SWOT Analysis Of Starbucks analyzes, Starbucks is the world’s biggest American coffeehouse chain with in 31256 locations around the world. It was established at Seattle, Washington in 1971. With the energizing idea from Howard Schultz (current Executive Chairman) Starbucks transformed into more than just a coffeehouse it became a third space between home and work. Kevin Johnson is the CEO at present of Starbucks. Starbucks SWOT Analysis will teach us alot.
Did you know? There are 87,000 drink combinations available at Starbucks.
Starbucks is one of the largest foodservice companies in the world and is one of the most recognizable brands across the globe. It has become synonymous with high-end coffee-based drinks and an affluent lifestyle. It experienced explosive growth over recent decades and has continued to solidify its place in the market through its premium selection of beverages, marketing savvy, and high customer loyalty.
This can only be achieved through a firm with extensive knowledge, experience and innovative strategies. To determine the strengths of the company potential, weaknesses, opportunities and threats, it is necessary to conduct a SWOT analysis by Starbucks.
Starbucks At A Glance – Starbucks SWOT Analysis
Company: Starbucks Corporation
Founders: Jerry Baldwin | Zev Siegl | Gordon Bowker
Year of establishment: 31 March 1971, Pike Place Market, Seattle, Washington, United States
CEO: Kevin Johnson
Headquarters: Seattle, Washington, United States
Employees (Dec 2020): 346,000
Ticker Symbol: SBUX
Annual Revenue (Dec 2020): $19.16 billion
Profit net income (Dec 2020): $15 billion
Products & Services: Coffee | Handcrafted Beverages | Fresh food | Non-food items | Packaged goods | Mugs and accessories | Gifts
Company Website: www.starbucks.com
Starbucks SWOT Analysis
SWOT Analysis Of Starbucks analyzes the brand based on its strengths weak points, weaknesses, opportunities, and threats. With Starbucks SWOT Analysis it is clear that the advantages and disadvantages are internal factors, while threats and opportunities are external elements. Here we are going to talk about Starbucks SWOT Analysis. Below Is The Detailed SWOT Analysis Of Starbucks.
Starbucks Strengths – Starbucks SWOT Analysis
1. A strong brand image: Starbucks Corporation is among the top recognizable and enduring brand in the food and drink sector. The size, volume and the number of loyal customers increased over time. It has a value at $11.7 billion as per the 2019 Interbrand ranking.
2. A strong financial position: With an average annual income in the range of $26.5 billion and a profit at $3.6 billion in the fiscal year 2019 Starbucks is in a solid financial position on the market.
3. Stores’ growth: It increased its number of stores from 1,886 to 31,256 between 1998 and 2019.
4. A vast supply chain across the globe Supply chain that spans the globe: Starbucks is known for having an extensive supply chain. Starbucks procures the coffee it uses from 3 producing regions: Latin-America, Africa, and Asia-Pacific.
5. Acquisitions: The company has acquired the top six businesses such as Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh, Torrefazione Italia Coffee, and Ethos Water. These acquisitions have proved to be quite profitable for Starbucks.
6. Moderate diversification: Moderate diversification Starbucks has diversified its business operations through the introduction of novel products and food products. One example is the introduction of Ice cubes that are made from Coffee that result in an enhanced Coffee taste.
7. Qualitative, taste and Standardization: Thanks to its high-end blends and delicious coffees Starbucks has grown worldwide. They offer top quality and consistent standardization of its products in every single location.
8. Efficiency and Strategic Planning as well as Reinvestment Strategy: Strategy for Reinvestment, Efficiency, and Strategic Planning Starbucks reinvests their profits into expanding its business across different places. The company’s efficiency in operations and well-planned strategic choices have brought many benefits for the business.
9. Treatment of employees: It is very kind to its employees which ultimately results in happier employees that can serve customers with ease. Starbucks has been repeatedly ranked as one of Fortune’s top 100 places to work for.
10. The Strong Loyalty Program : Starbucks offers a fantastic reward program to keep customers hooked to their coffee. For every dollar, you earn 3 stars ($1 equals three stars). If you accumulate 150 stars you will receive an unrestricted drink (150 stars equals 1 drink for free). Additionally rewards members have the ease of mobile payments and pre-ordering, free birthday drinks, and more.
11. Gender neutral Restrooms: Gender neutral restrooms Starbucks has created gender-neutral restrooms to guard the Lesbian and bisexual as well as transgender (LGBT) community from discrimination. This is in reaction to anti-LGBTQ laws which discriminate against specifically transgender individuals.
Starbucks’s Weaknesses – Starbucks SWOT Analysis
1. Prices that are high: For many middle-tier and the working class, Starbucks’ offerings are more expensive than McDonald’s as well as other coffee establishments. The pricey costs make it more expensive for people who use it.
2. The imitability of the products: Imitability of products Starbucks does not have the most original products on the market. This makes replicating Starbucks’ products easy for other businesses. Food and beverage chains such as McDonalds McCafe and Dunkin Donuts provide similar items.
3. Generalized standards for all products: Certain products aren’t compatible with the norms that other industries. For instance, in certain areas, the beverages it produces are not in line with tastes of the consumer.
4. European Tax avoidance: Due to its tax evasion in the UK the company was subject to a number of controversy and criticisms. Reuters Investigative report revealed that it didn’t pay taxes for sales of PS1.3 billion of sales for three years prior to the year 2012.
