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Running Head: SWOT ANALYSIS FOR STARBUCKS CORPORATION

SWOT Analysis for Starbucks

Starbucks, the largest coffeehouse in the world was founded in 1971 and based in Seattle,

Washington. The restaurant chain sells coffee and tea products. The company believes in selling

the best possible coffee to the consumers (Paryani, 2011).

Strengths

Starbucks Corporation has a comprehensive financial record. The profit of the company

has risen over the years to over 15% now. The company has also outdone its nearest competitors

by registering a return on equity that was over 29% and 24.54% return on the investments.

Starbucks has a great reputation as the number one coffee brand. The firm produces quality and a

well-refined coffee. The quality of the beverages has seen the company continue to dominate the

market. The firm offers excellent services to the consumers that lead to incomparable customer

service. It provides a welcoming environment to the customers hence creating a right image. The

coffee brand is the most valued, and it enjoys a 4 billion dollar value. The company also has an

excellent policy of employee management. The benefits offered to the employees in terms of

wages and salaries are better than those given by the competitor companies. The corporation also

has the reputation of being the largest coffeehouse chain in the world. The firm operates about

20,000 branches in sixty countries hence making it the largest coffee chain in the world.

Starbucks pays keen attention to ethical values, which is even displayed in their mission

statement that talks about environmental leadership.

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Weaknesses

The company makes big investments hence spending more. A large amount of money

gets spent while making these investments on new products and building infrastructure abroad.

The high rate of spending makes it impossible for the company to pay heftier quarterly dividends

to the shareholder. The company also faces uneven profits from the other branch companies

overseas. Some of the branches are not as profitable as the main company. Starbucks is only

dependent on its key input, the coffee beans; hence it depends acutely on the price of coffee

beans as the determinant of the profits. The firm faces the challenges of having to diversify the

products range owing to the fluctuations in the price of the beans. Starbucks has been put under

fire for making unethical procurements with third world countries. The company has also been

accused of violating the coffee trade principles. The way the company prices its products out of

the budget of many consumers poses another weakness as the consumers prefer to buy from

other producers like McDonald’s. Starbucks has also faced negative publicity over the recent

years and has been accused of poor scheduling of working hours for their employees. The

corporation has also encountered difficulties in some of its worldwide operations. Starbucks has

dissolved several partnerships in many different countries due to operational challenges.

Opportunities

The company should focus on extending the supplier networks. Starbucks gets its coffee

from Africa, South America, and Arabia (Elliott, 2001). In order for Starbucks to ensure a good

supply of coffee beans in Asia, reducing the overdependence on good or bad produce from

Africa and America, it should extend the networks. Starbucks should also consider extending to

the emerging economies. In China and India, there are excellent opportunities and Starbucks

should expand the business in those two countries. The company should take that opportunity

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and develop the small number of restaurants they have there. The corporation should also

consider increasing the number of products that they offer. They could start offering other drinks

such as beer, wine, and other new products in order to broaden the customer base. Apart from

managing coffeehouses and franchises the firm should form more partnerships with other

retailers such as supermarkets in order to increase the coffee sales. Starbucks should invest in

many distribution channels where they raise the consumer packaged products. Increasing the

distribution channels will result in increased sales, and this will see Starbucks continue to

dominate the beverage market. The company should seize the moment and focus on a fast market

growth at this time when it is enjoying profitability and good brand (Elliott, 2001).

Threats

Starbucks experiences threats from direct competitors. These competitors are other

brands selling the same type of products as Starbucks for lesser charges. Some of these

competitors are McDonalds and Dunkin Donuts, and they seize the opportunity of expanding the

domestic markets where Starbucks have not established the business. Therefore, Starbucks

should also invest in local markets so as not to leave any chance to the competitors. Instability in

coffee growing regions also may affect the performance of Starbucks. There might be some

times when the coffee harvests go down, which in turn affects the price of coffee. When

Starbucks increases the costs, consumers prefer to get the same product from a different producer

at a lesser price. The fluctuations in coffee beans supply can put the business at risk.

Starbucks has built a unique brand of delicious coffee that has gained recognition

internationally. However, the corporation has enormous opportunities to seize so as to increase

the profits. The company also must focus on the domestic market, and that will see Starbucks

steer to higher heights even in the years to come.

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References

Elliott, C. (2001). Consuming caffeine: The discourse of Starbucks and coffee. Consumption,

Markets and Culture, 4(4), 369-382.

Paryani, K. (2011). Product quality, service reliability and management of operations at

Starbucks. International Journal of Engineering, Science and Technology, 3(7), 1-14.