Business Policy & Strategy Assign 8 part 2
rodeyl
strategic_audit_of_starbucks.docxStrategic Audit of Starbucks Company 1
Strategic Audit of Starbucks Company 6
Strategic Audit of Starbucks Company
Rodney A. Lee Sr.
Grantham University
Strategic Audit of Starbuck Company
External Environment
Using PEST analysis, we can evaluate the external environment of Starbuck Corporation. Politically, the company is affected by various political forces which influences its decisions regarding job cuts, recruitment, salaries, opening and closing of store etc. Starbucks Workers Union also has a great influence on decisions concerning wages, working hours, recruitment etc. Additionally, some laws and regulations such as international trade tariffs, taxation policy, deregulation, government and international stability can also have major impacts on the activities of the organization. Economically, the economy of the US is heavily affected by the present recession. Purchasing power of many Americans has reduced thus decreasing the overall demand of products and services consequently affecting the total revenue of the company. The society also affects the operations of Starbuck as most people are between 15-64 years. This is basically favourable for their businesses (Smith, 2014).On the side of technology, it is essential to note that America is one of the countries where technology forms a critical part of life. Starbucks is therefore expected to employ high end technologies in improving their products and services.
Starbucks is facing cut throat competition from organizations like Panera Bread, Dunkin Donuts, McDonalds, and Steattle’s best coffee (Smith, 2014).However, in their bid to expand their services, the company should know that their major competitors lie in the specialty coffee shops or quick service restaurants. The competition would normally arise from competitive strategies like price cuts, product differentiation and expansion to increase market share. Starbucks should therefore focus on offering life experience that changes the way consumers view their lifestyles. They would also provide premium quality coffee at a premium price.
We can also use the Porte’s Five Forces to understand the forces that would influence the structure of the organization. As the company is expanding internationally, it is essential to note that the buyers have strong bargaining power since they have various options available (Alderman, 2012).Suppliers have a medium bargaining power since the industry deals only with specialty coffee. Competition would be intense in nature as every player would be trying to improve on their products so as to attract more customers. The threats of new entrants into the market would basically be moderate to high due to the difficulty experienced in starting a specialty coffee shop or quick service restaurants.
Internal Environment
Starbucks has various strengths and opportunities which it can capitalize on as it expand to overseas markets. The strengths include its unique atmosphere found in every store as well as the quality coffee that they offer. It has a strong brand throughout the world with huge experience in the speciality coffee and also enjoys a good relationship with suppliers who are majorly responsible for the high quality coffee they offer. Besides coffee, the company also provides handcrafted beverages and fresh foods such as salads, baked pastries and sandwich. This helps enhance the competitive advantage. Another essential strength that Starbucks must capitalize on while expanding to the overseas market is the strong research and development abilities which ensure that product quality is enhanced (Jobber, 2010).
Recommendations
While expanding, Starbucks should focus on emerging markets in countries such as Latin America, Africa and Asia. They should consider countries such as South Africa and India in opening up new stores. These countries’ economies are actually growing very fast. Starbuck should also consider vertical integration and start producing its own coffee to reduce the entire dependency on suppliers. Lastly, the company is strong financially thus it should start its own business, for example, food retail chain to enhance its financial strength and competitive edge.
Cost Evaluation and Control Processes
The company’s cost evaluation and control processes will be based on the balanced scorecard which entails how they appear financially, to the customer, internal business perspectives as well as how we handle learning and innovation.
Financially, the company should consider how they appear to the shareholders and whether their activities are yielding profit in the short and long run. How they will appear to the customers would be a critical factor to consider. Starbucks normally offers quality products and this will appeal to the customer’s trust and satisfaction (Jobber, 2010).Starbucks must extensively work on their mission and vision goals in order to excel at internal business perspectives. More importantly, the company will focus on continued improvement and creation of values through innovation and learning.
In conclusion, Starbucks is a successful company in the US and it should consider expanding its operations to overseas markets. Based on the internal and environmental analysis, the company should capitalise on its strengths and opportunities to ensure a successful expansion to the international markets since it is a financially sound organization.
References
Jobber, D. (2010).Principles and Practice of Marketing (6th Edition). Maidenhead: McGraw-Hill.
Alderman, L. (2012).In Europe, Starbucks adjusts to a Café Culture. [On-line].Available @ http://www.nytimes.com/2012/03/31/business/starbucks-tailors-its-experience-to-fit-to-european-tastes.html?pagewanted=all&_r=0 [Accessed 30/03/16].
