Starbucks Corporation: SWOT Analysis
Starbucks Corporation is a leading roaster, marketer, and retailer in the coffee industry in the world. It is worth noting that the company has remained robust and competitive in the sector since its foundation in 1971 (Starbucks Corporation). The mission of the organization is to inspire and nurture the human spirit through its products. Essentially, it is important to look at the competitiveness of the company into details. In fact, the discussion applies the SWOT analysis as the tool to evaluate the internal strengths, weaknesses, opportunities as well as existing threats.
In essence, the strengths are the factors that make the business competitive and successful (Ferrell and Hartline 122). The first resilient point of the firm is its favorite brand image. Indeed, Starbucks is well known in the world market making it easy to attract new and retain old customers. Consequently, the company has accumulated many loyal clients while new ones are attracted as they seek to experience the fulfillment of the favorite products. The second strength is the extensive global supply chain developed over the years. Notably, the company can source the materials and reach out to the wide market that assists in expanding the revenue and profit earned. Evidently, its financial assets grew from $14,866,800,000 in 2013 to $ 16,447,800,000 in 2014, and then to 19,162,700,000 in 2015 (Yahoo Finance). Thirdly, the outlets of the company have got an aesthetic appeal, and they are located in the prime and strategic points to attract and be accessible to the customers.
On the other hand, weaknesses are the feeble points that are hinder the organization from realizing its full potential (Ferrell and Hartline 122). The first challenge that faces the company is the expensive products differentiated with high quality and Starbucks’ experience. As a result, the products are less affordable to many potential customers limiting its revenue and profits. Secondly, the company is largely dependent on the American market. As a matter of fact, reliance on a single market may risk its performance in case of an economic downturn.
Nevertheless, the company has a certain range of opportunities that can assist in enhancing its competitiveness. The first one is to expand its enterprise into the emerging markets. Fundamentally, the firm should expand in markets such as China, India, and Brazil among others as it continues with the large scale operations in its traditional markets while still embarking on expanding its product mix and offerings to meet the diverse customer tastes and preferences. Finally, the company should seek to utilize the modern technology to reduce the cost of production and subsequently lower the prices charged to clients.
On the other hand, Starbucks may face two fundamental threats. First, there is a growing competition in the coffee industry as new entrants seek to enhance their market share. Specifically, companies such as Dunkin Brands, McDonalds, and Pete’s Coffee among others are increasing the competition pressure in the market (Yahoo Finance). Secondly, the change in consumers’ tastes and lifestyle choices threaten the market performance of Starbucks in the future due to the presence of substitution. Besides, the markets in the developed world are saturated with new players. Therefore, the company may record a decline in income levels, particularly during the economic hardship.
As it is evident from the above analysis, it is clear that Starbucks Corporation is still the leader in the coffee industry. In fact, the company’s high-quality products, strong brand image, and positive financial performance are some of the key factors keeping its presence in the market highly recognized. In contrast, heavy reliance on the American market is the main flaw of company’s policy and business strategy of development. As such, the firm should seek to exploit the opportunities in the developing economies and make use of modern technology to minimize the current weaknesses and threats.
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