Starbucks is a network of coffee shops and a coffee corporation based in the United States. In 1971, Seattle, Washington, served as the location for the founding of Starbucks. As of the year 2018, the corporation has operations in 28,218 sites throughout the globe. There are more than 15,000 Starbucks locations in the United States alone, making it the biggest coffeehouse chain in the whole globe (Aminuddin et al., 2021). The company’s offerings include java, tea, baked goods, and sandwiches. In addition, customers may choose from a wide selection of food and drinks, including products suitable for breakfast, lunch, and snacks. Customers of Starbucks may participate in a customer loyalty program known as Starbucks Rewards, through which they can accumulate points for each transaction they make.
Starbucks was started in 1971 by three partners: Jerry Baldwin, Zev Siegl, and Gordon Bowker in Seattle, Washington. Starbucks’ initial site was a coffee bean roasting business, and it was not until later that they started selling coffee by the cup (Aminuddin et al., 2021). Starbucks initially only sold whole-bean coffee and did not provide prepared coffee to consumers. It was in 1986 that they decided to offer brewed coffee and espresso beverages. Starbucks is now the world’s biggest coffee chain, with over 22,000 stores. Since its modest beginnings, the firm has gone a long way, and it now provides a range of food and drink products in addition to coffee. The frappuccino, iced coffee, and Starbucks Double Shot are among their most popular menu items. In recent years, the firm has also worked to extend its culinary options, adding products such as breakfast sandwiches and salads.
Starbucks has consistently been recognized for its high-quality coffee and excellent customer service, regardless of size. The firm carefully selects its coffee beans and works with farmers to guarantee they are cultivated ethically and responsibly. Starbucks also sells Fairtrade and Rainforest Alliance-certified coffee. Starbucks attempts to provide a friendly atmosphere for all customers regarding customer service. The organization has a zero-tolerance policy for discrimination and provides training to all workers on building a welcoming and inclusive environment for everyone.
Despite its many excellent characteristics, Starbucks has received some criticism. The corporation has been chastised for its part in gentrification, the usage of throwaway cups, and tax evasion. On the other hand, Starbucks has attempted to address these issues by becoming more ecologically friendly and socially responsible. Starbucks is a vast and profitable firm influencing the coffee market positively (Kim & Park, 2021). The firm is well-known for its high-quality coffee and excellent customer service and has made strides to become more ecologically and socially responsible. While Starbucks has received some criticism, the company has also attempted to address these concerns.
Current Mission, Objectives, and Strategies
The company has aimed to extend its worldwide operations while improving its product offerings. Starbucks has recently aggressively increased its food options to attract more consumers and increase revenue. In order to keep up with companies like Dunkin’ Donuts and McDonald’s, the firm has been working to improve its digital and mobile capabilities. Starbucks’ overarching aim has been to broaden its worldwide presence while enhancing its product options (Tikson, 2018). The corporation has been especially active in extending its culinary choices to attract more consumers and increase revenue. Starbucks’ current purpose is “to inspire and nourish the human spirit, one person, one cup, and one community at a time” (Tikson, 2018, p. 4). The company’s goals are to expand its worldwide business while being more efficient and successful in its operations (Tikson, 2018). Starbucks has focused on growing its reach, improving its product options, and developing its digital and mobile skills to accomplish these objectives.
Industry Analysis
The annual growth of the coffee market indicates that it is a multibillion-dollar sector. All the way from the farmers who cultivate the beans to the roasters who process them to the merchants who sell them, the coffee business is a complex web of interconnected supply chains and value chains. The coffee giant Starbucks operates over 22,000 locations in 70 countries. Both the quality of their coffee and their dedication to social justice have made Starbucks a household name. Many other businesses, such as Dunkin’ Donuts, McDonald’s, and Peet’s Coffee, compete with Starbucks in the coffee market. The coffee market is forecast to expand in the years ahead, making Starbucks an ideal candidate to maintain its dominant position.
General Outlook
The coffee industry is thriving, with lots of space for expansion. Coffee consumption in the United States has surged by more percentage in the past decade. This is primarily due to the proliferation of specialty coffee shops, such as Starbucks, which have made coffee more accessible and attractive to a broader spectrum of individuals (Areiza et al., 2020). The coffee business is likely to expand in the following years. The worldwide coffee industry is predicted to reach $33 billion by 2025, with the specialty coffee category growing annually. The coffee market in the United States is predicted to expand from $23 billion in 2019 to $28 billion by 2025. Various causes are driving the expansion of the coffee business, including the expanding popularity of cold brew coffee, the increase of at-home coffee brewing, and the growing demand for fair trade and organic coffee (Areiza et al., 2020). As the coffee market expands, firms like Starbucks will have more opportunities to extend their reach and innovate.
