Starbucks Internal and External Analysis

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Weaknesses (Internal Strategic Factors)

Starbucks has relatively high prices compared to McCafe or Dunkin Donuts coffee and may not be accessible to middle-lower income individuals. Also, Starbucks Coffee is easy to imitate many companies can serve coffee with premium quality while maintaining costs. Also, most of its revenues are generated in America, in case of a risk of recession the company must be able to still make profit in other parts of the world.

Opportunities (External Strategic Factor)

Starbucks can grow their business further by expanding and opening more stores in the Middle East and Africa to spread out their revenue. Asia is also a great place to expand due to the high population and rising economic growth rates. The company also has a great product mix, even though it’s a Coffee company it offers a wide range of snacks, sandwiches, juices etc.

Threats (External Strategic Factor)

The specialty coffee business remains highly competitive based on price, quality, service and convenience. Many companies in the U.S have expanded into the coffee business including Krispy Kreme, McDonald’s and Dunkin Donut. Also, Starbucks coffee can be easily imitated and succeeded which poses a threat for the company to innovate and continue to differentiate their products.

Starbucks Coffee Core Competencies

Starbucks has many core competencies which include their dedication to providing quality to customers and enhancing customer experience, continuous product advancement, care for employees and consumers, and its global expansion. Howard Schultz focused on providing freshly roasted and poured coffee of high quality that once customers tasted it they would be attracted to the taste and come back. The company has managed to maintain its core competencies in all its stores internationally.

Starbucks Resource Analysis

Starbucks uses its resources, capabilities and strong relationships with its suppliers, consumers, and stakeholders to achieve profitability and customer loyalty. As mentioned, Starbucks has been successful in offering a wide range of products such as coffee, teas, bakery goods etc. this has been achieved through Starbucks’s capability of forming strategic supplier relationships. Starbucks has expanded internationally investing in many countries in the worlds to increase their market share and firm revenue. They have chosen the perfect locations to open the store such as universities, malls, airports etc. The Starbucks brand reflects premium quality which is both a resource and a result of its capabilities, it has embedded in consumer cultures.

Conclusion

Starbucks has been able to achieve sustainable competitive advantage by providing premium quality of its products and as well as great customer service. Although the company may have weaknesses and threats present, they can overcome it because they have a strong market presence and brand loyalty compared to other low cost coffee industries. If Starbucks decides to diversify into other continents of the world, and cut costs while maintaining quality it would be the leading quality coffee company for a very long time, making it harder for other coffee firms to compete.

Sources

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