Gabriela Popova

Fac. №: 118465
Group: 32
SWOT analysis of Starbucks

Company Starbucks
CEO Kevin R. Johnson
Founded March 31, 1971
Headquarters Seattle, Washington, USA
Number of employees
346,000
(Sept 2019)
Market cap (Feb 2020) $99.59 Billion
Annual revenue (Sept 2019) $26.51 Billion
Profit (Net income)
$3.60 Billion
(Sept 2019)
Coffee, handcrafted beverages,
fresh food, non-food items,
Products and services
packaged goods, mugs and
accessories, gifts
Costa Coffee, McDonalds
Competitors
McCafe, Dunkin Donuts

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Fac. №: 118465
Group: 32
SWOT analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. A

SWOT analysis or also known as a SWOT matrix is a strategic planning technique
for assessing these four aspects of a business. It is an incredibly simple, yet
powerful tool to help people develop their business strategy, whether they are
building a startup or guiding an existing company.

Starbucks’ strengths
1. Strong brand image - Starbucks Corporation has one of the
world’s strongest and most popular brands. Its size, volume and the

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Group: 32
number of loyal customers have kept growing over time. It has a brand
value of $11.7 Billion as per 2019 Interbrand ranking.
2. Strong financial performance - with annual revenue of $26.5
billion and profit of $3.6 Billion in 2019, Starbucks has a strong financial
position in the market.
3. Growth in stores - Starbucks increased its number of stores
from 1,886 to 31,256 between 1998 and 2019.
4. Extensive international supply chain - Starbucks is known to
have an extensive global network of suppliers. It sources its coffee beans
from three coffee producing regions: Latin-America, Africa and Asia-
Pacific.
5. Employee treatment - the company is known for treating its
management and employees well, including numerous benefits and a
higher pay rate than the competition offers. Starbucks has been listed as
one of the Fortune’s Top 100 Places to Work for.
6. Efficiency, strategic planning and reinvestment strategy -
most of the profits that this company makes go straight back into
expanding the business. Its efficient operations and well-planned
strategic decisions have brought many advantages for the company.
7. Quality, taste and standardization - due to its premium blends
and delicious coffees, Starbucks has extended globally. It offers excellent
quality and consistently standardized products in all the locations.
8. Innovation - Starbucks has also diversified its business
operations by introducing innovative merchandises and food items. Such
an example is the addition of ice cubes made of coffee which results in a
stronger coffee flavor.

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Fac. №: 118465
Group: 32
Starbucks’ weaknesses
1. High prices - for many middle tiers and working consumers,
Starbucks’ offerings are more costly than McDonald’s and other
coffee outlets. Its high prices reduce affordability for the
consumers.
2. Imitable products - Starbucks doesn’t own the most unique
products in the market and therefore, their products are quite
imitable for other companies. Coffee shops and food chains like
McDonalds McCafe and Dunkin Donuts offer almost the same
products.
3. Generalized standards for most products - as a hot and cold
beverages retailer, most of Starbucks products are generalized
i.e. similar to those of other premium retailers. This makes it
easier for customers to switch from Starbucks to any other chain
such as McDonald’s or Burger King which also serve similar
beverages along with a larger range of food items.

Starbucks’ opportunities
1. Expansion in developing markets - Starbucks has coffee houses
mainly in the US. Global expansion in areas like India, China and
some regions of Africa can give a great opportunity to the
company.
2. Business diversification – the company can further diversify its
business operations to improve overall revenue growth
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Group: 32
opportunities. The company can reduce its dependence on its
current industries as well.
3. Introducing new products - as the company is quite popular,
introducing new products and holiday flavors (such as Peppermint
Mocha, Eggnog Latte, Gingerbread Loaf) under its name would
be profitable and greeted in the market.
4. Partnerships or alliances with other firms - co-branding results
in benefits. Starbucks has the opportunity to develop partnerships
and alliances with major firms. This would strengthen its presence
and market share.

Starbucks’ threats
1. Competition with low-cost coffee sellers - many coffee houses
offer products at an affordable rate. This can threaten the future
stability of Starbucks which offers higher prices.
2. Competition with big outlets - aggressive competition with
multinational companies like Dunkin Donuts and McDonald’s
can also pose a threat to its market position.
3. Rise in the prices of inputs - the company faces threats from the
increasing prices of coffee beans and is subject to supply chain
risks related to fluctuations in the prices of this key input.
Furthermore, the boost in the prices of dairy products impacts the
company adversely leading to another threat to its profitability.
4. Independent coffee house movements - there are many socio-
cultural threats for Starbucks. Independent coffee house
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Fac. №: 118465
Group: 32
movements support small independent and local coffee houses
and oppose the expansion of large multinational chains.

Starbucks is a globally recognizable coffee and beverages brand that has

rapidly made strides into all major markets of the world. The industry environment
of Starbucks involves diverse challenges. However, analyzing it with the help of
the SWOT matrix can show what the future might have in store for this world-
famous chain.

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Group: 32

Sources

https://www.ukessays.com/essays/marketing/
strategic-analysis-of-starbucks-corporation.php

https://strategicmanagementinsight.com/swot
-analyses/starbucks-swot-analysis.html

https://www.managementstudyguide.com/swo
t-analysis-of-starbucks.htm