International Outlook
Consumer patterns in the coffee market have shifted dramatically in recent years. People are more interested in tasting new and unique varieties of coffee, and they are prepared to pay a premium for a high-quality product. This has resulted in a boom in the specialty coffee sector, and Starbucks has become one of the world’s most successful firms (Nogalski et al., 2021). The firm has always been inventive and forefront of coffee market developments. Starbucks, for example, was one of the first firms to provide fair trade and organic and sustainably produced coffee. Starbucks has always prioritized offering a positive customer experience, contributing to its success. The firm provides a broad range of coffee, tea drinks, and snack products (Park & Jang, 2022). They also offer a loyalty program that pays clients to return often. Starbucks’ success stems partly from its ability to cater to diverse consumers. They have a varied product range, and their outlets are spread around the country.
Furthermore, the firm has a strong web presence and a smartphone app that enables clients to order and pay for their beverages ahead of time. In recent years, the corporation has experienced several issues, including racial discrimination charges and questions about its goods’ health impacts (Jacoba, 2022). They have, nevertheless, conquered these hurdles and remained one of the most successful organizations in the world.
Economic Forces
Economic factors that might affect Starbucks are inflation, interest rates, and unemployment. Due to inflation, Starbucks’ coffee and other items have become more expensive, making it more difficult for people to buy them. Interest rates have influenced the company’s ability to borrow money for growth or other objectives (Aminuddin et al., 2021). If interest rates increase, Starbucks may have to pay more to borrow money, which might harm its bottom line. Unemployment has impacted the firm by decreasing the number of prospective consumers with discretionary money who can afford to purchase coffee. Starbucks has been touched by all of these economic pressures in recent years. The company’s prices have increased due to inflation, but interest rates and unemployment have decreased the number of prospective clients. By expanding into new areas and launching new goods, Starbucks has been able to mitigate some of these negative consequences.
There are many significant participants in the coffee market, like Dunkin’ Donuts, McDonald’s, and Nestle. Therefore, the sector is quite competitive. Starbucks can maintain its lead over its rivals because of the quality product, exceptional customer service, and one-of-a-kind brand experience that it provides to its customers (Jacoba, 2022). Both the FDA and the USDA are in charge of regulating the coffee business. These organizations provide guidelines for the manufacturing and labelling of various coffee products. For Starbucks to continue to sell its goods, they are required to comply with specific standards. The coffee business has been subjected to many technological shifts throughout its history. Due to these developments, customers now have it much simpler to prepare their coffee, including installing automated coffee machines. In addition, clients can now purchase coffee online and have it delivered to their homes, thanks to the advent of the internet. The coffee business has been affected by sociocultural trends, including the growing awareness of the need to maintain a healthy lifestyle (Park & Jang, 2022). Coffee drinkers today are more aware of the potential health concerns linked with drinking coffee, including an increased chance of developing cardiovascular disease and cancer. Consequently, many individuals decide to reduce their coffee consumption or convert to decaf.
Summary of Opportunities and Threats
There is much competition for market share in the coffee business, which is why there are so many giant corporations in the field. Starbucks must always be innovative and develop new methods to appeal to consumers to maintain its position as the industry leader and remain ahead of the competition (Tikson, 2018). The price of coffee beans, the amount of labor available, and shifting preferences among consumers are some of the outside factors that impact the coffee business. These considerations may play a significant role in determining the level of profit that coffee businesses achieve. For instance, if coffee beans go up, businesses must decide whether to increase their pricing or look for methods to reduce their expenses. If there is a shortage of employees, businesses could have little choice but to increase salaries or increase the number of procedures that are automated. Furthermore, if customer preferences shift, businesses must modify the available products to meet the demand.
In addition, there are a variety of possibilities and dangers that are shared by the many businesses operating in this sector. The ever-increasing need for coffee, the ever-increasing popularity of specialty coffees, and the ever-increasing number of individuals prepared to pay a premium price for high-quality coffee are some of the essential potentials (Kee, 2021). To stay ahead of the competition and hold its position as the industry leader, Starbucks needs to always be creative and create new ways to appeal to customers. In addition, they need to be aware of the external influences that might affect the sector to capitalize on possibilities while simultaneously minimizing risks.
