Starbucks
2. SWOT ANALYSIS
Strengths
Brand Image:
Starbucks is amongst one of the very few companies that have managed to successfully create market awareness and stir up consumer interest in specialty coffee while at the same time preserving brand dominance. Its focus on consistency in delivering positive consumer experience stresses the point about consumer visits to its cafes being an ‘Experience’ rather than just seeing it as another coffee maker (workforce.com).
Unique Strategy:
The Ability to capture key locations and open stores in close nearness to each other is a unique strategy for Starbucks. This ensures that franchises that don’t meet set achievements are closed down. Therefore only the most profitable stores that maintain high sales, and retain the most customers survive.
Valued and motivated employees:
Starbucks promotes an environment that encourages team working and collaboration. As such it encourages managers to follow its motto of ‘hire the personality, train the skill’. Hence through exceptional service, customers keep coming back. (workforce.com)
The strengths provide a favourable impact. Weaknesses
Over-reliance on home market:
Although the American coffee market is worth over $18 Billion (e-importz.com), over-reliance on this market leaves Starbucks vulnerable to unforeseen changes that might occur in such market. E.g. recession affects disposable income for customers and subsequently, profits. Thus the management decision to focus mainly on the US market makes it a weakness.
Aggressive Expansion:
Due to the takeover and acquisition of local community coffeehouses and buildings, Starbucks has been labelled the ‘Tesco of coffee’ after a criticism from local residents due to closures of local shops. This has lead to boycotts and increasing membership of sites likeihatestarbucks.com. They see Starbucks’ aggressive expansion as an erosion of their local environment and culture. This, in fact, means that weakness is an unfavourable impact.
Strengths
Brand Image:
Starbucks is amongst one of the very few companies that have managed to successfully create market awareness and stir up consumer interest in specialty coffee while at the same time preserving brand dominance. Its focus on consistency in delivering positive consumer experience stresses the point about consumer visits to its cafes being an ‘Experience’ rather than just seeing it as another coffee maker (workforce.com).
Unique Strategy:
The Ability to capture key locations and open stores in close nearness to each other is a unique strategy for Starbucks. This ensures that franchises that don’t meet set achievements are closed down. Therefore only the most profitable stores that maintain high sales, and retain the most customers survive.
Valued and motivated employees:
Starbucks promotes an environment that encourages team working and collaboration. As such it encourages managers to follow its motto of ‘hire the personality, train the skill’. Hence through exceptional service, customers keep coming back. (workforce.com)
The strengths provide a favourable impact. Weaknesses
Over-reliance on home market:
Although the American coffee market is worth over $18 Billion (e-importz.com), over-reliance on this market leaves Starbucks vulnerable to unforeseen changes that might occur in such market. E.g. recession affects disposable income for customers and subsequently, profits. Thus the management decision to focus mainly on the US market makes it a weakness.
Aggressive Expansion:
Due to the takeover and acquisition of local community coffeehouses and buildings, Starbucks has been labelled the ‘Tesco of coffee’ after a criticism from local residents due to closures of local shops. This has lead to boycotts and increasing membership of sites likeihatestarbucks.com. They see Starbucks’ aggressive expansion as an erosion of their local environment and culture. This, in fact, means that weakness is an unfavourable impact.
References: 7. A.L. Van Houtte. (2005). Van Houtte-fine coffee, filtered water, quality teas. from About Van Houtte: http://www.vanhoutte.com/ 8 9. Argenti, P. A. (2004). Collaborating with Activists: How Starbucks Works with NGOs. Berkeley: Haas School of Business. 10. Gulati, R. (2007). Silo Busting: How to Execute on the Promise of Customer Focus. Boston: Harvard Business School. 11. Harding, V. V. (2000). The Starbucks Effect. Boston: Harvard Business School. 12. Lee, H. (2007). Starbucks Corporation: Building a Sustainable Supply Chain. Stanford: Stanford Graduate Business School.