Starbuck’s SWOT Analysis
Running head: Starbuck’s SWOT Analysis
Starbucks Corporation, founded in 1971, is a retailer of specialty coffee. Starbucks retails a variety of drip brewed coffee, espresso-based hot drinks, other hot and cold beverages, complementary food items, coffee-related accessories and equipment, teas, ice cream, and items such as mugs, coffee beans, and music and other non-food products through retail stores in approximately 39 countries worldwide. The company operates primarily in the US. It is headquartered in Seattle, Washington and employs about 150,000 people. Starbucks mission is “To inspire and nurture the human spirit— one person, one cup, and one neighborhood at a time” (www.Starbucks.com). Top management believes in involvement in the activities of the corporation and employees enjoy unsurpassed benefits in the industry. Schultz strongly believes that Employee satisfaction is directly related to customer satisfaction. The company recorded revenues of $7,787 million during the fiscal year ended October 2006, an increase of 22.3% over 2005. The operating profit of the company was $894 million during fiscal year 2006, an increase of 14.5% over 2005. The net profit was $564.3 million in fiscal year 2006, an increase of 14.1% over 2005. Its very strong financial position allows it to expand aggressively domestically and internationally. Situational Analysis
In regards to the coffee bean market, although it has endured much criticism for its purported monopoly on the global coffee-bean market, Starbucks only accounts for roughly two percent of global coffee production. According to Starbucks, they purchased 4.8 million pounds of Certified Fair Trade coffee in fiscal year 2004 and 11.5 million pounds in 2005. They have become the largest buyer of Certified Fair Trade coffee in North America, 10% of the global market, and the only company licensed to sell Certified Fair Trade coffee in 23 countries. SWOT Analysis
Starbucks Corporation is a very profitable organization, earning in excess of $700 million in 2006. It is a global coffee brand built upon a reputation for fine products and services. Due to its specialization in all things coffee, it achieves high buying volumes, and utilizes international sourcing, some from fair trade suppliers. It has almost 9000 cafes in almost 40 countries. Starbucks was one of the Fortune Top 100 Companies to Work For in 2007, ranked at number 16 (www.money.cnn.com). The company is a respected employer that values its workforce. The organization has strong ethical values and an ethical mission statement as follows, “Starbucks is committed to a role of environmental leadership in all facets of our business” (www.starbucks.com). It has a strong brand image associated with high quality coffee and excellent customer service. The company franchises and licenses 6,500 shops and has developed excellent skills in franchise management.
Starbucks has a reputation for new product development and creativity. Starbucks is a premium brand commanding premium prices. However, they remain vulnerable to the possibility that their innovation may diminish over time. The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk. The organization is over-dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise. As competitive pressures increase, the company could be undercut by lower price rivals such as McDonalds or Costa Coffee. Starbucks may also be overextending themselves by expanding their food base.
Starbucks is very good at taking advantage of opportunities. In...