2. SWOT Analysis
Short for Strengths, Weaknesses, Opportunities and Threats, the SWOT analysis is a tool “commonly used in marketing and business in general as a method of identifying opposition for a new venture or strategy” (Goodrich, 2013). In using this tool, professionals are able to “identify all of the positive and negative elements that may affect any new proposed actions.” The SWOT analysis of Starbucks Coffee Company is conducted below in Table 1.
Table 1: SWOT Analysis on Starbucks Coffee Company
Strengths
- Top contender in the coffee industry
- Consistent international market growth
- Environmentally friendly
- Brand recognition is strong
- Use of high quality products and services
Weaknesses
- High product pricing
- Very dependent on sales of coffee products
- Do not have as much control over stores out of the U.S.
- Operation costs are high
- Lacks internal focus due to expanding too much too fast
Opportunities
- Start selling whole beans in supermarkets
- Expand product variety
- Expand distribution channel
- Expand into growing economies
- Take on more countries to get coffee bean supply from
Threats
- Competition
- Recession
- Bad publicity
- New changes in consumer trend
- Different countries have different political/cultural differences]
The first point from Table 1 that I would like to address and elaborate on is their high prices, a weakness of theirs. As compared to McDonald’s and many other places, coffee is a main focus of the stores, and because the focus is not on the food, there’s hardly any focus on preparing food to match such pricing.
Another point I have chose to point out is the threat of competition. Competition is so high in the coffee industry today and many companies are catching ...
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...nscious as some consumers are. However, Starbucks uses their preferences and adapts to it so as to satisfy their consumers.
Lastly, the developments in machinery impact the company tremendously. Machines are meant to decrease manual labour workload. Hence, Starbucks has to question if these developments will affect the standard of quality products, and will manufacturing, thus, be cheaper?
4. Porter’s Five Forces Analysis
Porter’s five forces model is “an analysis tool that uses five forces to determine the profitability of an industry and shape a firm’s competitive strategy” (Strategic management insight, n.d.). It helps to classify and analyze the most crucial forces impacting the rivalry among existing competitors in the same industry, and how it can better profit itself. The table below depicts how Porter’s Five Forces is conducted for Starbucks in Singapore.
As strategy consultants of McCormick & Associates, we use Porters Five Forces Model as a framework when making a qualitative evaluation of a firm's strategic position (Appendix 1.2). These five forces determine the competitive intensity and therefore attractiveness of a market. These forces affect the ability of a company to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place.
Finally, this report will identify recomendations for Starbucks to minimze future loss and to compete with major competitors like McCafe and Gloria Jeans Coffee.
• Discussing the two forces of competition, which are threat of new entrants and threat of substitutes, and identifying the most significant of those forces for McDonald’s Corporation.
In every business, there is an analysis called the SWOT, it is the Strength, Weaknesses, Opportunities, and Threats of a company. Wendy’s is a company that is against the use of frozen ingredients and it is a fast food place that has a slogan “Quality is our Recipe”.
The definition of SWOT analysis is comprehensively summaries the internal and external conditions, critical evaluate advantages and disadvantages of organization, facing the opportunities and threats, in order to the combination of company 's strategy and internal resources and external environment (Yuan, 2013). In contrast, SWOT analysis method is a descriptive model, because the enterprise strategy is often a typical uncertainty problem, the lack of adequate analysis and logic, and a SWOT analysis cannot provide the specifically, format of strategic advice (David,
The improvements to coffee brewers and the innovation of Keurig has allowed for Starbucks to repackage their products and distribute it as a home product. Many of the flavors consumers could only get from the Starbucks espresso machine in the store can now be duplicated in the home. The opportunity for continued expansion is present. Coffee is quickly being consumed in almost every country in the world, Starbucks has a legitimate opportunity to influence those countries without the Starbucks brand to open their doors.
With strength ultimately comes weakness and McDonald's has its fair share, especially in the last few years. Many weaknesses are due to the external environment which includes market saturation, increased price competition, and food and labor costs. These weaknesses affect many firms in the fast food industry so McDonald's is trying to effectively combat these forces using a differentiation strategy. Developing new products such
Porter’s Five Forces analysis is a framework for industry analysis and business strategy development. The porter’s five forces contain established industry rivals, customers, suppliers, potential entrants, and substitute products.
Porter’s competitive forces model includes five forces that need to be analysed. These forces include the intensity of rivalry from traditional competitors, threat of new market entrants, threat of substitute products and services, bargaining power of customers and bargaining power of suppliers (Laudon & Laudon, 2007). See diagram below;
This strategic capitalises on weaknesses since will decrease the cost of coffee beans/beverages but also Starbucks operating cost which they regularly ship across the world to various stores. Starbucks can capitalise on this weakness to improve their brand options. It adds value in the inbound logistics activities, operations and procurements. Starbucks should consider this option since it will decrease their operating cost and therefore will reduce the prices on their menu. The attractiveness is the exact same as mentioned in option 1.
Porter's five forces analysis is an industry analysis model developed by Michael E. Porter as a tool for developing business strategies to become or stay competitive in an industry or marketplace as per (Braze, 2013).
Bruss (2001) argues that the company hopes as well to make new investments in new coffee types. Starbucks has recently developed a new type of coffee called green-coffee. These strategies are created with the objective of support Starbucks’ commitment to buy coffee that has grown and processed by suppliers. They meet certain conditions of social, economic and quality standards. In addition to that, the company is paying additional premiums to those vendors who meet the specific requirements that the company wants.
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.
The strategic vision that Howard Schultz had for Starbucks was "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow". This s...
In terms of machinery or technological suppliers, suppliers to the restaurant industry enjoy moderate power, as suppliers are few. This applies to suppliers of coffee, latte and espresso machinery as well due to the small number of organizations servicing the industry. Due to their success in differentiating themselves as providers of premium coffee, Starbucks faces little bargaining power from their customers around the globe. However, a lesson from their entry into the Chinese market has been that an organization needs to clearly understand their target consumers and price their products accordingly to avoid demand challenges.