MGT499 - Strategic Management Mod 4 SLP - Essay Example

Starbucks Internal Strengths and Weaknesses Analysis Founded in year 1971 in Seattle as a single coffee house, Starbucks Corporation today is one of the most successful companies and the largest coffee house company in the world. Starbucks Corporation has over 18,190 outlets operating globally across 45 countries and an annual turnover of US$ 7,786.9million for fiscal year 2007 (Starbucks Fact Sheet 2008). Its rapid expansion from a single outlet selling roasted coffee beans in whole and grounded form to an internationally renowned chain of coffee houses serving a wide variety of coffee beverages, snacks and the overall Starbucks experience warrants an analysis of how well the company manages its internal strengths and weaknesses by optimizing its core competencies and developing its weaknesses that will allow it to achieve its company mission and objectives.

StrengthsOne of the biggest strengths of the company lies in the dedicated and exceptionally skilled workforce who is well trained. Company strategy has always been to reward excellence of employees and Starbucks is today among the best companies to work for as per Fortune 500 ratings and Financial Times ratings. With attractive fringe benefits, stock option plans and high wages and salary scales, the Starbucks refers to its employees as partners, promoting commitment and loyalty and this is one of the key resources of the company which is hard to imitate due to “social complexity” involved ( Barney 1991).

The company utilizes this strength in many ways. It has used the service staff’s skills in customer care and overall enthusiasm to create an in store atmosphere that is cozy, friendly and home like that they have branded it as the “third place” in life. The regular customers are called by name and the Baristas of Starbucks outlets remember their usual drinks. Such customization has been at the cornerstone of Starbucks success. Another internal strength is the Starbucks special SWOT team specializing on stores opening.

They have an excellent track record of location scouting and opening new outlets in cost effective and speedy fashion. This strength has allowed the company to make right location decisions and the use of in-house design and fabrication teams has allowed Starbucks to cut costs in outlet openings and also maintain the unique Starbucks ambiance in line with company expectations. Optimization of this strength has allowed the company to drive its expansion plans aggressively. Financial strength and low costs is strength.

This is achieved through large scale roasting and milling facilities, contractual purchasing, and commodity hedging and currency hedging activities to counter the international market turbulences. The company has used this strength effectively to invest on new outlets, expansions of operation capacities as well as to reward its stakeholders though high profits, high salaries and benefits, high contribution to community such as Starbucks Red card contribution Large number of stores and global presence is yet another strength which the company has utilized to expand is business and benefit from economies of scales as well as to reach its customers conveniently.

WeaknessConsidering the weaknesses of the company, its retail sales division has not experienced much attention up until recently. This is mainly due to the lack of own distribution operation to cater to the mass retailing sector. However the company has recently widened its retail product portfolio to include few lines of specialized coffee brews, sachet form of Starbuck Double, Prapuchino and ice cream which will widen their business domain and keep them away from a myopic business outlook that will hinder growth in the long run.

Another main weakness is its high prices. The company has not countered this weakness much but justifies this as a part of their premium coffee offer. However, with economic crisis escalating, people may opt to drink their coffee at other optional places as Dunking Dough Nut or Petes coffee instead of Starbucks at 1/4th the price of Starbucks (Higbee, et.al 2007). References:Barney, J. B. (1995) “Looking Inside for Competitive Advantage” Academy of Management Executives. Nov page 49Starbucks Home Page. 2008. Retrieved from http://www.starbucks.com/mission/default.

aspCompany Fact Sheet 2008. Retrieved from http://www.starbucks.com/aboutus/Company_Factsheet.pdf