Business Environment: Starbucks
Business Environment: Starbucks
Starbucks is an American corporation that prides itself as a premier roaster, retailer, and marketer of specialty coffee across the globe. It was founded in 1971in Washington’s Seattle (Goldstein, 2009). The company has opened over 19767 stores in 62 countries while it has about 182,000 across the globe. Starbucks’s product mix includes handcrafted and roasted premium priced coffees, cold blended beverages, Italian style espresso beverages, rich-brewed coffee, premium teas, and equipment and accessories related to beverages (Goldstein, 2009). In most instances, businesses are entirely independent as a result of the various environmental factors that influence their actions and activities within the network that they operate in.
External Environment
The porter’s five forces can be used to analyze a company’s environment. The threat of substitutes includes drink categories such as juice, aerated drinks, juice, soda and non-alcoholic drinks. Customers may change the type of drinks that they take. The threat of new entry is relatively high because coffee is easy to prepare. Big Multinational companies, such as Subway, KFC, Burger King, and Mc Café, are capable of adding beverages into their menu items (Tucker, 2011). Competition rivalry that Starbucks faces includes competition from Java Centrale, McDonalds, Pete’s Coffee, Mc Café, and Costa Coffee among others. The bargaining power that the suppliers and buyers possess is the other environmental factors that affect Starbucks Corporation.
Internal Environment
The core competence that Starbucks holds is in its ability to provide differentiated products based a premium product mix of snacks and high-quality beverages. The brand equity of the company is widely established around offering customers the “Starbucks Experience” and selling premium quality coffee.
Furthermore, the company has a cohesive internal structure that encompasses the training of employees as well as the management through an excellent training program that prepares them to be the best in the industry. Research suggests that Starbucks retail chain procedures, coffee production knowledge, and customer services are instilled in the company’s employees (Goldstein, 2009). Moreover, the company has an infectious culture that inspires its employees to strive for excellence and contribute meaningfully towards the company’s organizational goals.
Macro Environment
Macro environmental factors that influence Starbucks’s business lines are political, economic, social, technological, and legal. The political factors include taxation policies that affect coffee farmers while economic factors include currency exchange rates and international trade regulations that affect the importation of coffee. Negative economic growth results in reduced disposable income and a subsequent fall in the spending rates of consumers. From a social point of view, the income levels within a particular area directly influence the spending ability. In most cases, strategic positioning helps Starbucks to achieve higher sales (Goldstein, 2009). On the other hand, lifestyle changes in particular locations or region can influence the number of coffee consumers. Technological factors include the emergence of new coffee brewing machines and the use of information technology aspects, such as social media and websites, to attract consumers to Starbucks brand.
Competitive Environment
Starbucks Corporation competes and operates in the snacks and retail coffee store industry (Goldstein, 2009). Primarily, the company grew into a recognized and strong brand by understanding the strategies of its competitors. Furthermore, the company’s international competitors include McDonalds and Durkin Donuts while its domestic competitors include Caribou Coffee, Gloria’s Jeans, and Tully’s Coffee. Starbucks should continually differentiate, evolve, and grow (Tucker, 2011).
Managerial Decision-Making
A company’s management should make decisions that ensure that it stays competitive. Such decisions may involve making strategic decisions that result in high-quality products that satisfy the customers’ needs. Starbucks has succeeded in creating a competitive and unique brand that can thrive in global markets (Goldstein, 2009). The management should consider that factors that influence Starbucks business include its reputation, brand, and the success of its suppliers and business partners.
References
Goldstein, J. (2009). It's Not About the Coffee: Lessons on Putting People First from a Life at Starbucks. New Jersey: Pearson Press.
Tucker, M. (2011). Coffee Culture: Local Experiences, Global Connections. Stanford: Stanford University Press.
