Strategic Analysis Of Starbucks Corporation
Location and Aesthetic appeal of its Stores: Starbucks has stores in some of the most prime and strategic
location across the globe. They target premium, high-traffic, high-visibility locations near a variety of settings,
including downtown and suburban retail centers, office buildings, university campuses, and in select rural and
off-highway locations across the world.
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This has earned them a significant competence and advantage to be
able to penetrate prime markets and tap into customers convince factor. Their stores are visually appealing and
have a ‘cool’ factor attached to it with being designed to reflect the unique character of the neighborhood they
serve in and environmentally friendly. They provide free wifi, great music, great service, warm atmosphere
and provide an environment of community meeting spot, which forms a wider part of the ‘Starbucks
Experience’. The main aim for the firm is to make their stores a ‘third place’ besides home and work.
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Human Resource Management: Starbucks is know for its highly knowledge base employees. They are the
main assets of the company and they are provided with great benefits like stock option, retirement accounts
and a healthy culture. This effective human capital management translates into great customer services. It was
rated 91
st
in the 100 best places to work for by Fortune Magazine.
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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.
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Diverse Product Mix: Starbuck portfolio of products given in Appendix 8, that caters to all age groups
demographic factors.
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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.
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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.
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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.
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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.
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.
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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.
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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.
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This provides significant
opportunities for Starbucks.