5. Procurement practices: Many environmental and social activists have criticized the company over its unprofessional procurement practices. They claimed that they procure coffee beans from poor third-world farmers. The company has also been accused of breaking ” Fair Coffee Trade” principles.
6. Recall of products: Over the years, Starbucks has been able to recall lots of its most popular products. This could negative impact the image of the business and can result in losing the customer base.
– In March of 2016, Starbucks recalled two products. The first was the sausage and egg breakfast sandwich with cheddar and sausage and the other was a cheese and fruit bistro boxes. The reason behind recalling these products was the possibility to the contamination of allergens and contaminants..
– Through routine tests the results showed that the factory that made breakfast sandwiches was contaminated by an abundance of Listeria Monocytogenes over the contact surface.
– The 250 restaurants across Arkansas, Texas, and Oklahoma that sold these sandwiches were forced to stop selling the items. A cheese-and-fruit bistro was removed because almonds. The almonds that were found inside the box. They contained trace amounts of not-declared cashew nuts.
– It was there was no label which highlighted any cashew nuts present. This could pose a risk to life for those who suffer from cashew allergies.
Starbucks’s Opportunities – Starbucks SWOT Analysis
1. Expansion into developing markets: The company Starbucks has coffeehouses , mostly located in the US. International expansion into developing economies like India, China and few areas of Africa can provide a fantastic opportunity for Starbucks.
2. Business diversification and Product Specifications: It is a great way to expand its operations to increase the overall revenue growth potential. In addition, creating products to the preferences of customers in the particular market can also be a lucrative possibility.
3. The introduction of new products: Since the company is extremely popular and has a wide range of products, introducing new ones and holiday-themed flavor (Peppermint Mocha, Eggnog Latte, Gingerbread Loaf) under the name of HTML0 would be lucrative and welcomed by the market.
4. Alliances or partnerships with other companies: Co-branding is always beneficial. Starbucks can establish alliances and partnerships with large companies. This could increase the market presence as well as the market shares.
5. Explore the latest trends in coffee and Technologies: Although Starbucks is one of the leading innovators in modern coffee technology There is space for growth. From top foam technologies to snap-chilling back to black and RSI-reducing gadgets There are endless possibilities provided by the most recent technology and trends in coffee.
6. Use Price Differentiation: Certain coffee houses are expanding their customer base by providing premium and regular coffee to meet the needs of various classes. Starbucks is able to offer regular coffee at a price lower , aimed at the middle-class but still serve its more expensive varieties as premium.
7. Enhance online channels: The pandemic has slowed down customers from buying coffee in store, with more drinkers opting to buying their coffee at a take-away. Starbucks can improve its online sales channels in order to draw more customers to purchase their coffee on the street or at pickup places.
8. Coffee Delivery Service: Currently the customers use Uber Eats, Grub Hub and Postmates for Starbucks cafe delivery. Starbucks may launch its own delivery service for coffee to improve customer service.
9. Coffee subscription: The company Panera bread has already launched a coffee subscription services. Starbucks is also able to test a its new coffee subscription model to grow the number of customers it serves.
Starbucks’s Threats – Starbucks SWOT Analysis
1. The competition with coffee shops that are low-cost sellers: Many coffeehouses provide items at a reasonable price. This could threaten the long-term security of Starbucks that has higher costs.
2. The competition with large outlets: Aggressive competition from multinational corporations like Dunkin Donuts and McDonald’s can also threaten the company’s place in the market.
3. Imitation: Products are copied by new and traditional competitors.
4. TDS (union) Strike: Starbucks Supply Chain is comprised of a variety of third-party contractors and other stakeholders, making it challenging managing the whole chain in a timely manner. In the year 2019 Starbucks cafes in the Mid-West faced shortages after employees of one of the major suppliers struck.
5. Independent coffeehouses: There are a variety of social-cultural challenges to Starbucks. These movements are a part of the sociocultural movement that support small local and independent coffeehouses and oppose the growth of multinational chains.
6. Dispute regarding California warning rules: The California judge ordered Starbucks along with other firms in March of 2018 to include warning labels on all of their coffee products. This was to stop the use of chemicals that could cause cancer.
7. Philadelphia arrests: From April to April, 2018. two African-American men were detained at Starbucks that sparked quite an dispute over social networks about Starbucks. Starbucks employees refused to allow them to use the bathroom because they had not purchased any items. The Starbucks CEO Kevin Johnson issued an apology to both men later.
8. Coronavirus: Starbucks has temporarily shut down 2 000 stores in China because of the spread of coronavirus. If you take into account that Starbucks operates 4123 outlets across China and more than half of them are shut and will have a negative effects on its business by 2020.
9. Global Recession: Experts are forecasting that the current recession will be more severe than the previous recessions. Starbucks revenues have already declined. Comparing to the previous year in this fiscal year quarter 2 is down five percent. The third quarter is down 38% due to the pandemic.
10 Price of Raw Coffee Beans: The cost of coffee beans the price of raw coffee beans Arabica is the most produced coffee in the world (representing more than 60 percent of the world’s output) has seen a dramatic increase in the course of the pandemic because of the concerns about the availability of it, hoarding and disruptions to supply chains. Every dollar that is spent on purchasing coffee beans that are raw at a higher price decreases Starbucks profit margins.
This is the SWOT report that Starbucks has done. Please let us know if you have additional suggestions to add.
Starbucks SWOT Analysis Template
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