Pestle Analysis of Starbuck in Ukk

Topics: Coffee, Inflation, Strategic management Pages: 26 (5476 words) Published: November 16, 2012





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PESTLE stands for:Political - The current and potential influences from political pressuresEconomic - The local, national and world economy impactSocial - The ways in which changes in society affect usTechnological - How new and emerging technology affects our businessLegal - How local, national and world legislation affects usEnvironmental - The local, national and world environmental issuesThe PESTLE analysis will be used to identify and understand the important factorsStarbucks must consider in all areas of the business.Political:* Taxation policy - high taxation imposed on farmers in those countries producing thecoffee bean will usually mean Starbucks pay a higher price for the coffee they purchase. Any fluctuations in taxation levels in the industry are almost certainlyultimately passed on to the consumer. Recently (June 13, 2003) Tanzania's Minister of Finance harmonized and rationalized local government taxation to boost rural productivity of the coffee bean. Tax was lowered for these 'small holder' farmers andthis saving will have been passed on to purchasers of coffee like Starbucks.* Deregulation - A decade ago, the USA pulled out of the ICA (international CoffeeAgreement) that set export quotas for producing nations and kept the price of coffeefairly stable. Coffee quotas and price controls ended. Since the deregulation farmershave suffered and their earnings have dropped. Many have struggled to make a livingso have given up.* International trade regulations/tariffs - Trade issues will affect Starbucks predominantly when exporting and importing goods. When another country'sgovernment imposes a tariff it not only results in an efficiency loss for Starbucks butlarge income transfers can become inconsistent with equity. This extra charge can turna bargain into a rip-off. Also, since 9/11, trade relations have been adversely affected between the USA and some other countries.* Government stability - Starbucks should thoroughly investigate the political stabilityof any country they plan to expand to. Changes in government can lead to changes intaxation and legislation. The forthcoming American elections may have an effect onStarbucks as new legislation or new or existing government may bring in taxes. Also,those countries in political turmoil or civil war (e.g. Zimbabwe at present) should beapproached with great caution when considering new ventures.* International stability - The international economy must be brought intoconsideration as it can affect Starbucks' sales and markets. The aftermath of 9/11 was

an example of an economic downturn that affected the world market. If the worldmarket is in a slump it is not usually the ideal time for a business to look at grandexpansion.* Employment law - A reduction in licensing and permit costs in those countries producing the coffee bean for Starbucks would lower production costs for farmers.This saving would in turn be passed on to the purchaser.Economic:* Interest rates - A rise in interest rates means investment and expansion plans are putoff resulting in falling sales for Starbucks and their suppliers. Also mortgagerepayments rise so consumers have less disposable income to spend on luxury products such as coffee. Low interest rates should have the opposite effect.* Economic Growth - If growth is low in the nation of location of Starbucks thensales may also fall. Consumer incomes tend to fall in periods of negative growthleaving less disposable income....
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