Starbucks Swot Analysis

Starbucks is a globally recognized brand in coffee and beverages.  Initially focused on in-home brewing, Starbucks, led by Howard Shultz, pursued the "personal relationship that people could have to coffee, the social aspect" (Buchanan & Simmons, 2009, p. 2).  

The environmental analysis of Starbucks follows:

Strengths:

• Starbucks has a strong financial position, in 2016, US Stores "Consolidated net revenues grew 16% to $5.7 billion" (Starbucks Reports, n.d.). Globally, "Consolidated net revenues grew 11% to $21.3 billion" (Starbucks Reports, n.d.).   Resulting in Starbucks position as the number one coffee and beverage retailer in the world.

• Brand recognition among consumers is an intangible strength.  Their name evokes quality and excellence in the market.  Affording Starbucks the ability to charge a premium for their products in a very competitive market.

• Starbucks has an employee-first culture that is "tightly linked to the company’s distinctive capabilities" (Leinwand & Davidson, 2016).  By fostering an employee-first approach to management, it enables the mission of being their guests' "third place."  Incorporating the diverse backgrounds of employees in order to create a welcoming environment for customers of diverse backgrounds, has allowed the company "to deliver on its strategic goal of being that “third place” that customers value" (Leinwand & Davidson, 2016).

• Starbucks pioneering top-level management team has allowed the company to diversify its product offerings, expand globally, and compete with low-cost competitors.

• Due to Starbuck's ethical sourcing programs, "Starbucks consistently pays premium prices that are substantially over and above the prevailing commodity coffee prices"(Alexander, 2015, p. 248).  Creating an environment whereby Starbucks is not sensitive to fluctuations in coffee bean prices.

Weaknesses:

• Starbucks has recently been accused of violating its own Fair Coffee Trade policies.  "Just 8.5 percent of its coffee is Fair Trade certified, and Starbucks' self-certified coffees do not have to pass any outside review, only the company's own criteria, and in-house standards" (Kessler, 2015).

• Product pricing is typically above the budget of the typical working class American, causing many consumers to choose lower-cost options like McDonald's and Dunkin Donuts.  

• Product placement is outside the typical working class American male's perception of a cup of coffee.  Considered "yuppie drinks" (Buchanan & Simmons, 2009, p. 12).

• Heavily reliant on oil and gas prices for product transportation.  Starbucks is not recession proof "due to their broad customer base” (Buchanan & Simmons, 2009, p. 13).

• Continuing to diversify, Starbucks still offering a limited food menu.

Opportunities:

• In urban areas, grab-and-go is becoming extremely popular.  Starbucks has an opportunity to continue to diversify and expand its lunch offerings.

• Starbucks has an opportunity to expand its supplier base, and improve their supply chain, allowing them to be less susceptible to the volatile markets for tea and coffee.  

• Starbucks can continue to expand into emerging markets, broadening their global reach.

• Starbucks can continue to diversify its position within the United States by opening retail outlets in new markets.  

Threats:

• Starbucks continues to battle questions concerning its Fair-Trade Coffee policies.  Millennials, the largest demographic in the world, are acutely aware of what brands represent, Starbucks can quickly alienate a large proportion of Millennials thus cutting into their revenues significantly.

• Starbucks operates in a highly competitive market.  The quick service restaurant chains like McDonald's and Dunkin Donuts have "been making a big push into the coffee business in recent quarters, and this could become a big challenge” (Dalavagas, 2016).  

• Trends such as home juicing, tea brewing, coffee roasting can potentially damage some of Starbucks revenues.  

• Starbucks faces an increasing level of power from its suppliers due to its Fair-Trade Coffee policies.  To a degree, this opens up Starbucks to vulnerabilities.  

• Starbucks faces the potential for new entrants to emerge in this mature market.  "there is room for a new entrant to that industry to attract enough customers that it hurts Starbucks' bottom line, either in a region or a local market" ("Starbucks - Porter's," 2016).  This will not be in the form of a single competitor but many who create large, local, loyal consumer bases.  

References

Alexander, P. B. (2015). Corporate social irresponsibility. Retrieved from https://books.google.com/books?id=IMqgBgAAQBAJ&pg=PA249&lpg=PA249&dq=starbucks+dependency+on+oil&source=bl&ots=LbJ7pnIxwD&sig=Br0uhXHSPqKRn1phTTb9l3A1BiY&hl=en&sa=X&ved=0ahUKEwi_veOMteHUAhUBET4KHf1fB8cQ6AEIOzAD#v=onepage&q=starbucks%20dependency%20on%20oil&f=false