Starbucks Corporation Case Study

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Legal factors

The legal factors in the PESTLE analysis are the laws and regulations on business. Starbucks must address the following legal external factors:

Health and Safety law

The first preference of the government for its nation is to keep the people healthy and safe. Before the initiation of any food sector, the government makes sure that the company is using right and ethical products to produce the goods.

Local license and permission

There is a great legal influence on the expansion of the company. To expand the company, they need to have a proper legal permission from the government.

Trade laws

Coffee is a commodity which is often being imported from the other nations which have the suitable climate and environment for its growth. For import, the trade laws should not be strict so that the company can maintain a good relationship with the countries as well as bring in the coffee easily.

Environmental factors

This component of the PESTLE analysis identifies the effects of ecological or environmental conditions on business. Starbucks faces the following environmental factors:

Business sustainability

The business sustainability trend focuses on business processes that ensure minimal environmental impact.

Responsible sourcing

Responsible sourcing emphasizes corporate social responsibility in the supply chain. Starbucks has opportunities to enhance its performance in these areas. Note that the company already has responsible sourcing policies which talked above.

Environmentally friendly products

Starbucks also can offer more of its products in recyclable packaging. They are using more of the bio degradable material for recycling

SWOT Analysis

Strengths

The Highest Quality: They give the highest importance to the quality of their products and avoid standardization of their quality even for higher production output.

financial performance: its strong financial performance which has resulted in the company occupying the number one spot among coffee and beverage retailers in the world.

Human Resource Management: They are the main assets of the company and they are provided with great benefits like a stock option, retirement accounts and a healthy culture. This effective human capital management translates into great customer services.

Strong Market Position and Global Brand Recognition: Starbucks has a 37% market share in the United States and has operations in over 60 countries. Starbucks is also the most recognized brand in the coffeehouse segment. Such strong market position and brand recognition allow the company to gain significant competitive advantage in further expanding into international markets and help register higher growth in both domestic and international markets.

Diverse Product Mix: To expanding its menu, Starbucks began to diversify. They have Seattle’s Best Coffee, Teavana’s Heaven, Torrefazione Italia, Evolution Fresh, La Boulange to offer different products.

Social Responsibly Initiatives: their stores are community friendly, focused on recycling and reducing waste. And they concern about foreign works life.

Customer base loyalty: they have implemented loyalty-based programs to drive loyalty with the Starbucks Rewards programs and Starbucks Card.

Use of Technology: Starbucks has made online shop locator to make the process easier for the customers to reach to the store. Starbucks is also doing online delivery of their produced coffee.

Capital: strong financial performance which has resulted in the company occupying the number one spot among coffee and beverage retailers in the world

Weaknesses

Coffee beans affect: the company is heavily dependent on its main, which is the coffee beans, is acutely dependent on the price of coffee beans as a determinant of its profitability. The company must immediately diversify its product range to reduce the risk.

Aggressive expansion: by aggressive expansion due to overcrowding in the market leads to self diminishes long term growth targets of Starbucks.

Price war: the company prices its products in the premium to the middle tiers of the market segment. Many consumers prefer to visit McDonald’s and other outlets for their coffee instead of Starbucks.

Overdependence in the U. S. market: Starbucks generates a huge percentage of their total revenue from the US and this makes it very sensitive to prospects of the US economy and growth.

Opportunities

Expansion to a new market: most governments around the world are improving infrastructure. This development policy creates the opportunity for Starbucks as well other companies to access more markets or suppliers. Also, international trade policies give convivence to companies to trade their products and enter a market. For Starbucks, it promoted its global expansion.

Economic growth: The economic growth after the crisis creates opportunities for Starbucks to gain more revenues from various markets around the world.

Expand its product offerings: Starbucks recently started to expand their product mix by venturing into the Tea and fresh juice product offerings with a smart acquisition strategy.

E-commerce: Starbucks has made online shop locator to make the process easier for the customers to reach to the store. Starbucks is also doing online delivery of their produced coffee.

Threats

Increased Competition: The biggest threat that Starbucks faces with the market being at a mature stage, there is increased pressure on Starbucks from its competitors like Dunkin’ Donuts, McDonald's, Caribou Coffee.

Material cost: the rising prices of coffee beans related to fluctuations in the prices of its main products. Further, the increase in the prices of dairy products impacts the company adversely leading to another threat to its profitability.

Local license and permission: there

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