie to its brand, Starbucks can keep up with its competitors
  
  Threats:
• Fluctuating costs of products such as coffee and milk
• Health-conscious consumers are decreasing their intake of caffeine, sugar, and fat
• A different taste of coffee is desired by people in different regions
• There may be an oversaturation of specialty coffee shops and places that fight to be the consumers “third place”
• Restaurants and fast food offer more food selections and yet are offering specialty coffee

PEST Analysis of Starbucks

PEST—is “an analysis of the external macro-environment that affects all firms.  P.E.S.T. is an acronym for Political, Economic, Social, and Technological factors of the external macro-environment.  Such external factors usually are beyond the firm’s control and sometimes present themselves as threats”, as stated by PEST Analysis (2007).

Starbucks Corp is one of the top ten coffee companies in the world with most of its sales in North America.  (Euromonitor International: Global Company Profile, p. 5, 2007).  Starbucks is not expected to enter international markets via licensing as food service is not its main focus.  Coffee is its main strength and that is considered a supplement/complement to retail services.  Its retail presence is strong in North America but limited to that region.  China is expected to become the company’s second-largest market.  Euromonitor International:  Global Company Profile, p. 5, 2007) refers to Euromonitor International Asia-Pacific and reports that China is  “expected to have one of the lowest forecast growth rates for fresh coffee, the category in which the company operates (12% over the 2005-2010 period compared to a world growth of 13% over the same period) and the company is up against some strong competitors in hot drinks.”  Berger, Buchman, Chase et al (n.d.) gives a PEST analysis:

Political Influences:

• Relationships between coffee-producing nations and the US
• State & Local government controls

Economic Influences:

• The constant demand for food and beverages
• Changes in disposable income could influence purchase levels

Social Influences:

• Consumer preferences could shift from coffee to other beverages
• Technological Influences
• The use of technology can  improve operational efficiencies