Paper due

Starbucks Coffee Company

Starbucks coffee company was established in 1971 in Seattle Washington. Operating in just a small storefront, Starbucks has acquired its position to be the largest coffeehouse chain worldwide (Starbucks: The Early Years). Starbucks has about 291,000 plus employees around the world in 77 countries. Their product mix includes many handcrafted beverages, sandwiches, teas, spices, etc. Starbucks’ mission statement is, “To inspire and nurture the human spirit---- one person, one cup, and one neighborhood at a time”. Although, Starbucks is the world’s largest coffeehouse, they have strengths, weaknesses, and threats like any other business. Today we witness a new coffee era, made up of many different drinks such as Espresso, Macchiatos, Frappuccino’s, Cappuccinos, Lattes and more. It is very important for Starbucks to exercise many different strategies to stay ahead of their competitors. This essay will discuss potential growth opportunities and strategies that could enhance Starbucks coffee.

SWOT analysis is a unique framework used for analyzing a company’s strengths, weaknesses, opportunities, and threats. The framework allows companies to build on their success, address the things they lack, minimize risks, and take advantage of opportunities (Hitt, Ireland, & Hoskisson, 2017). Starbucks coffee has many strengths. Starbucks corporation is one of the most admired companies worldwide. Starbucks is known for treating their employees well, which reflects in how they treat their customers. They offer a mobile app where customers are able to place orders and pay in advance to prevent a long waiting time. This company has acquired six companies which are Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh, Ethos Water, Coffee Equipment Company. Starbucks was very profitable in 2019, their revenue was 26.5 billion dollars (Starbucks Company Timeline). One of the main weaknesses Starbucks has is that some consumers think their coffee is costly compared to their competitors. In 2018, Starbucks recalled their bodum press coffee maker which caused a negative effect on the company’s image. Opportunities for Starbucks Corporation incudes global expansion, more gender-neutral bathrooms and the introduction of new products. Starbucks is worldwide, but mainly in the US. They now have the opportunity to expand into China and a few other regions in the world. Starbucks has introduced gender neutral bathrooms that indicates support for customers and employees’ rights. Lastly, they bring back their holiday flavors every year in December, they are known for introducing new products every year, which gives them more opportunities to bring out new flavors. Threats that Starbucks may encounter include competitors’ low rates, imitation, and profit lost because of COVID-19, as well as Black Lives Matter controversy (Starbucks Stories, 2020). Competitors low rates make consumers go elsewhere which is not good for business. Some of the products Starbucks offer are being imitated, which isn’t good because that means consumers can find it in other coffee shops. Coronavirus has come and turned things upside down including Starbucks revenue. It has caused many store closures. Not only did that cause a profit loss, the Black Lives Matter controversy has consumers boycotting.

Starbucks has created many strategic alternatives that has brought value to their company. Expanding their business in China and India, improving technology, developing new products and more. Expanding the business and opening new stores has not only caused internal growth, but more revenue and resources. One of the drawbacks for Starbucks is that business is slow in India and not taking off as expected. Starbucks’ partnership with their mergers/ acquisitions and joint ventures has allowed them to level the competitive landscape and grow in the market. Their acquisitions allowed external growth. The drawback for Starbucks merging with one of the companies was that it didn’t bring in the anticipated revenue. In 2017, Starbucks sold the Tazo brand to focus more on Teavana.

As a business analyst, one has many jobs, which include conducting market analyses, analyzing the product lines and making sure the company is profitable. An analyst must have a strategic plan to ensure the success of the company. A decision matrix can help. I would use a decision matrix when introducing new products as well as locations. Being able to compare multiple options for food, drinks and locations will allow one to narrow down the options and make a final decision. I would also use the decision matrix to evaluate various alternatives, be it external or internal improvements. The alternatives with the highest score on the matrix will determine how we value the better option. For example, Starbucks’ leading alternatives are innovation, revenue, locations worldwide, loyal customers, global brand recognition, etc.

A few factors that could hinder the success of Starbucks’ optimal strategic alternatives is competition, COVID-19, and availability of specialty coffee machines for home use. Competition is everywhere. The key is to stand out and offer something others can’t imitate. COVID-19 has caused many of Starbucks stores to close temporarily, which has cost them roughly 915 million dollars so far (Starbucks Stories, 2020). Companies should always be prepared for unexpected situations, but the pandemic has taken everyone by surprise. Lastly, the convenience of Keurig, and other coffee makers has caused consumers to spend less money at coffee shops such as Starbucks. The above issues can all be solved with a strategic plan. Competition is what drives innovation which means Starbucks needs to continue to be innovative in order to stay ahead. No one knows how long the pandemic will last, but Starbucks’ mobile app and curb side service has kept them in the game and making revenue. As for coffee makers they have been around for years, yet consumers still enjoy going out for a cup of coffee.

Growing an organization isn’t always about increasing the size of the company. Starbucks’ goal is to expand coffee worldwide, while maintaining their uncompromising principles (Starbucks: The Early Years). Their mission statement previously mentioned, is to “To inspire and nurture the human spirit---- one person, one cup, and one neighborhood at a time”. Expansion is only one element of Starbucks’ growth. Other elements that lend themselves to growth is market penetration, product development, and diversification. These elements can be achieved by focusing on consumer wants, developing products geared towards everyone, and mostly staying inspired.

Starbucks is a leading coffee company around the globe. Starbucks uses a simple strategy which is connecting with their employees in order to connect with the consumers. Their goal is to provide good products and services. One of the many factors that separate them from their competitors is success. They have established market power by merging with other companies which has given them a big advantage.

Reference

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2017). Strategic management: Competitiveness and globalization: Concepts and cases (12th ed.). Boston, MA: Cengage Learning.ISBN-13: 9781305502147.