Company background

Name Starbucks Corporation

Industries served Restaurants, Coffeehouses
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Howard Schultz
Revenue $ 13.29 billion (2012)
Profit $ 1.38 billion (2012)
Employees 149,000 (2012)
Main Competitors
McDonald's Corp., Dunkin' Brands Group, Inc., Nestl S.A., Green
Mountain Coffee Roasters, Costa Coffee, Caribou Coffee
Company
Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world,
operating 20,000 coffeehouses in more than 60 countries. It is the no.1 brand coffeehouse
chain in the world.
You can find more information about the business in its official website or Wikipedias article.
SWOT
Starbucks SWOT analysis 2013
Strengths Weaknesses
1. Sound financial records
2. No. 1 brand in coffeehouse segment
valued at $4 billion
3. Starbucks experience
4. Largest coffeehouse chain in the world
5. Employee management
1. Coffee beans price is the major influence
over firms profits
2. Product pricing
3. Negative publicity
Opportunities Threats
1. Extend supplier range
2. Expansion to emerging economies
3. Increase product offerings
1. Rising prices of coffee beans and dairy
products
2. Trademark infringements
4. Expansion of retail operations 3. Increased competition from local cafes
and specialization of other coffeehouse
chains
4. Saturated markets in the developed
economies
5. Supply disruptions
Strengths
1. Sound financial records. Starbucks profitability has been rising for the past few years and is
now 14%. The company also outmatches its nearest competitors with 24.54% return on
investment and 29.16% return on equity.
2. No. 1 brand in coffeehouse segment, valued at $4 billion. Starbucks has a strong brand
reputation associated with quality coffee and excellent customer service. Its brand is the
most valuable brand in coffeehouse segment and is valued at $4 billion.
3. Starbucks experience. One of the strongest advantages Starbucks has is the experience it
delivers to its customers with perfectly blended coffee, premium music, friendly staff and
warm atmosphere, which results in incomparable customer service.
4. Largest coffeehouse chain in the world. The company operates around 20,000 coffeehouses
in 60 countries, making it the largest coffeehouse chain in the world.
5. Employee management. The company offers its employees extensive range of benefits and
a pay rate higher than offered by competitors.
Weaknesses
1. Coffee beans price is the major influence over firms profits. Starbucks profitability and its
coffee price are largely dependent on prices of coffee beans, which is a commodity and
cannot be controlled by Starbucks. Due to hedge funds, weather conditions and many other
factors, Starbucks cannot estimate the price of tis coffee and companys profitability.
2. Product pricing. Starbucks offers great coffee and customer experience but that results in
high price of its products. In comparison, McCafe premium coffee was price lower than
Starbucks coffee and was better evaluated.
3. Negative publicity. The corporate continuously receives negative publicity over its poor
efforts of becoming greener company, tax evasions and poor treatment of some suppliers.
Opportunities
1. To extend supplier network. Starbucks doesnt grow its own coffee beans but has to buy
them from various suppliers, which are mainly clustered in South America, Arabia or Africa.
For Starbucks to ensure critical supplies for its operations in Asia, reduce the dependence of
good or bad harvests in Africa and South America and to save on shipping costs, Starbucks
has to extend its supplier network.
2. Expansion to emerging economies. There are great opportunities for coffeehouses in China
and India, in which Starbucks has comparably only modest number of restaurants.
3. Increase product offerings. The business could expand the number of coffeehouses that
offer wine and beer, plus adding some new products and reaching broader customer group.
4. Expansion of retail operations. Starbucks does not only manage coffeehouses and
franchises but sells some of its products through other retailers. The firm should form more
of such partnerships and offer to sell its coffee, for example, in supermarkets.
Threats
1. Rising prices of coffee beans and dairy products. The chain strongly depends on the coffee
beans and dairy products prices, which Starbucks cannot control or can hardly estimate.
2. Trademark infringements. The company is often involved in cases over illegal use of its
trademark, which is costly and detrimental for Starbucks.
3. Increased competition from local cafes and specialization of other coffeehouse
chains. Local cafes can offer much lower price and more suited menu for its customer. Big
coffeehouse chains specialize so they wouldnt need to compete head-to-head with
Starbucks. In both situations, Starbucks experiences intense competition and loses market
share.
4. Saturated markets in the developed economies. Coffee markets in the developed
economies are already saturated and with intensifying competition, Starbucks will find it
hard to grow in these markets.
5. Supply disruptions. Due to political, economic and weather conditions Starbucks may
experience supply disruptions, adding significant cost to the firm.










