Starbucks in the UK | Analysis

1913 words (8 pages) Essay in Marketing

18/05/17 Marketing Reference this

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Business strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives.

Strategy is a management’s game plan for strengthening the performance of an enterprise. It states that how businesses should be conducted to achieve the desired goals. Without a strategy management doesn’t have a roadmap to guide the managers and their teams.

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Company Introduction

Starbucks is the famous and largest coffeehouse in the word as well as Starbucks Corporation is an international coffeehouse chain based in Seattle, Washington, USA with 17,133 stores in 49 countries. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and panini, pastry, snacks, and items such as mugs and tumblers.

Starbucks has always been the place to find the world’s best coffees. 1970s The first Starbucks opens. The name comes from Herman Melville’s Moby Dick, a classic American novel about the 19th century whaling industry. The seafaring name seems appropriate for a store that imports the world’s finest coffees to the cold, thirsty people of Seattle.

Mission Statement

To inspire and nurture the human spirit- one person, one cup, and one neighbourhood at a time

Our Coffee

It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done.

Our Partners

We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard.

Our Customers

When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers- even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.

Our Stores

When our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. It’s about enjoyment at the speed of life-sometimes slow and savoured, sometimes faster and always full of humanity.

Starbucks in the UK

In May 1998, Starbucks has successfully enter the European market through its acquisition of 65 Seattle Coffee Company stores in the UK. The two companies shared a common culture, focusing on a great commitment to customised coffee, similar company values and a mutual respect for people and the environment.

The layout and atmosphere of Starbucks stores are specifically designed to be cosy and intimate, while at the same time providing people with their own personal space to use as they wish. The combination of sofas, armchairs, coffee tables and chairs, bars and stools and meeting room tables means that there is something for everyone.

Those looking for peace and quiet away from home or the office can relax and linger in an armchair and escape into a book, whilst those looking for an intimate place to meet friends can huddle on a sofa and chat over a mug of coffee, as they would in their own home. Soft lighting and background music make the experience complete.

SWOT Analysis

SWOT analysis is an extremely useful tool to understand different scenarios and helps in decision-making for all sort of situation in businesses and organizations. SWOT consists of four different trends and it stands for Strengths, Weaknesses, Opportunities and Threats.

The SWOT analysis mainly provides a good support for reviewing strategy of an organisation, its position, trends and direction of business. It is quite simple to complete a SWOT analysis and may be used for business planning, strategic planning, competitor evaluation, marketing, business development, product development and making research reports etc. A SWOT analysis measures a business unit and the ideas or concepts behind a successful business strategy.

Following are some examples for which a SWOT analysis can be used to assess a running or a proposed business:

Position of a company in the market and its commercial feasibility

To define and improve the ways of sales distribution

To identify a product or a brand

To create a business concept or idea

Finding strategic options like describing the ways to enter a new market or launching of a new product

To provide opportunity for a gain

To search for a potential partnership

To find better suppliers or changing a current supplier

To outsource services, activities or resources

To find investment opportunities

SWOT Analysis of Starbucks

Strengths

Starbucks is known as the market leaders of the coffee market

Customers are quite happy with their service and say it excellent

Customer feedback shows that the customers are satisfied with the quality as well as taste of the coffee

Starbucks is operating its business in 40 countries worldwide

Starbucks is known as a global coffee brand that is built upon a reputation for fine products and services

People have high brand awareness for Starbucks

The company motivates its employees by practicing different strategies and by providing a good working environment that really boost the performance of the employees and results in bringing more business to the company

Starbucks believe in a good relationship with its suppliers

Strong financial position of Starbucks in the market in coffee market is a real plus

Starbucks having an edge on its competitors with its customer based loyalty

Starbucks has become globalised as operating in many countries

The company has most of high visibility or prime locations to attract the maximum of its customers

It has become an industry market leader with a globally renowned brand

The company is famous for its special flavors and drinks

Weaknesses

Starbucks offer high price for its products as compared to the other competitors in the market like Costa, Café Nero etc.

By introducing and implementing high quality standards the operating cost has become higher.

Most of the business profits are highly dependent on its coffee products

The company also facing an increasing number of competitors in this growing market

Starbucks is having less control over stores outside the US

Closing of a number of stores in different countries is giving hard time to the company

Protest from some environment protection groups or agencies is another problem, that the company is having in recent times

Opportunities

Advance technology options can be used for the business with a strong financial hold as compared to other names

Brand extension in global market would be a great opportunity for Starbucks

Co-branding with other manufacturers for different food items and drinks, may provide an opportunity to further expand the business and to capture some more share of the market

Launching of some new products in Asian countries looks attractive

Product diversification

Option to explore the market by introducing variety of products

The company may plan to offer some new products for its customers

The company may attract people with new packaging designs

Threats

As other business security is the key issue for Starbucks at different public places

New Competitors with better plans can be a huge threat to the company in these times

Low price offers from its competitors

Volatile pricing of coffee in developing countries

Political and culture issues in foreign countries

Dissolving signs of potential coffee markets

The PEST Framework

PEST analysis measures a business market and its potential according to external factors, which are Political, Economic, Social and Technological. It is often helpful to complete a PEST analysis, prior to a SWOT analysis. In a nutshell PEST analysis measures a market.

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Political Factors

Political factors include government rules & regulations and other legal issue as well as both informal and formal rules, which the company has to follow. When Starbucks enter into a new market then it has lots of challenges and some of those are:

Pricing regulations

Political instability

Taxation rules and Policies

Employment Laws

Environmental laws

Wages legislations

Property protection acts

Trade restriction or limitations

Economic Factors

Different economic factors may affect the purchasing power of potential customers and the cost of capital of the company.

When Starbucks launched a new coffeehouse in UK, the company has affected by the regional economic growth, interest rates, currency exchange rates and the inflation rate

in the region. The factors of this kind may have major impacts on how businesses operate and how they make decisions for the company. For example, interest rates will affect the cost of capital and as a result the business grows and expands to a certain extent. Similarly, the exchange rates will affect the costs to export goods, supply of the product and price of imported goods to a region. It is vital for Starbucks as it imports coffee beans from African countries. Following are some key elements that are significant for a company and its operations:

Type of economic systems in different countries to operate

Interest rate

Discretionary income

How efficient are the financial markets of a region

Economic growth rate

Exchange rate and how stable is the currency of host country

Government intervention at different times

Social Factors

Social factors play a really pivotal role when launching a product in international markets. On its entry to UK Starbucks targeted young people keeping in mind the people and the trends in the region. Here are some factors that may affect customer needs and the total size of a potential marketplace.

Health consciousness

Population growth rate

Age distribution

attitudes

Working environment

Demographics

Education

Class structure

Culture etc

Technological Factors

Technological factors may help companies to reduce the number of barriers to entry a market or to minimize the intensity of a barrier. Starbucks is using new technology and equipment in different countries and by using this technology they have managed to increase production of their coffee products. Following are some factor that may influence a business or its products:

Research and development activity

Impact on cost structure

Automation of the system

Technology incentives

Rate of these technological changes

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