Starbucks External Analysis
SWOT -Opportunities
One of the opportunities presented to Starbucks is the growth in coffee market. In the United States, specialty coffee sector accounts for approximately 15% of the total retail coffee market which is equivalent to $21billion. In 2005, the retail coffee market was valued to be around $23billion and specialty coffee accounted for nearly 45% of the market and was still expected to grow. Starbuck has a 40% market share in the specialty coffee sector which provides an indication that anticipatory growth in the following category will provide Starbucks with opportunity to expand and grow in the US. Furthermore, Starbucks has the opportunity for major expansion in to Asia Markets such as China. Starbucks plan to focus on current markets such as Beijing and Shanghai along with expansion in to new cities.
Threat
One of the threats that present itself to Starbucks is raising dairy cost. Dairy prices have been on the rise and have significantly affected Starbucks profit margins. Milk and other dairy products represent a total of 4-5% sales in Starbucks, and continual increase in prices that lower the company's profit. Further threats Starbucks will face is the Slowing US retail sales. The company faces long-term concerns regarding its US store growth potential. If the current growth rate is sustained, the North American retail division will saturate within 5 years. This proves to be a big issue for Starbucks given the fact that domestic retail has been the source of 75% of the company's revenue and profit growth. Sales and growth of its domestic retail will be stagnant and decline over the next 3-5 years before reaching saturation point. Another threat to Starbucks is that Seattle's Best Coffee is using Starbucks consumer education to create consumer awareness of its gourmet coffee, behind expanding nationally. The next threat is in regards to the rising costs in coffee beans and furthermore farmers are growing more profitable crops, hence
One of the opportunities presented to Starbucks is the growth in coffee market. In the United States, specialty coffee sector accounts for approximately 15% of the total retail coffee market which is equivalent to $21billion. In 2005, the retail coffee market was valued to be around $23billion and specialty coffee accounted for nearly 45% of the market and was still expected to grow. Starbuck has a 40% market share in the specialty coffee sector which provides an indication that anticipatory growth in the following category will provide Starbucks with opportunity to expand and grow in the US. Furthermore, Starbucks has the opportunity for major expansion in to Asia Markets such as China. Starbucks plan to focus on current markets such as Beijing and Shanghai along with expansion in to new cities.
Threat
One of the threats that present itself to Starbucks is raising dairy cost. Dairy prices have been on the rise and have significantly affected Starbucks profit margins. Milk and other dairy products represent a total of 4-5% sales in Starbucks, and continual increase in prices that lower the company's profit. Further threats Starbucks will face is the Slowing US retail sales. The company faces long-term concerns regarding its US store growth potential. If the current growth rate is sustained, the North American retail division will saturate within 5 years. This proves to be a big issue for Starbucks given the fact that domestic retail has been the source of 75% of the company's revenue and profit growth. Sales and growth of its domestic retail will be stagnant and decline over the next 3-5 years before reaching saturation point. Another threat to Starbucks is that Seattle's Best Coffee is using Starbucks consumer education to create consumer awareness of its gourmet coffee, behind expanding nationally. The next threat is in regards to the rising costs in coffee beans and furthermore farmers are growing more profitable crops, hence