The significance of value analysis is demonstrated by the wide use of the SWOT analysis by every business nowadays. This test can be viewed as a feasibility test that predicts to what extent a business is going to be in a pre-determined duration. As a matter of fact, before any business embarks on strategies and sales methodologies, different kinds of tests that display the potential of the business are performed. This system is widely used to determine the position of businesses in a particular marketable ecosystem. For instance, a corporation that objectifies the profitability of its business entities will have to calculate its current profit state, the factors that hinder its profitability, as well as those that boost the process. The SWOT test is virtually a test protocol that evaluates a particular business with respect to extensive factors directly related to the organizational objectives of the business. To establish the efficiency of this evaluation system, we consider a case study, Starbucks’ Global Quest 200: Is the Best Yet to Come?
Fundamentally, SWOT analysis evaluates a business with respect to strength, weaknesses, opportunities, and threats in that chronological order (Erica, 2014). Each of these aspects can be classified as either external or internal depending on the influence it has on the business. The case study depicts the largest coffeehouse company in the world that displays its current state in terms of production, sales and profitability of its products, furthermore; it poses the question, Is the best yet to come? This questions the potential of the business to perform better than it currently does in the future. This is established through the SWOT analysis. To begin with, the business is evaluated with respect to the internal factors that give it strength in terms of sales and its image in the market.
Gauging from the business model provided the high quality of products that they produce gives them strength in their sales as a result of faith and customer satisfaction (Antoine, Bayou, Hazet, & Heberle, 2014). Additionally, the customer’s experience on having used their products before will automatically encourage the same customer to buy their products again at the expense of other products. Furthermore, their products have added value in the stores in which they are stocked in a number of strategies. In fact, stores have different methodologies that they use in distinguishing value attached to each product in stock. Owing to this, customers tend to believe in highly valued products that ultimately boost Starbucks’ sales.
The company also gets the strength and dominance it has in the market through its strategic location in the market that guarantees high customer attendance. As a matter of fact, the position of the market served by a particular business determines its success. This is a strategy extensively utilized by Starbucks that awards it strength. In addition to this, the loyalty that the company has displayed has awarded it good customer relations that have helped it up their sales. The company should capitalize on this factor to ensure greater results are achieved to guarantee continued success in the future.
Another significant aspect covered in the SWOT analysis is the weaknesses exhibited by the business. Unfortunately, this factor tables an aspect that disadvantages the implementation of organizational objectives. Starbucks has a weakness of overpricing their products, a factor that drives some customers away. It is noteworthy that the financial viability of a product determines its sales in the market; customers will most likely race for the less expensive product at the expense of the highly priced products, a market characteristic that weakens Starbucks. Additionally, Starbucks has a general weakness in communication.
In this context, a business should create strategies that ensure efficient and timely communication between all the stakeholders that govern its operation. A business needs to communicate with its customers in adverts, between its employees and in the form of policies within the organization. The failure of a communication system paralyzes the business in divergent fronts. Starbucks suffers from this aspect to a greater extent; it is advisable for the company to make efficient arrangements to boost its potential in communication.
Opportunities are the divergent factors from the external business environment that the business could utilize to boost the implementation process of its organizational objectives. Starbucks can virtually undertake tests on the markets and production environments to identify those factors that would benefit its processes. For instance, the international market provides the company with vast alternatives through which the company could exploit. In this context, the company could enhance its performance and viability in the market by creating newer sale niches in the international front. Additionally, there exist different trade policies in different markets that the company could exploit, for instance, fair trade is a business policy adopted by numerous states to enhance trade between its local markets with foreign traders. Starbucks can use this front to ensure future success in its sales.
Threats thwart the continuity and financial viability of the business in the respective sections they operate on. This is a study aspect in the SWOT analysis that evaluates external factors that seem to jeopardize the realization of the business objectives. Taking for instance the sale of coffee in a particular market could be threatened by various factors present in the same market. First, the presence of other coffee service provision companies will provide competition in the form of an alternative product at the expense of Starbucks’ coffee. Competition is a factor that threatens the sales of a particular product. In this context, businesses develop divergent strategies that give it a competitive advantage over others.
This is the sole prospect that determines the success of a business in a competitive front. Additionally, given the expensive nature of Starbucks’ products it is logical that the sale of its products will be directly related to the customer’s purchasing power. As a matter of fact, the probability that a customer purchases a product in the market is determined by his/her purchasing power. Additionally, the orientation of customers’ choice would also affect the number of customers who buy their products. Some customers have developed preferences with respect to the products they choose to use. In case an individual chooses to continuously use a particular product and leaves others of the same kind, it automatically reduces the sales of the other firms by a factor. This is coupled by the quality experience exhibited by different products in the market. All these factors are analyzed in the SWOT analysis to verify the current position of the business. Additionally, they are analyzed so as to predict the viability of the business in the future.
In conclusion, it is paramount that a business keeps track of its financial worth and the probability that it will operate successfully in a given market. In fact, a particular business of Starbucks can analyze each of its markets to establish the ones that benefit it most. In this manner, business can get the best of their strategies, sales, and production processes.
References
Antoine, M., Bayou, J., Hazet, C., & Heberle, C. H. (2014). Starbucks Coffee. Retrieved 03 9, 2014, from Slideshare: http://www.slideshare.net/yhelson1/starbucks-global-quest-in 2008-is-the-best-yet-to-come
Erica, O. (Director). (2014). How to Perform A SWOT Analysis [Motion Picture].
