Strategic Fit Analysis of Starbucks Coffee Company

Economic conditions in the US and certain international markets could adversely affect Starbucks’ business and

It is measured using theRetail Price Index (RPI) in the UK. Business costs will rise for Starbucks throughinflation, as will shoe-leather costs as they shop around for new 'best prices ' of materials, menu costs will rise as Starbucks have to create new price lists. Also,uncertainty is created when making decisions not least because inflation redistributesmoney from lenders to borrowers. A firm that borrows L1000 during an inflation period will pay back less in 'real terms ' as the value of this money will decline over the period.* Competitors pricing - Competitive pricing from competitors can start a price war for Starbucks that can drive down profits and profit margins as they attempt to increase,or at least maintain, their share of the market.* Globalisation - Globalisation of the coffee market has meant farmers of the beannow earn less money than they used to. This can result in a decrease of people willingto do it for a living, which will mean a decrease in coffee produced, resulting in adrop in Starbucks supply levels and probably profits.* Exchange rates - Starbucks are affected by exchange rates when dealing withinternational trade. If the value of the currency falls in the country of a coffee supplier this enables Starbucks to get more for their $ or L when importing the goods to their country. This saving can be passed along to the customer. Exchange rates are forever changing throughout the world in today 's

"External factors influence a firm 's choice of direction and action and, ultimately, its organizational structure and internal processes. These factors, which constitute the external environment, can be divided into three interrelated subcategories: factors in the remote environment, factors in the industry environment, and factors in the operating environment… In combination, these factors form the basis of the opportunities and threats that a firm faces in its competitive environment," (Pearce & Robinson, 2004, p. 78). To create an experience unlike its competitors, Starbucks must constantly evaluate all areas of their business while capitalizing on economies of scale and eliminating redundancies.

In this technique, internal strengths and weaknesses of a company and external opportunities and threats faced by it are closely examined to chart a marketing strategy for the future (Forsyth, 2010, pp. 102-106). Major strengths, weaknesses, opportunities and threats of Starbucks are analyzed below.

The price has been rising, not simply due to the price of coffee itself, but because of the supply chain and the current economic situation around the world. Last year Starbucks had to raise prices globally, but especially in the United States and China, due to rising prices for coffee and other ingredients, but this year they are taking the hit from the rising coffee prices for the consumers (Baertlein, 2011). Although the prices of coffee had to be raised globally due to the high demand of the product and the cost of producing it, there is still a strong outlook for the coffee industry because of the large consumer base of the industry. The coffee industry is expected to continue growing through at least the year 2015 and even longer in other emerging markets around the world (Lingle, 2007). Even if the market in the United States begins to decline, there are other emerging markets for the specialty coffee industry. Due to Brazil’s rising economy, it is set to be the biggest coffee drinking country in the world with recent coffee consumer growth of 39% from 2000 to 2009 (Murphy, 2011). With Brazil’s upper and middle classes expanding, it has more money to spend on specialty coffee and other superfluous items. Brazil could be

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

The most effective method is to use SWOT that helps in identification of all analysis be it internal. The internal sources will be through Starbucks website and the externals information will be through government website. Evaluation of market strategy, these will include research of what is are the strong point and weakness of Starbucks competitors, factors influencing high sales for a company and finally companies that the company need to compete with for the organization to be successful.

Topic: An examination into the rise and fall of Starbucks Coffee Company and its relationship to certain microeconomic principles.

Starbucks strategies have successfully made them one of the biggest names in the coffee market globally. Starbucks has been able to survive the high competitive market and to differentiate themselves from other coffee shops by producing high quality coffee. Also, Starbucks successfully create a huge numbers of loyal customers worldwide by providing great services and high quality products. Starbucks was able to survive 2008 financial crisis successfully. In 2008, Starbucks net income was -53% that means Starbucks was losing so much many yet, 2009 Starbucks was able to not only stop their losses but also to gain a profit of 24%. However, Starbucks should be worry from the possibility of another financial

If the income of consumer decreases then the demand of coffee in Starbucks will decrease and will become an inferior good. Because consumer will start visiting McDonlad’s where the price of coffee is less than Starbucks.

1. What factors in the global environment provide opportunities or threats for Starbucks? How do Starbuck’s strengths and weaknesses match up to its opportunities and threats?

Such natural events are affecting production and price; this poses a problem for the bottom line. In addition, Starbucks does not seem to have suppliers in other regions; this is a major weakness that needs to be addressed immediately.

The threats to the Starbucks Corporation are associated with competitive rivalries in the coffee market, rise in price of raw materials, cultural and political factors related international business.

Locally, Starbucks operates in a monopolistic competition market. As stated in The Micro Economy Today this market structure is define as,” A market in which many firms produce similar goods or services but each maintains some independent control of its own price.” (page 238, Schiller). Indeed, coffee lovers have a variety of options as to where they get their caffeine fix. Due to a large amount of substitute for coffee and beverages Starbucks cannot price their goods higher than others. If they raise their prices too high, consumers will simply turn to other suppliers and Starbucks will suffer a loss in profits. In addition to having an abundance of substitutes another characteristic of having a monopolistic competition is low barriers to entry. The cost to enter the coffee market is relatively low and people who desire to enter the market cannot be kept out. New entrants threaten

In this paper, I will talk about Starbucks Company. I will define the influence of the vision, and mission of the company and primary stakeholders along with their overall success. An examination will be conducted to categorize five forces of struggle and their effect on the corporation. I will carry out a SWOT analysis to determine the opportunities, threats, strengths, and weaknesses. Founded on the SWOT analysis, a technique of opportunities and advantages will be exploited while threats and weaknesses will be diminished. Several types and levels of techniques will be talked over to operate the profitability and competitiveness. I will outline a plan of communication to make approaches known to all investors. Two corporate authorities will be designated to assess the efficiency of the regulating managers. I will also assess the effectiveness of management within the Company and come up with sanctions for upgrading.