BUS

Starbucks is recognized as the world largest coffee house chain with more than 20,000 locations in the entire world. Since its establishment in 1971, this firm has been offering hot and cold beverages especially coffee and snacks. In recent times, this firm has increased its efforts towards selling branded goods like packaged coffee beans, mugs, and other gifts (3). This paper is therefore aimed at discussing the strengths and weaknesses of this firm, the tactic that this firm needs to choose to ensure that there is maximum use of its advantage as well as the tact it can use to fix the weakness. Other sections to be discussed in the paper include the tangible and the intangible resources, the core abilities, and the core competencies; two segments of the general environment that is likely to influence on Starbucks; the forces of competition; how to improve to address its ability in the near future to overcome the competition; the greatest external threat; and the greatest opportunity presented to Starbucks.

The strengths and weaknesses

The first strength is related to the quality, profitability, and ethicality. This firm has established itself as the premium coffee house chain despite the existence of the global presence especially firms producing fast food. The products produced by Starbuck are excellent in terms of quality, environmentally friendly, and consistent between regions. The next strength is related to the effectiveness and re-investment strategies used by the firm and this implies that the profit made by this firm is going straight to the expansion of the business and this is why this firm is increasing its chains all over the world. This organization is also treating its employee. It is among the top 100 firms according to the Fortunes Top 100 Places to work for due to the manner, in which it treats its employees.

With regard to its weaknesses, this firm is having a high price point and this means that many customers are being prevented from visiting this firm to make their purchase. Another weakness is related to the lack of over uniqueness of its products. This firm does not have a unique market and this, therefore, implies that it provides products, which are similar to the majority of those, which are being provided by other firms.

How to take maximum advantage of the strength and fixing of the weakness

One of the strengths of Starbucks is related to its quality, profitability, and ethicality. This, therefore, implies that the majority of the customers get attracted to the products being produced by this firm. Therefore Starbuck can take advantage of this strength to increase the prices since the majority of the customers will be willing to pay. For the purposes of reducing the weakness related to the high price point which appears to be pushing some customers away, this firm can increase its customer base by introducing new products and co-branding by targeting the supermarkets to attract more customers. Through the selling of their own-branded products in stores will help in the maximization of the value of their huge reputation (2).

Starbucks tangible and non-tangible resources, core capabilities, and core competencies

Starbuck organization is having both intangible and tangible resources or assets, which are put into action with the ability possessed by the firm. With regard to the tangible assets, there is the location of their stores, which is considered to be the additional company, which is owned by the Starbuck firm. The other tangible resource is the location for of the roasting plants where this firm buys its beans. The last tangible resource is the employee benefits package. Starbuck is having about 17,000 branded cafes in approximately 40 nations in the entire world. There are also about 9,000 regions, which are considered to be the corporate that is owned and license as well as other franchisees, which operate in more than 8,000 locations. Location assets are important for this firm since they are aimed at bringing about the experience to the clients with each cup of coffee (3).

With regard to the intangible resources, there is the existence of procurement processes of the coffee beans, the logo of the firm, the Shultz’s knowledge and the workers training programs. The procurement process or the roasting of coffee beans is playing an important role in the products of this firm. The log is helping in displaying the brand of this firm. The logo is representing the mermaid who has flowing hair that afforded her more modesty and the logo is used to present broader products of the firm.

Regarding the core-capabilities, this firm is having the abilities to productively utilize their resources. Other abilities include procurement process, which is relied on for the purposes of producing coffee, recruitment and training methods. The hiring practices of Starbuck are having the ability to recruiting proper workers that helps this firm to find a quality business. The core-competencies of Starbucks are its unwavering focus on quality, outstanding customer services, ongoing production advancement, caring for its workers, and a drive to operate everywhere in the entire world (3).

