Katherine Kaye H.

Villaganas ABM 11 – Gates

Strength

1. Strong brand recognition.

2. Innovative business model.
3. Commitment to sustainability.
4. Strong customer loyalty.
5. Strong global and digital presence.
6. Strong financial performance.

Weakness

1. Major dependence on a single product line which is coffee.

2. Intense competition in the coffee industry.
3. Limited international expansions in some markets.
4. High product price compared to other competitors that has a potential negative impact on price
movement.
5. Limited menu options for customers with dietary restrictions or preferences.

Opportunities

1. Expanding into new markets

2. Partnerships and collaborations with other companies or brands
3. Adopt Price Differentiation
4. Introducing customers to new products and coffee subscription
5. Expanding the Starbucks Rewards loyalty program and other customer loyalty initiatives

Threats

1. Competition from other coffee chains and independent coffee shops

2. Changes in consumer preferences or trends
3. Economic downturns or market instability
4. Supply chain disruptions or sourcing challenges
5. Labor disputes or employee turnover
Explanations:
Explanation on Starbucks Strengths:

1. Strong brand recognition.

Strong brand recognition is a key strength for Starbucks. The company has a solid
reputation for quality and customer service, making it one of the most recognizable and
renowned coffee brands in the world. This strong brand recognition has helped Starbucks
establish a loyal customer base and differentiate itself from competitors.

2. Innovative business model.

Starbucks has a long history of innovation, including the introduction of the coffee bar
concept and the development of new products such as the Frappuccino. This focus on
innovation has helped Starbucks stay ahead of the competition and maintain its position as a
leader in the coffee industry.

3. Commitment to sustainability
Starbucks places a high priority on sustainability, and it has put in place several initiatives
to lessen its impact on the environment and support sustainable agriculture. For example,
Starbucks has set a goal to become resource-positive, meaning that it will give back more
resources to the planet than it uses.

4. Commitment to sustainability
Starbucks has strong customer loyalty due to the high quality of its products and
services. The company is known for its commitment to using high-quality, ethically sourced
ingredients and brewing techniques that result in a consistently excellent cup of coffee.
Starbucks also has a wide range of menu items, including food, beverages, and baked goods,
which allows it to appeal to a diverse customer base. In addition, Starbucks has a strong
presence in many locations, making it convenient for customers to access its products and
services.

5. Strong global and digital presence

Starbucks has a large worldwide footprint, with stores in over 80 countries. The
company's broad and diverse customer base, as well as its access to new markets and revenue
streams, allows it to do so. Starbucks has a strong reputation for high quality products and good
customer service, making it the world's most widely known brand. In order to offer a wide range
of customized products and services in different regions, the company has also sought to adapt
to local tastes and preferences. This leads to Starbucks reaching out to a wide range of
customers and maintaining an established presence in more than one market.
Thanks to a strong presence on the internet, Starbucks has been able to engage with its
customers and help maintain brand loyalty throughout this modern age. The Starbucks mobile
application enables customers to place and pay for their purchases ahead of time, track the
reward they have earned as well as access exclusive offers, is one way that Starbucks establishes
a strong digital presence. Personalized recommendations based on the customer's previous
purchases and location are also provided by the app.
 6. Strong financial performance
Over the years, Starbucks has always shown a strong financial performance. The firm
consistently generates revenue growth from 2013 to 2021, with revenues up from $13.98 billion
in 2013 to $29.06 billion in 2021. A combination of factors, including an expanding world
presence, successes in launching new products and continuous efforts to enhance the customer
experience have led to this growth. In addition, Starbucks continued to maintain a high margin
profile and over the last few years TTM profit margins have consistently hovered in the range of
18% until 2020.

Explanation on Starbucks Weakness:

1. Major dependence on a single product line which is coffee.
The big dependency of Starbucks on coffee is one of the company's weaknesses. Although the
business offers a variety of different products, including tea, smoothies and foodstuffs, coffee is
its principal source of income. This dependence on one product line can be regarded as a
handicap, since it leaves the company exposed to fluctuations in coffee demand and changing
consumer preferences.

2. Intense competition in the coffee industry

The intense competition it faces in the coffee business is another weakness of Starbucks. A high
degree of competition exists in the coffee business, with a large number of players competing for
market share. Starbucks is facing a number of competitors, including other specialty coffee
companies, independent coffeehouses and even fast-food restaurants and convenience stores
that sell coffee.

3. Limited international expansions in some markets.

Starbucks has a strong global presence, with over 30,000 stores in more than 80 markets around
the world. However, the company’s expansion into certain markets has been limited.

4. High product price compared to other competitors that has a potential negative impact on
price movement.
Starbucks, in particular as regards the raw materials used to manufacture its products, is at risk
of potential adverse effects from commodity price fluctuations. Due to a variety of factors, such
as weather conditions, disease outbreaks and the global monetary situation, coffee is
particularly susceptible to price fluctuations. Starbucks could suffer from a deterioration of
profitability and cash flow if the coffee prices were to rise significantly. Starbucks is famous for
offering high quality products and services, but this can lead to higher prices than some
competitors. Although the company's prices may be justified by its quality of products and
 customer experience, they are also considered to be a weakness because it might not compete
with other competitors in the market.

