Learning Team Peer Evaluation

Strengths

Starbucks possesses several main strengths including their high visibility being located in high traffic areas, quality of service and products and their established brand loyalty. Starbucks remains an established leader being the number one known coffee house in the world while possessing a competent workforce, providing quality service, and continuing financial soundness. They also are known for their strong internal and external relationships with their suppliers.

Weakness

Weaknesses that Starbucks must address include: Product affordability and pricing, coffee beans price is the major influence over the firms profits, maintaining the positive public opinion of their products, avoiding any negative publicity, and remaining connected to their customers. Starbucks must also consider the fact they have expanded domestically and internationally resulting in saturation of the markets. They are also a non-smoking facility alienating some customers from purchasing coffee or other products from their store.

Opportunities

Opportunities include the ability for Starbucks to enter into different and new markets,

partnership opportunities with businesses, growing acceptance and customer satisfaction, and increase different product offerings. Starbucks must strive to continue expanding their products and food service to remain competitive and reach other consumers. Another option would be for Starbucks to allow consumers to order their products online and afterwards pick it up at their stores.

Threats

Threats that Starbucks might encounter include strong competition (expansion of product offerings by other coffee shops), vulnerability to economic change, disruptions in supply, saturated markets in the developed economies, the trend of consumers changing to a healthier lifestyle, rising prices of coffee beans and dairy products, as well as the new products innovation from their competitors.

PESTLE Analysis

A Political, Economical, Social, Technological, Legal, and Environmental (PESTLE) Analysis is typically used by organizations as an aid to assist them to understand and analyze the impacts of external factors on a organization/company they operate now and will operate in the future.

Political

From a political standpoint, political stability is needed throughout regions where coffee in generated as this will impact Starbucks as farmers are able to produce quality coffee beans. Strabucks needs to ensure they remain connected and continue their relationships between the countries that produce the coffee beans.

Economic

Inflation rates are growing rapidly around the world, resulting in probably a decrease in sales of coffee. Slow economic growth and may result in decrease in buying power of the consumer, implying decrease in demand for coffee due to the vulnerability to the economic change. Although, Starbucks remains an established leader in the coffee industry and they export to several countries they could also be faced with exchange rates (fluctuating), which could hinder/fluctuate their overall profits generated. Starbucks is also faced with a saturated coffee market in which consumers are looking elsewhere for their coffee purchases.

Socio-Cultural

Coffee plays a significant/integral role in the lives of consumers all around the world. Drinking coffee has become part of a social event for consumers both in the business and private lifestyles of consumers.

Technological

Advanced technology throughout the years has allowed Starbucks to introduce WIFI and even develop apps to be downloaded via iTunes. You are now able to remain informed of all the newest products and store locations throughout the world. This advanced technology will assist in the emergence of innovative technology, biotechnological developments, developments in agriculture, as well as the development of the research and developmental team.

Legal

Policies and Procedures play a large role in any organization and may cause restrictions and

even decreased consumption of coffee by the consumer. Particularly when engaging in policies and procedures set forth by different health authorities pertaining to caffeine production, consumption, and the impact on a consumers overall health. Another aspect of legal pertains to the trade restrictions that Starbucks might encounter as production of customs are becoming tougher. Finally, licensing regulations may contribute to the legal aspects of coffee production.

Environmental

Environmental factors that should be considered consist of pollution as well as planning permission, environmental rules and regulations, environmental disasters in countries that are producing the coffee beans, and finally global warming and other environmental issues in a global level as some countries may be more stringent than others on the impact that Starbucks may have on the environment. Starbucks needs to consider all of these factors addressed in the PESTLE analysis to introduce their presence in markets not already identified and even to remain competitive in the markets they have already established presence in.

Competitive position and possibilities

Starbucks strives to sell the finest, high-quality coffee beans and serve the finest quality of coffee beverages. They are the most recognized brand in the coffee area and were ranked 91st in the best global brands of 2013 (Elder, Lister, & Dauvergne, 2014). They are located in high visibility areas near a variety of different settings (ie; campuses, malls, downtown, etc.). Starbucks is also known for their strong social responsibility to the community. They have made several contributions to several charities, researches, shelters, etc. In 1991, Starbucks established a relationship with the international and relief and developmental organization known as CARE.

Starbucks remains competitive and will continue to have competitive advantage over their counterparts based on their reputation, customer loyalty, their branding, ethics, product differentiation, reputation, location, and even technology making it difficult and costly for other competitors to imitate.

Starbucks will need to introduce new products to include organic coffee and decaffeinated lattes. This will satisfy the growing trend of consumers seeking to live a healthier lifestyle. The industries demand for high quality coffee products are driven by price, quality, taste, and attitudes towards health.

The competitive threat for Starbucks will continue to rise due to the increase in coffee shops entering the market as well as the quality of coffee beans being used. Large global roasters such as Nestle, Kraft, Sara Lee and Smuckers “moved into spaces opened by liberalization to increase their influence over production” (Elder, Lister, & Dauvergne, 2014, p.78). Today, while roasters continue to dominate market share, more and more it is retailers such as Starbucks, McDonalds, and Dunkin Donuts that are driving the market for higher-grade specialty coffee. This specifically includes coffee that meets “Voluntary, sustainable production standards to include: Fairtrade, Organic, Rainforest Alliance, UTz Certified, and CAFÉ Practices” (Elder, Lister, & Dauvergne, 2014, p.79).

Dunking Donuts is one of Starbucks main competitors as they sell coffee and donuts and has not started to sell their creamers in the stores. Although, there is no other specialty coffee shop that has more stores than Starbucks, there is a chance this could change. Starbucks has helped Americans turn into Java junkies, thus making the likelihood of the number of new competitors high. Starbucks will need to ensure their products remains different to include the use of coffee beans (such as country of origin of coffee beans being consumed; changing the coffee beans along the year and providing information about the coffee beans being used; producing a wider range of beans from different countries; flavors, darkness of roast, changing the packaging being used for the products; and making new product lines for non-coffee drinkers).

Conclusion

Starbuck’s strives on being known for selling the finest quality of coffee and other products. However, this could change with the rapidly growing competition, the economy, and the consumers’ preference. In order for Starbucks to remain competitive and stay ahead of the competition that is in the market, they must develop and expand their products.

References:

Elder, S., Lister, S., & Dauvergne, P. (2014). Big Retail and sustainable coffee: A new

development studies research agenda. Progress in Development Studies 14(1), 77-90.

Pearce, J.A. & Robinson, R.B. (2013). Strategic Management: Planning for Domestic and

Global Competition (13th ed). New York, NY: McGraw Hill.