SWOT analysis is one of the critical planning tools. In the global perspective SWOT analysis has the power to make any business more competitive in the market place. It is worth noting that SWOT analysis is a planning tool, which compares the weaknesses and strengths together with the opportunities and threats in order to develop an action plan in the business.
The essence of weaknesses and strengths are mostly based in the internal sector of the business. On the other hand, threats and opportunities are external factors to the business. The SWOT analysis in most cases is used as a business or organizational planning tool, but it can also be used for personal development. In order to focus on SWOT analysis Starbucks Corporation is the company to analyses. The company is a premier retailer and roaster of specialty coffee. It is worth noting that the company operates in Asia pacific, US, Latin America, as well as the Europe Middle East Africa (EMEA) (DATAMONITOR: Starbucks Corporation, 2011). The company has its headquarters in Seattle, in Washington. Starbucks Corporation operates in more than fifty countries, and continues to increase in its coverage.
Strengths
Starbucks Corporation has various strengths that have made it to be one of the competitive companies in the globe. One of the strength is the fact that Starbucks Corporation has wide geographical presence. This is actually achieved through expansion to many parts of the world. The company continues to expand to more than 50 countries. The international markets of Starbucks Corporation include Bulgaria, Brazil, China, Germany, Greece, Ireland Poland, Romania Thailand, as well as Peru just tom mention some (Lussier, 2012). In addition, the Company has strengthened its presence in various distribution channels.
The company focuses in undertaking various initiatives towards developing the brands through many channels. In fact, the channels help the company to meet its potential customers in where they travel, work, shop, as well as dine. The company also enters into tie-ups with other companies in order to strengthen its channels. Starbucks Corporations focuses on expansion through tremendous strategic agreements (DATAMONITOR: Starbucks Corporation, 2011). Another company’s strength is that the development and research capabilities are focused on in order to strengthen the portfolio of the company’s product. Other strengths that Starbucks Corporation focuses on is the issue of brand equity which has led to competitive edge in the market place.
Weaknesses
One of the company weaknesses is the fact that the company has recalled its products, which affects the brand image of the company adversely. For example, in the year 2010 the company recalled the glass water bottles in Canada and United States (Lussier, 2012). It came to the realization that the bottle could actually shatter while inserting the stopper which is an hazard to the customers. In addition, the recalling of peanut butter products due to outbreak of Salmonella is also part of the weaknesses of the company.
Another weakness is that Starbucks corporations have increasing store operating expenses, which affects the profitability of the company. On the same note the aspect if intense restructuring carried out in the company tends to affect profits (Kurtz & Boone, 2011). The weakening potential in the United States is also another weakness since the company earned a lot of revenues from United States markets. The class-action in various markets weakened the brand image of the company.
Opportunities
- The ever growing market in Asia is one of the greatest opportunities for the company. In fact, Starbucks Corporation has aggressively expanded its markets and business in Asia, especially in India and China.
- China is actually growing economically and the number of middle class earners is also in the rise. This change puts the company in a better position to market its products. The population of middle class earners in China is predicted to double in the next decade.
- India is also an avenue of many tea drinkers; hence, it is one of the potential markets that the company has expanded into (Kurtz & Boone, 2011). The rise of population in India and the increase of middle class earners have also increased the number of tea and coffee consumers.
- Another opportunity is the investment aspect meant to improve customer interface. The company is investing a lot of resources in enhancing the customer’s experience. For example, the launch of mobile payment tends to improve the company’s performance towards customers interface.
- The increase and expansion of single-serve coffee market in the United States is one of the opportunities. The variety of offers and convenience increases the single serve coffee demand regardless of its price increased (DATAMONITOR: Starbucks Corporation, 2011).
- Other opportunities include stable rating on issues of credit, which strengthens the confidence of the stakeholders. The introduction of VIA coffee by the company increases the many opportunities in the Japanese markets.
- The technological advancement is also another opportunity for the company to capitalize on it and enhance its service delivery
- The opportunity for brand expansion
- The plan to infiltrate into new markets internationally
- Discovery to enhance partnership with other global organization
- The use of internet in reaching the customers and customers making online orders is one of the greatest opportunity to be effective
Threats
- The increased minimum wage has affected adversely the operating margins of the company. The tight labor market in the regions where the company operates has led to increase in the labor cost, which influences the Starbucks Corporation operating margins.
- The discretionary spending has negative impact on the margins. In fact, the discretionary spending has reduced consumer confidence in the company’s brands (Lussier, 2012). The decrease in consumer confidence will affect the purchasing power
- The global recession has challenged the companies operation and the emerging economies are facing economic downturns..
- The issue of health is one of the biggest threats in the modern market place. It is worth noting that most of the Americans have become conscious on issues of health, which may increase the demand of Starbucks Corporation products (Kurtz & Boone, 2011). The products of Starbuck Corporation contain dairy products, caffeine, and sugar components, which has effects on human health. The increased scrutinies on issues of health pose a great threat to the company.
- The ever growing competition also another threat to Starbucks corporation
- The unstable prices of dairy products and coffee puts the corporation under big threat, especially on profitability
- The questionable economy
- Political tension in global markets threaten Starbucks corporation
- The economic imbalance
- The legal issues and requirements in various nations
- The global conversion rates due to its global operation
- Te company has saturated some coffee markets
References
DATAMONITOR: Starbucks Corporation. (2011). Starbucks Corporation SWOT Analysis, 1-12.
Kurtz, D. L., & Boone, L. E. (2011). Contemporary business. Hoboken, N.J: Wiley.
Lussier, R. N. (2012). Management fundamentals: Concepts, applications, skill development. Mason, Ohio: South-Western.
