Essay on Starbucks SWOT Analysis

Starbucks is a US-based, globally renowned independent coffeehouse founded in the year 1971 in Seattle, Pike Place. Being a seller of great quality coffee, it not only markets but roasts and retails it too. Spreading its arms wide across the global market, with approximately 25,000 stores all over the world Starbucks, has become one of the biggest brands in the coffee world.

The SWOT analysis table below, will identify the strengths, weaknesses, opportunities, and threats related to Starbucks and will throw light on its internal and external environment for the year 2019 (till now).

Strengths

The company has had a very strong and firm hold on its financial position in the world market. In the year 2018, Starbucks improved its financial standing which ensured higher returns to the shareholders, attracting further investments. Being one of the world’s most popular coffee brands, the loyalty of the customers also adds to its business and financial stability. The company has diversified its business, by developing subsidiaries and making acquisitions; like Teavana, Seattle’s Best Coffee, Evolution Fresh, TATA Starbucks, etc. Ensuring a great relationship with existing customers and constantly attracting new ones, Starbucks focuses on providing a great in-store experience to the customers. They provide free WIFI which is an amazing way to make the customer spend more time in the store. Starbucks’ popular loyalty program, “Starbucks Rewards” and Starbucks card ensures that customers keep coming back to have more coffee and earn stars (rewards). By providing perks like free coffee, upgrades, customizations and refills, discounts on food and beverages, etc., it keeps its customers on their toes wanting more.

Considering the heavy food delivery competition, Starbucks has also, in certain markets collaborated with Uber Eats to deliver its beverages and food items, which has brought coffee a step closer to its consumers. Starbucks is also known for being a great employer, making its employees the main assets of the company. Offering them options like retirement accounts, stocks, and a healthy culture, in return gets them to provide great customer service.

Starbucks won hearts in 2018 by opening its first sign language store in the US according to Independnt.co.uk.

Weakness

The US-based company is highly dependent on its home country for the majority of its income. With operations in Asia Pacific, Europe, the Middle East, and Africa, it generates the majority of its income from America. Being dependent on one region can have adverse effects on the company’s financial structure and it also poses a great weakness to the company altogether, in case of an unforeseen circumstance.

With the emerging competition and independent coffeehouses across the globe, the high prices of Starbucks coffee as well, pose a weakness for it to be successful in the developing markets of Asia Pacific, Europe, and the Middle East. The local coffee houses are trying their best to provide a similar experience to Starbucks, as they can imitate it easily and serve their beverages and food at a cheaper rate, which would be preferable for the majority of the customers.

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Opportunities

Starbucks is yet to open its arms completely to the world, it has recently started selling its ready cold beverages through retail and convenience stores, and the same is yet to be fully realized by the consumers, which would provide the brand with great opportunities for the future to expand its financial boundaries. With limited markets offering Starbucks coffee delivery, the company needs to tie up with brands like Uber Eats, Zomato, etc in different regions and markets and venture into delivering its products.

With an extremely well-established name in the US, the company must as well, shift focus to the Asia Pacific region to increase its revenue. Starbucks has, indeed taken steps to establish a firm foot in countries like India, China, and Tokyo. With an intensive growth strategy of penetrating the markets, Starbucks focuses on opening more company-owned outlets. At the same time, the company ensures its presence and market share through partnerships and alliances with other firms. For example, the company entered into a joint venture with TATA Global beverages in India, a developing country and a land of opportunities. The joint venture, named TATA Starbucks would help the brand manage 145 outlets in the country by the end of the year. Also, in 2018, the brand announced it to open around 6000 outlets by 2021 in China, which would help it to increase its revenue. Starbucks, currently, has approximately 3300 outlets in China and according to the Starbucks SWOT Analysis by MarketLine https://web-b-ebscohost-com.simsrad.net.ocs.mq.edu.au/ehost/pdfviewer/pdfviewer?vid=2&sid=32c96eed-1654-4d2d-9ae1-9aeaaba9a076%40pdc-v-sessmgr01, the company generated 18.1% of its income through China in 2018. Starbucks also exclusively opened its biggest roastery in the world, earlier this year in Tokyo and named it Nakameguro, by the cherry blossom-lined Meguro River. Including Tokyo in the list, this is the fifth Starbucks reserve in the world, the first was opened in Seattle followed by Shanghai, Milan and New York.

While the company offers different menus in different regions, it tries to fit into the culture of that land, yet the basis of the same is still Western. With a huge opportunity in these developing countries, it is important to ensure the prices and taste fit the consumers. Mixing with the culture and customizing its menu accordingly, would attract more consumers and lead to successful operations of the brand in these countries.

Also, with the limited food options available, it is time, that Starbucks broadens its horizon and expands into food services as well, as the same remains a huge opportunity for the brand.

Threat

The biggest threat to the company is from its competitors like McDonald’s, the Dunkin brands, Barista, Costa Coffee, etc, plus the emerging local coffee houses which as well, offer great quality coffee and service; at times at a relatively cheaper price with better deals. Also, with the change in consumer taste and lifestyle, a shift to healthier products might pose a great threat to the very future of Starbucks and the coffee culture itself.

According to CNBC, Australia has almost no Starbucks as the brand could not manage to fit in. The coffee offered was too sweet, which is what the Aussies do not prefer, which led the brand to shut down 70% of its locations leaving the continent with hardly any stores. With a huge demand for great coffee, easily available at cheaper rates, people prefer to spend less, yet receive great quality coffee that fits their taste.

Starbucks's vision (as mentioned on its website) is to “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.”

However, the very essence of the same is lost if its beverages and food are merely sold as products, which Starbucks is not focusing on now, as its prime area of concern is expanding business in just any way possible.