Starbucks Situational Analysis

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- Economic:

- The recession of 2011 impacted the coffee purchases directed towards office users negatively. The economical fear of having scare discretionary income was in direct relation to decrease in sales directed to office users.

- The coffee market has progressively increased each year from factors such as a economical improvements, increase in discretionary money, and increase in employments

- Office Coffee Service Revenues on average increased more than one million and a half each following year after the year of 2011 with fluctuating Annual Percent Changes but seem to developing consistency in the years 2015 and 2016.

Year

Office Coffee Service Revenue ($Billions)

Annual Percent Change

2011

3.93

5.40%

2012

4.12

4.80%

2013

4.33

5.10%

2014

4.5

3.90%

2015

4.7

4.50%

2016

4.91

4.50%

- Regulatory:

- The International Coffee Organization (ICO) depicts most coffee organizations throughout the World. This can be a key factor to influences in price and supply of coffee.

- The Fair Labor Standards Act (FLSA) common attribute that devise a company in the coffee industry such as the work environment, wages paid to employees including overtime, and working conditions the employees undergo.

- This regulation of the (FLSA) have a direct impact on the operational implications that devise the company.

- Factors like limited overtime hours and minimum wage requirements lay a foundation that companies have to oblige by causing the companies to have to pay a certain amount for both legally regardless of what the company feels fit to pay.

- Fair Trade USA evaluates and certifies products that have been grown (such as coffee beans) and guarantee factors such as fair pay for goods and safe working environments for workers.

- Fair pay for the goods produced resolves the issue of discriminate prices but also enforces coffee shops such as Starbucks to pay a minimum regardless of their thoughts, for goods such as coffee beans.

- Upholding safe working conditions is to be regulated by management, which again has to be paid in order to continue inspection and maintenance.

- Cultural:

- Time is of the essence for many consumers today. Consumers wish to get in and get out of stores to continue forth with their days. Attempts to help accommodate such means resulted in the development of the first ever “express stores”.

- First express store was developed in New York and have been progressing. Express stores will soon be a common feature of Starbucks as time passes.

- Technology has developed a trend amongst Starbucks and their customers through communication with one another online.

- “My Starbucks Idea” has made communication between Starbucks and customers easier then ever for customers to not only embrace the Starbucks websites, but also inform Starbucks of creative ideas to help expand and progress the company.

- Fitness and Health have been a cultural trend amongst Americans in the recent years in efforts to diminish our past/ present normality of Obesity.

- Easy to see nutritional information has developed a since of transparency of information amongst customers and Starbucks.

- Starbucks have taken the initiative to develop healthy food alternatives and beverages that consist little to no sugars.

- Tips for Wellness and Fit- guides are available on Starbucks main website.

- Technological:

- Technological advancements have changed the way consumers live and are commercially informed of products. Starbucks incorporated ways of informing and rewarding customers other then just there website.

- Starbucks Rewards mobile-payment application:

- More than 12 million customers use this application worldwide

- It rewards customers for payments that they already were going to originally purchase from the store but authorize payments through the app. (Rewards are awarded after a certain amount of purchases are made)

- According to a company called Comscore, this reward/ payment application is the third most popular app used my American consumers

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- Wi-Fi:

- Free Wi-Fi is a commodity that is relatively new within the years but has implemented a new way of obtaining new customers and keeping them.

- Free Wi-Fi is a great resource for consumers who are tech savvy and use the are regularly on the internet such as:

- Middle aged children from the age of 12- 17 (typically accompanied by an adult)

- Young adults from the age of 18- 29 (Especially college students who drink coffee consistently and you the internet for school)

- Middle aged adults from the age of 30-45 (Use the Wi-Fi to check emails, file reports, and work related means on the internet)

- Older generations typically don’t jump at the fact of free Wi-Fi but are represented in a small number

- Supplier/ Distributor:

- Suppliers: Starbucks controls its coffee purchases, operations involving distribution of goods, and packaging of goods. Starbucks gathers the finest coffee