Company background
Name McDonald's Corporation
Industries served Restaurants, Food
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Don Thompson
Revenue $ 27.56 billion (2012)
Profit $ 5.46 billion (2012)
Employees 1,800,000 (2013)
Main Competitors
Burger King Worldwide,Inc., Yum! Brand Inc., Subway, Wendys
Company.
McDonalds is the worlds leading fast food restaurant chain with more than 34,000 local restaurants
serving approximately 69 million people in 119 countries each day. More than 80% of McDonalds
restaurants worldwide are owned and operated by independent local franchisees.
You can find more information about the business in its official website or Wikipedias article.
SWOT
McDonalds SWOT analysis 2013
Strengths Weaknesses
1. Largest fast food market share in the
world
2. Brand recognition valued at $40 billion
3. $2 billion advertising budget
4. Locally adapted food menus
5. Partnerships with best brands
6. More than 80% of restaurants are owned
by independent franchisees
7. Children targeting
1. Negative publicity
2. Unhealthy food menu
3. Mac Job and high employee turnover
4. Low differentiation
Opportunities Threats
1. Increasing demand for healthier food
2. Home meal delivery
1. Saturated fast food markets in the
developed economies
3. Full adaptation of its new practices
4. Changing customer habits and new
customer groups
2. Trend towards healthy eating
3. Local fast food restaurant chains
4. Currency fluctuations
5. Lawsuits against McDonalds
Strengths
1. Largest fast food market share in the world.McDonalds is the largest fast food restaurant
chain in terms of total world sales (8%). It is the second largest outlet operator with more than
34,000 outlets, serving 69 million consumers every day in 119 countries.
2. Brand recognition valued at $40 million.Companys brand is the most recognized brand in fast
food industry and is valued at $40 billion. McDonalds is also famous by the Ronald McDonald
clown.
3. $2 billion advertising budget. McDonalds spends on advertising more than the next 4 fast food
restaurant chains combined.
4. Locally adapted food menus. The fast food chain is operating in many diverse cultures where
tastes in food are extremely different than those of US or European consumers. Thus ability to
adapt to local tastes is one of McDonalds strengths.
5. Partnership with best brands. McDonalds offers only most popular brands in its restaurants,
such as: Coca Cola, Dannon Yogurt, Heinz ketchup and others.
6. More than 80% of restaurants are owned by independent franchisees. Therefore,
McDonalds can focus more on perfecting its serving system and marketing campaigns.
7. Children targeting. The business successfully targets very young children through offering
playgrounds, toys with its meals and advertisements.
Weaknesses
1. Negative publicity. McDonalds is heavily criticized for offering unhealthy food to its customers,
stimulating obesity and strong marketing focus on very young children.
2. Unhealthy food menu. Although McDonalds tries to introduce healthier choices in its menu, the
menu is largely formed of unhealthy meals and drinks. Such menu offering prompts protests by
organizations that fight obesity and hence, decreases McDonalds popularity.
3. Mac Job and high employee turnover. Mac Job is a low paid and a low skilled job, which is
often seen negatively by its employees. This results in lower performance and high employee
turnover, which increases training costs and add to overall costs of McDonalds.
4. Low differentiation. McDonalds is no longer able to substantially differentiate itself from other
fast food chains (at least not enough to gain some market share) and opts to compete by price
rather than by additional features.
Opportunities
1. Increasing demand for healthier food. While demand for healthier food increases, McDonalds
could introduce more healthy food choices in its menu and reverse its weakness into strength.
McDonalds is trying to seize such an opportunity and soon plans to open only vegetarian
restaurant in India.
2. Home meal delivery. McDonalds could exploit an opportunity of delivering food to home and
increase its reach to customers.
3. Full adaptation of its new practices. McDonalds has redesigned its logo and restaurant design
in 2006. In addition, it has introduced some new practices. In a result, remodeled restaurants
have seen 8-9% higher than average market growth. McDonalds should finish remodeling all of
the restaurants and adapt the best practices in them as soon as possible.
4. Changing customer habits and new customer groups. Changing customer habits represent
new needs that must be met by businesses. So far, the company has been successful in
introducing its McCaf, McExpress and McStop restaurants to meet the changing customer
habits and the needs of previously untapped customer groups.
Threats
1. Saturated fast food markets in the developed economies. The fast food market in the
developed countries is already overcrowded by so many fast food restaurant chains and this
already proves to be a threat to McDonalds as it barely grew through 2012.
2. Trend towards healthy eating. Due to government and various organizations attempts to fight
obesity, people are becoming more conscious of eating healthy food rather than what
McDonalds has to offer in its menu.
3. Local fast food restaurant chains. Local fast food restaurants can often offer a more local
approach to serving food and menu that exactly represents local tastes. Although McDonalds
does a great job in adapting its own menu to local tastes, the rising number of local fast food
chains and their lower meal prices is a threat to McDonalds.
4. Currency fluctuations. The business receives a part of its income from foreign operations. The
profits that are sent back to US have to be converted into dollars and may be affected by the
exchange rates, especially when the dollar is appreciating against other currencies. In 2012,
McDonalds profit was largely affected by appreciating dollar.
5. Lawsuits against McDonalds. McDonalds has already been sued for many times and lost
quite a few lawsuits. Lawsuits are expensive as they require time and money. And as McDonalds
continues to operate more or less the same way, there is high probability for more expensive
lawsuits to come.