The general environment that would rank highest in influencing Starbuck

Usually, the general environment is consisting of dimensions within the society that is influencing businesses within it. Environmental segments are grouped into demographic, economic, political or legal, socio-cultural, technology, international, and physical environmental segments. Out of these environmental segments, the general environment that can be considered to be the highest in influencing on Starbucks is the socio-cultural and the physical environment. A socio-cultural segment is concerned with the mind-sets as well as the cultural values of the society. Starbuck has since made an effort to employee more than 5,500 veterans and spouses according to the announcement it made in 2013 over the recruitment of more than 10,000 military veterans and spouses. This firm has managed to use the American values towards the military and spouses to ensure that there is a promotion of greater firm while at the same time creating a workplace with diversity (4).

The physical environment segment simply means the ability as well as the actual changes within the physical environment in addition to the business practices that are aimed at constructively responding to and dealing with changes. Therefore, in dealing with this segment, this firm has put a focus on energy consumption, the sources of energy, the environmental footprint, and the production of environmentally friendly products for the consumers. Addressing issues related to environment is performed on an annual basis. All these segments are important in ensuring that there is a good relationship between the customers, society, and the government especially with regard to the observance on the ethical values (4).

The forces of competition

The common forces that shape industry include the presence of the competitive rivalry between the dealers, threat from the new market opening, the bargaining power of the purchasers, the power of the sellers, and the threats caused by the substitute products. Starbuck firm has remained competitive through providing its products via its grocery stores and licensing its brand for other products such as food and other beverage products. One of the forces of completion is the threat of the substitute products especially from its competitor like McDonald (2).

The substitutes for Starbuck coffee are tea, soft drinks, water, and energy drinks. In addition, pubs and bars are also considered as substitute places for other customers. Nevertheless, the suppliers of this firm have higher bargaining power since the demand for coffee is higher internationally and due to the fact that the production of coffee can only take place within a single geographical area. Another force of completion is the presence of competitive rivalry between the suppliers. The main competitor of Starbuck is McDonalds Corporation; nevertheless, Starbuck still rises above it despite the higher prices of its products. Starbuck is controlling more market share than its competitors (1).

What can be done to improve the two competitive forces?

The competitive force related to the presence of rivalry firm can be handled in the future by ensuring that Starbuck makes more investment in its initiative process to ensure that its products are unique from the competitors. Lack of unique products is one of the weaknesses of Starbuck and therefore if this is not done, then it means that the competitors will capitalize on this weakness. With regarding the threat from the substitute product at a competitive force, it is a time for Starbucks to reconsider the prices of some of its products. It is important to ensure that some of the products are charged at a price that can be afforded by many people (2).

The greatest external threat to Starbuck

The greatest external threat for this firm is the increasing presence of the substitution or substitutes to the products of Starbucks. There is high substitute availability lower switching cost for these products, and higher affordability of the substitute products. This threat can be overcome by making the products by this firm to be unique so that they can be easily differentiated from those of the competitors and attract more market share. Another solution is to ensure that the prices of the products produced by Starbuck are reduced or made affordable to the general public. This is important in competing against the wave brought by the new substitute products (1).

The opportunity presented to Starbucks

The opportunity presented to this firm is the ability to expand internationally. Even though this firm does have several coffee houses in the entire world, most of these coffee houses are found within the United States. There are a number of available market opportunities and areas which this firm can expand its stores to generate more profits. Some of the regions which Starbuck can expand its stores include India, Central Europe, and some African Nations. In Africa, Starbuck is having more bargaining power due to the absent as well as negligible switching cost for its consumers. There is the availability of offers for Starbuck firm. There is also a low threat of new entrance in Africa since the market seems to be an extremely saturated and considerable amount of financial resources are also linked with the buildings and assets that are acquired for the purposes of gaining entry in the industry (3).

References

Bush, T. (2016, April 20). SWOT Analysis of Starbucks, the World’s Leading Coffeehouse Chain. Retrieved August 30, 2019, from PESTLE Analysis: https://pestleanalysis.com/swot-analysis-of-starbucks/ Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: A set of industry analysis templates. Competitiveness Review, 24 (1), 32-45. Glowik, M. (2017). Case Study: Starbucks. Global Strategy in the Service Industries, 156-164. Kimball, D. (2016). Corporate Social Responsibility at Starbucks: 2016-2017 Issues for Discussion.