Strengths and Weaknesses of Starbucks
Starbucks is commonly linked with quality coffee and a premium coffeehouse experience and is one of the most recognized brands in the world. The brand has established a solid reputation for its high-quality coffee, courteous and experienced baristas, and modern and cosy coffeehouses. A Powerful Brand and Reputation: Starbucks is one of the most famous brands in the world, and it is often linked with high-quality coffee and a high-quality coffeehouse experience (David et al., 2021). An Experience at a Coffeehouse that Is Both Comfortable and Stylish Starbucks coffeehouses are known for their high levels of comfort and style, as well as their ability to create an atmosphere that is both friendly and soothing for their clientele. Baristas Who Are Educated and Polite Starbucks baristas are famous for their ability to provide excellent customer service in addition to their friendly and knowledgeable demeanor. High-Grade Coffee: The coffee sold at Starbucks is usually regarded as high quality, and the firm imposes stringent quality requirements on the beans it uses and the processes it employs to make the coffee. A Powerful Emotional Connection with Customers Starbucks has established a powerful emotional connection with its customers. They often consider the firm a “third location” outside their homes and employment, where they may unwind and interact with others.
Starbucks has been attacked in recent years for its lack of creativity. The firm has been criticized for its delayed response to coffee industry developments, such as cold brew and third-wave coffee growth. However, Starbucks has developed several new items, like the Nitro Cold Brew; they are seen as incremental rather than revolutionary breakthroughs. Starbucks’ expansion has become more dependent on the U.S. market, which makes a large share of the company’s revenue in 2016 come from the United States. This reliance on the U.S. market makes Starbucks susceptible to the country’s macroeconomic realities. Starbucks is often criticized for its expensive pricing, which is typically the company’s coffee is more costly than its rivals.
Primarily, the firm offers coffee and espresso-based beverages. While it does provide food products such as pastries and sandwiches, they account for just a minor portion of its total revenue. This limited product selection makes Starbucks susceptible to shifting customer tastes. Starbucks faces competition from low-priced competitors such as McDonald’s and Dunkin’ Donuts. These businesses provide comparable goods at a cheaper price point. This might undermine Starbucks’ consumer base and market dominance, posing a danger to the company. Starbucks has expanded slowly into overseas markets. The firm has a presence in just a few nations outside the United States. This reduces its capacity for expansion and exposes it to currency risk.
(IFE) Matrix
Strengths
Starbucks is a well-known business with a powerful brand identity that is recognized all over the globe. The firm sells a wide range of products, some of which are food, while others are beverages such as coffee and tea. Starbucks is known for its robust customer loyalty program and extensive customer base (Luo, 2020). The corporation owns and manages many retail outlets under its brand name. Starbucks is in a solid financial position, as seen by its high profitability and low level of debt.
Weaknesses
Starbucks’ products depend on the coffee bean, which means that the company is vulnerable to price swings. The items offered by this organization are priced rather expensive, which may prevent it from attracting customers that place a great value on cost savings (Nogalski et al., 2021). Starbucks has a small foothold in other countries worldwide compared to its rivals. The firm is up against severe opposition from specialty coffee chain stores and merchants catering to the general public.
References
Aminuddin, M. A., Abdullah, N. F., Mazlan, N. A., Mohd Idris, A. A., & Mustafa, A. N. (2021). Starbucks Coffee Company: Coffee cafe company. Web.
Areiza-Padilla, J. A., Cervera-Taulet, A., & Manzi Puertas, M. A. (2020). Ethnocentrism at the Coffee Shop Industry: A Study of Starbucks in developing countries. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 164. Web.
David, M. E., David, F. R., & David, F. R. (2021). Closing the gap between graduates’ skills and employers’ requirements: A focus on the Strategic Management Capstone Business Course. Administrative Sciences, 11(1), 10. Web.
Jacoba, J. (2022). Starbucks strategic analysis. Web.
Kee, D. M., Hidayah, N., Syamilah, H., Nasuhah, N. N., Syasya, N. H., & Norathirah, W. (2021). How Starbucks maintain its competitive edge? – The secret of its success. Journal of the Community Development in Asia, 4(2), 34–43. Web.
Kim, J.-E., & Park, E.-S. (2021). The spatial design marketing strategy of global franchises that take into consideration the characteristics of modern consumers—a study involving the global coffee companies of Starbucks and Blue Bottle. Land, 10(7), 716. Web.
Luo, P. (2020). Competition of Starbucks and Luckin Coffee: who will be the winner in China? (Doctoral dissertation). Web.
Nogalski, B., Nguyen, H. T., & Kuc, B. R. (2021). Comparative analysis of internal business environment of Van Lang University and Van Hien University using IFE matrix. International Journal of Advanced Multidisciplinary Research and Studies, 1(1), 10-15. Web.
Park, K., & Jang, S. C. (S. (2022). Do coffee chains have strategic superiority? An examination of the intra-regional and size strategies of coffee chains. International Journal of Hospitality Management, 105, 103254. Web.
Tikson, S. D. (2018). Human resource policies and work culture: A case of Starbucks. JBMI (Jurnal Bisnis, Manajemen, Dan Informatika), 15(1), 1–12. Web.