STARBUCKS ANALASYS

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Goodwill among consumers due to Social Responsibly Initiatives

- Their stores are community friendly, focused on recycling and reducing waste. They build goodwill among communities where they operate.

Diverse Product Mix

- Starbuck portfolio of products given caters to all age groups demographic factors.

Use of Technology and Mobile Outlets:

- Starbucks efficiently leverages technology with its mobile application “Starbucks App’ in both apple and android software’s. They make significant investments in technology to support their growth every year.

Customer base loyalty:

- Starbucks has cult following status among consumers and they have also implemented loyalty-based programs to drive loyalty with the Starbucks Rewards programs and Starbucks Card. The Starbucks Card is a value card program that provides convenience, support gifting, and increase the frequency of store visits by cardholders and integrated with their mobile application.

Excellent Support Operations and Logistics

- Essential.

- Starbucks have developed significant expertise in terms of supply logistics and operations.

Finance

- Starbucks now willing to borrow to fund expansions plans allowing for a more aggressive growth strategy.

New Products

- Starbucks are very innovative with the launch of many new products to include Frappuccino, Starbucks Barista home espresso machine, and lots of other food and beverage products. Such innovations build Brand awareness and confidence amongst consumers.

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Weaknesses:

- Expensive Products: While Starbucks does differentiate their products with being highly quality couple with the whole ‘Starbucks Experience’, in times of economic sluggishness, consumers to have so switching costs to competitor’s products with lower prices and forgo paying a premium. These premium prices could also pose some weakness for it to succeed in developing countries.

- Self-Cannibalization through overcrowding: By aggressive expansion and high saturation due to overcrowding in the market leads to self cannibalization and diminishes long term growth targets of Starbucks. This is happening especially in the United States where Starbucks operates 8078 stores.17

- Overdependence in the United States market: In line with self-cannibalization of the US market with 8078 stores, Starbucks generates a huge percentage of their total revenue from the US and this makes it very sensitive to prospects of the US economy and growth.

- Negative large corporation image: Like any large corporation, Starbucks does come under increased scrutiny and have to invest in corporate social responsibility activates and maintain tight control over labor practices.

- American/European coffee culture clash with that of other countries: Starbucks coffee culture may not widely accepted in some countries as part of their international expansion strategy.

- Hugh logistics challenges to service International Operations.

Opportunities:

Expansion into Emerging Markets:

- The increase saturation and self-cannibalization of the US market makes its international strategy even more important.

- Starbucks has made good inroad into many countries, with India recently joining the list with a joint venture entry. Starbucks has a great growth potential in further expanding into the emerging and developing markets.

- They can leverage their size, experience, financial prowess and efficiencies to make new market share.

Expanding Product mix and offerings:

- Starbucks recently started to expand their product mix by venturing into the Tea and fresh juice product offerings with a smart acquisition strategy. This provides significant opportunities for Starbucks.

Expansion of retail operations:

- Starbucks currently sell its packed coffee products, iced beverages and merchandizes through large box retailers. This market’s potential is yet to be fully realized and this provides Starbucks great opportunities for the future to future monetizes their brand.

Technological advances:

- Starbucks has leveraged the use of mobile applications and has an investment partnership with Square, a mobile payments app that is integrated with its Starbucks app. This creates an ease of use process for customers, aligns customer loyalty through reward programs. Starbucks has already set the bar in the industry with this advancement and about 10% of its transactions in the US have been made using mobile applications. This is a growing field and would drive more business to their stores as technology advances.

New distribution channels

Brand extension: Starbucks carries a powerful brand image and it can leverage it to extend into horizontal lines of its business and also venture into product diversification with keeping brand dilution risk in check.

Threats:

Increased Competition:

- This is by far the biggest threat that Starbucks faces with the market being at a mature stage, there is increased pressure on Starbucks from its competitors like Dunkin Brands, McDonalds, Costa Coffee, Pete’s Coffee, mom and pop specialty coffee stores.

Price Volatility in the Global Coffee Market:

- There has been significant fluctuations in the market prices of high quality coffee beans, which Starbucks can’t control.

Developed Countries Market Saturation:

- Starbucks derives a significant amount of its revenue from the development markets and there is increased market saturation currently.

Developed Countries Economy:

- In an increasingly