Starbucks: An Analysis with Focus on the Financial Function

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External Environment
Starbucks primarily operates in the retail coffee shop market. The UK coffee shop market alone is estimated at over 16,000 outlets and showed a strong growth of 6.4% in sales during 2013 (FDIN, 2014). The branded coffee chain segment recorded a turnover of £2.6 billion, delivering a higher than market sales growth of 9.3% (FDIN, 2014). The coffee shop sector has seen a considerable growth in the past 15 years and Allegra Strategies (as cited in FDIN, 2014) forecasts that UK’s branded coffee shop market will grow at 10% compound over the next five years.

A “PESTLE” analysis is a strategic analysis model used to identify the current and future external environment in which a company operates in and the environment’s macro economic functions (Worthington & Britton, 2006). The analysis includes the political, economic, socio-cultural, technological, legal and environmental factors that influence and affect a company.

I will use the “PESTLE” analysis to identify and understand the macro economical factors that Starbucks must consider when conducting its business.

Political:
• Taxation policies – High taxation imposed by a country’s government on the coffee bean farmers may ultimately lead to Starbucks having to pay a higher price for the coffee they wish to purchase, which may be passed on to the customer.
• Government stability – Starbucks must consider and investigate the political situation of any country they plan to open stores in. Changes in government can lead to drastic changes in legislations and taxation policies. The same consideration must be done when looking at suppliers of coffee beans.
• Tariffs and trade regulations – Regulations on trade will affect Starbucks primarily when exporting and ...

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...Prentice Hall

Ramagopal, C. 2008. Financial Management 1st ed. New Delhi: New Age International (P) Ltd., Publishers

Starbucks Investor Relations, 2014. Starbucks Annual Shareholders Meeting Spotlights Record Performance Driven Through the Lens of Humanity [Online] Available: http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=1910182&highlight= [28 March 2014]

Starbucks Corporation, 2014. Starbucks Fiscal 2013 Annual Report [Online] Available: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjE4MDQyfENoaWxkSUQ9LTF8VHlwZT0z&t=1 [26 March 2014]

Shultz, H. 2011. Onward: How Starbucks Fought for Its Life without Losing Its Soul. New York: Rodale Books.

Rochester Institute of Technology, RIT, (n.d.), Cost Benefit Analysis [Online] Available: https://www.rit.edu/~w-outrea/training/Module5/M5_CostBenefitAnalysis.pdf [28 March 2014]

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