An Idea on Swot Analysis of Starbucks

A SWOT analysis helps a company to develop methods to improve its position in the market and increase revenue. Learn more about Starbucks' SWOT analysis.

Swot Analysis of Starbucks

Strengths

Outstanding Financial Performance: Starbucks’ key strength is its strong financial performance, which has propelled the firm to the top of the world’s coffee and beverage merchants.

Firm Valuation: The company is valued at more than $4 billion, which is a significant advantage over its competitors.

Mind Recall: Starbucks’ intangible strengths include top-of-mind recall among customers. The corporation maintains a strong position in the global market for coffee and drinks because of its brand, which signifies excellence and quality at an affordable price.

Premium Product Pricing: The firm is the world’s largest coffeehouse. As a result of its size and volume, it can afford to price its items in the premium and middle-tier ranges to attract more customers.

Best People Management Skills: The organisation is renowned for pioneering people management in an industry where soft skills and people skills determine the difference between success and failure. In other words, Starbucks has created a happy and inviting work environment for its employees, which translates to more comfortable associates servicing customers more effectively, resulting in overall corporate advantages.

Weaknesses

Coffee Beans Are Extremely Dependent: The firm is extremely reliant on its major and most important input, coffee beans, and is acutely dependent upon the price of coffee beans as a driver of its profitability. This indicates Starbucks is extremely priced sensitive to changes in the price of coffee beans. As a result, it has to diversify its product line to mitigate the danger of such dependency.

Unethical Procurement Practices: The company has recently come under fire for its procurement practices, with many activists supporting the environmental and social issues raising their voices against the unethical procurement of coffee beans. In addition, the corporation has been accused of breaking the “Fair Coffee Trade” standards, which were established a few years ago to address this same issue.

Outside of Budget Prices: The corporation prices its products in the premium to medium tiers of the market sector, putting them out of reach for many working consumers who prefer to obtain their coffee from McDonald’s or other outlets rather than Starbucks. However, according to Starbucks’ weaknesses in 2018, the company offered all its premium drinks at an economical price to bring more people to the outlets. This was to celebrate its 100 stores in India.

Non-diversified products: If the company is to compete in the breakfast segment with competitors like Burger King and McDonald’s, which is rapidly growing as a result of consumers’ compressed schedules who would instead grab a bite and drink something than make it at home, it must diversify its product range immediately.

Opportunities

Extend the supplier network: The firm has the option to expand the range of suppliers and its supplier network from whom it sources to diversify its input sources and avoid being at the mercy of haphazard suppliers. Furthermore, this would help the corporation become less susceptible to coffee bean pricing and more robust to supply chain concerns.

Expand into new markets: When it comes to expanding into emerging markets, the corporation has great potential. With a billion people in several countries poised to join the pool of individuals who want instant coffee and breakfast, the corporation may grow in these and other rising regions, providing good potential.

Expand its product offerings: The opportunities section in Starbucks SWOT Analysis states that it has the opportunity to expand its product offerings to compete with full-service food and beverage retailers such as McDonald’s and Burger King, as the consumer segment that these retailers cater to is growing, resulting in more business opportunities for Starbucks.

Extend the firm’s retail store network: As part of its quest for more significant market share and new customer categories, the company can dramatically expand its retail store network in every country. This potential is linked to the others mentioned above, such as expanding into new markets, diversifying into new customer categories, and expanding its reach across its homeland and abroad.

Threats

Rising coffee bean costs: The firm confronts challenges from rising coffee bean prices and supply chain concerns associated with price volatility in this essential ingredient. Furthermore, the rise in dairy product prices negatively influences the firm, posing another danger to its profitability.

Infringement of trademarks and copyrights: The firm is plagued by copyright and trademark infringements from lesser-known competitors looking to cash in on its success. Like other multinational businesses in emerging economies, Starbucks has faced legal action from people who have misappropriated its brand and renowned emblem.

High competition: In terms of specific customer categories, the firm confronts stiff competition from local coffeehouses and speciality retailers, which give it a run for its money. In other words, the corporation is up against local retailers that cater to a devoted customer base that is uninterested in major brands.

Expand into emerging markets: Starbucks must expand into emerging markets as a matter of necessity because the developed markets it traditionally relies on are saturated. It faces significant threats in this direction, given that the recession and pandemic have made things difficult for many retailers.

Finally, Starbucks confronts substantial hurdles due to its worldwide supply chain, which is susceptible to interruptions for any reason connected to either global or local situations.