Analysis of Starbuck’s Case Study
Strengths
Starbucks, a coffee trading company is really on its way to achieving a substantial grip of the global market. With just a span of about 15 years, Starbucks had achieved an impressive increase in the number of shops to about 19,000 shops in the global market, up from 281 shops in 1999 with Seattle only has 17 shops. Since, its decision to expand, Starbucks has had a tremendous 20 per cent increase in sales since the company ventured into the global market with 2008, recording an outstanding $10.4 billion in sales. Nonetheless, the company has recorded huge profits since its conception peaking at $673 billion in 2007. Starbucks has managed to maintain an outstanding brand image, and this has enabled it to quickly recuperate after the closure of most of its stores. Moreover, the coffee company enjoys an extensive global supply chain which much supports its operations around the globe.
Weaknesses
Nevertheless, the company has not fallen short of weaknesses, to start with, it had registered massive losses in cost that lead to the closure of about 475 stores, mainly in the United States. In the past years, employee turnover rate has also dwindled owing to the mismatch between pay and workload; this had demotivated most of their employees, leading to some of them quitting and moving to other jobs. Again, the company gives its competitors an upper hand due to the easy imitability of the product. The product is no longer unique, and therefore most customers are being drifted away from Starbucks. The company is also greatly depending on their crucial input, coffee beans which entirely dictates their profitability margins. This dependence is quite dangerous as massive market price fluctuations might shake the stability of the company. In the recent past, Starbucks has received immense pressure due to its current unethical procurement of coffee beans from thirds world farmers. This unethical practice has seen the company stand accused of violating the “Fair Coffee Trade” codes of conduct.
Opportunities
The company has considerable opportunities in the global market, especially in emerging markets such as the third world countries the likes of Kenya in Africa and Afghanistan in Central Asia. This advancement will pull attention away from the United States, where the company is situated, and most of its revenues are generated. The installation of Wi-Fi networks will also help in attracting youths who are greatly indented to social media platforms. Also, there is a massive opportunity in business diversification where the company might opt to readjust their productions to incorporate other products like air fresheners of coffee-origin, and even fertilizers made from the waste products. This will reduce the over-dependence on coffee, thus cushion the company in seasons of intense fluctuations in coffee. Additionally, Starbucks sits on a great opportunity of improving alliances and partnerships with companies such as Walmart and Coca-Cola. These alliances will significantly enhance the market share of the company and even provide openings to beat competitors.
Threats
Starbucks is also victim to several threats posed from the external environment. First, is the threat of competitors who are selling their products at the lowest prices, thus enjoying price leadership. This threat has influenced the operations of Starbucks since the market price is unable to cater to their operating costs. This, in fact, led to the downfall of most of its stores due to high costs of operations. Furthermore, the threat of imitation of its products poses a significant challenge to the company cumbered with a reduction in sales due to the confusion posed on customers. Therefore, there are copyright and trademark violations by other coffee houses. Ultimately, the increase in prices has also greatly affected Starbucks, which entirely depend on coffee as its primary source of revenue. Consequently, revenue and profits are deemed to reduce at such times of price distress.