Starbucks Corporation: An Extensive Analysis
Management 429 – Dr. Yu Liu
April 16, 2012
Table of Contents
Brief Introduction & Key Issues 3-4
External Analysis 4-5
Internal Analysis 5-7
Analysis of Business Level Strategy 7-8
Analysis of Corporate Level Strategy 9-11
Brief Introduction & Key Issues
Starbucks opened their first location in Seattle, Washington in 1971. Since then, the company’s main focus has been to ethically source and roast the highest quality Arabica coffee beans in the world. The company’s mission ...view middle of the document...
Of the firm’s 17,000 current outlets, 12,500 are in the United States. (Starbucks franchise success)
Starbucks Corporation offers a wide range of products to meet the demands of their different markets. They offer a variety of fresh brewed to ready-made bottled beverages for those on the go. For those who enjoy their coffee at home, they sell the Starbucks brand in packages. For those who wish to come in and enjoy the Starbucks atmosphere they offer a limited food menu along with their full drink menu. Starbucks is most known for their ability to specialize their drinks to meet the demands of their many different markets.
“Aside from extraordinary coffee, Starbucks has made a business out of human connections, community involvement and the celebration of cultures. We're committed to upholding a culture where diversity is valued and respected. So it's only natural that as a guiding principle, diversity is integral to everything we do.” Starbucks defines their culture as one simple equation, Diversity = Inclusion + Equity + Accessibility. They focus their company-wide diversity strategy on four areas: partners, customers, communities, and suppliers. Starbucks applies their equation to each of these areas in hopes to create a successful and enjoyable partnership that is noticed by employees and patrons alike (Starbucks Corporation, Diversity, 2011).
Starbucks Corporation is focused on creating an environment that respects people from diverse backgrounds, while empowering their employees to perform their best. They believe that by using the promotion from within strategy and by providing employee recognition it will increase the employee morale, which gives them motivation to provide excellent customer service. The company provides training to all their employees, which stresses the importance of their brand image, making Starbucks welcoming to everyone no matter what their background (Starbucks Corporation, Diversity, 2011).
Although Starbucks has been very successful in the past, they still face external problems like every business. Starbucks’ key issues are increasing competition, market maturity and decline, and an unstable macro environment. Competition in the coffee industry is on the rise and is saturating the market. Although there are only a few major competitors in this industry, full service fast food restaurants offering coffee products are on the rise, thus increasing competition. For example, in the last few years McDonalds has added the McCafe products to their product line, offering low price alternatives. These have ‘stolen’ a portion of the market share from Starbucks Corporation, as they are substitute products. Second, the industry has matured and has become saturated. There are only a few major competitors, but there are many small local coffee shops. The third issue is the unstable macro environment. Prices are on the rise and due to the limited number of geographic regions coffee beans can grow in...