Starbucks Case Analysis

Topics: Coffee, Strategic management, Starbucks Pages: 24 (7872 words) Published: June 28, 2007

Introductionpage 1
PESTEL analysispage 1
Five forces analysispage 4
Competitor analysispage 6
Resource Auditpage 6
Value system analysispage 7
Core competencespage 8
Stakeholderspage 8
SWOT analysispage 8
Future strategic optionspage 9
Recommended optionpage 12
Critical reviewpage 12
References & Bibliographypage 13


This is a strategic report on Starbucks.
First of all I will explain the external environment of Starbucks using PESTEL analysis, Porter's five forces analysis and competitor analysis. Next will be an analysis of Starbucks' strategic capabilities. These will be determined using a resource audit, a value system analysis, the identification of possible core competences and the identification of important stakeholders. After this I will present a SWOT analysis of Starbucks before discussing three possible strategic options open to the company. Using the information I generate I will decide upon the most suitable option and then critically evaluate all the models and techniques used.

Howard Schultz bought a Seattle coffee company in 1987 then transformed the six coffee stores into a national, publicly owned company with more than 25, 000 employees and over 1,300 stores. By 2002 these figures had risen to 5,689 stores in 28 countries. He is the man behind, and CEO of, Starbucks.

PESTLE Analysis:

PESTLE analysis is a tool that can aid organisations making strategies by helping them understand the external environment in which they operate now and will operate in the future. It is a method of examining the many different external factors affecting an organisation – the outside influences on success or failure. PESTLE stands for:

Political – The current and potential influences from political pressures Economic – The local, national and world economy impact
Social – The ways in which changes in society affect us
Technological – How new and emerging technology affects our business Legal – How local, national and world legislation affects us Environmental – The local, national and world environmental issues

The PESTLE analysis will be used to identify and understand the important factors Starbucks must consider in all areas of the business.


•Taxation policy – high taxation imposed on farmers in those countries producing the coffee bean will usually mean Starbucks pay a higher price for the coffee they purchase. Any fluctuations in taxation levels in the industry are almost certainly ultimately 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 and this saving will have been passed on to purchasers of coffee like Starbucks. •Deregulation – A decade ago, the USA pulled out of the ICA (international Coffee Agreement) that set export quotas for producing nations and kept the price of coffee fairly stable. Coffee quotas and price controls ended. Since the deregulation farmers have suffered and their earnings have dropped. Many have struggled to make a living so have given up. •International trade regulations/tariffs – Trade issues will affect Starbucks predominantly when exporting and importing goods. When another country's government imposes a tariff it not only results in an efficiency loss for Starbucks but large income transfers can become inconsistent with equity. This extra charge can turn a 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 stability of any country they plan to expand to. Changes in government can lead to changes in taxation and legislation. The forthcoming American elections may have an effect on Starbucks as new legislation or new or existing...

References: and Bibliography:
Chambers I (1997) Business Studies (7th ed.) Causeway Press
Genus A (1996) Flexible Strategic Management (2nd ed) Chapman & Hall
Johnson G Scholes K (2002) Exploring Corporate Strategy (6th ed.) FT/Prentice Hall
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