5. Limited menu options for customers with dietary restrictions or preferences.

Starbucks’ menu offerings may be limited for customers with dietary restrictions or preferences,
which can be seen as a weakness. While the company has made efforts to expand its menu to
include more plant-based options and to accommodate dietary preferences, such as gluten-free,
low-fat, and low-calorie options, it may not have as many options as some other food and
beverage retailers.

Explanation on Starbucks Opportunities:

1. Expanding into new markets

Starbucks needs to keep growing and diversifying its business, and one way to do that is to move into
new markets. The company has a strong presence in the US, but there are still many markets where it
does not have a significant presence or where it has struggled to gain a foothold.

For instance, Starbucks has a limited presence in certain regions, such as Africa and the Middle East, and
has faced challenges in certain countries, such as India. Expanding into these markets could provide
significant growth opportunities for the company, as well as help mitigate the risks associated with
relying on a single market or region for a significant portion of its revenue.

2. Partnerships and collaborations with other companies or brands

Partnerships and collaborations with other companies or brands can provide a number of opportunities
for Starbucks. These partnerships can allow the company to access new markets, customer segments, or
distribution channels, as well as leverage the resources, expertise, and brand equity of its partners.

3. Adopt Price Differentiation

Adopting price differentiation as an opportunity could allow Starbucks to better meet the needs and
preferences of its customers, as well as increase its revenue and profitability. For example, Starbucks
could implement price differentiation by introducing different product tiers like premium and regular
options or by offering discounts to certain customer segments, such as students or seniors.

4. Introducing customers to new products and coffee subscription

This is a key opportunity for Starbucks to continue to innovate and meet the changing needs and
preferences of its customers. The company has a strong track record of introducing successful new
products, such as its seasonal drinks, such as the Pumpkin Spice Latte, and its line of ready-to-drink
beverages. By continuing to introduce new products, Starbucks can keep its menu fresh and appealing to
customers and stay ahead of trends in the market. New products can also help the company reach new
customer segments and expand into new categories, such as by expanding its plant-based menu options
or healthier options. This type of service could be an opportunity for Starbucks to create a more
convenient and personalized experience for its customers, as well as to generate additional revenue and
customer loyalty.

5. Expanding the Starbucks Rewards loyalty program and other customer loyalty initiatives
Other customer loyalty initiatives such as the loyalty program The opportunity for Starbucks to extend its
relationships with customers and increase customer loyalty and retention will be available by expanding
the Starbucks rewards program as well as through a range of initiatives on customer loyalty. Starbucks
Rewards is a loyalty program whereby customers earn points for buying products and are able to convert
those into reward items, such as free drinks or food.

Explanation on Starbucks Threats

1. Competition from other coffee chains and independent coffee shops
Starbucks faces competition from a variety of sources, including other coffee chains and
independent coffee shops. These rivals may provide similar products and services to Starbucks,
which could make it challenging for the business to stand out from the competition and hold
onto its market share. Competition from other coffee chains and independent coffee shops can
impact Starbucks’ market share, customer traffic, and profitability, and can also put pressure on
the company to continually innovate and improve its offerings in order to remain competitive.
2. Changes in consumer preferences or trends
If there is a shift in consumer preferences toward healthier or more sustainable products, it
could impact the demand for certain Starbucks products or put pressure on the company to
adapt its offerings to meet these changing preferences. Also, if there are changes in consumer
trends, such as a shift towards online or mobile ordering, it could impact the way Starbucks
does business and require the company to adapt its operations in order to remain competitive.
3. Economic downturns or market instability
Economic downturns or market instability can be a threat to Starbucks, as they can impact
consumer spending and the demand for the company’s products and services. During times of
economic uncertainty or recession, consumers may be more cautious about their spending and
may choose to patronize lower-priced options or cut back on discretionary purchases, such as
coffee or food items. Market instability can also impact the cost of raw materials or other inputs
used to produce Starbucks products, which can impact the company’s margins and profitability.
4. Supply chain disruptions or sourcing challenges
Starbucks faces a risk when there are interruptions in its supply chain or sourcing difficulties,
since these might have an effect on the price and availability of the raw materials and other
inputs utilized in the production of its products. Disruptions in the supply chain, such as
transportation delays or natural disasters, can impact the availability of certain ingredients or
materials, which can, in turn, impact the company’s production and profitability.
5. Labor disputes or employee turnover
The capacity of Starbucks to run its stores efficiently and provide a reliable customer experience
may be jeopardized if there were a labor conflict or high staff turnover. Conflicts with
employees, such as strikes or protests, may have a negative effect on both business operations
and consumer satisfaction.