SWOT Analysis of Starbucks Coffee

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Strengths

Starbucks profited $13.3 billion in net revenue in the year 2012 (Starbucks Investor Relations, 2013).

Starbucks has had an increase in annual profit of at least $1 billion in net revenue since the year 2010 (Starbucks Investor Relations, 2013).

Since its inauguration in 1985, Starbucks is currently operating in approximately sixty countries (Starbucks Investor Relations, 2013).

Starbucks continues to offer consumers new coffee products (Starbucks Investor Relations, 2013).

Company-operated stores are strategically built in areas of high-traffic and visibility (Starbucks Investor Relations, 2013).

Has the ability to vary the size of the stores to accommodate store locations in downtown centers, university campuses, and office buildings. (Starbucks Investor Relations, 2013).

One of the top 100 best companies to work for by Fortune 500 in 2013.

Weaknesses

Struggle to capture the European market due to its impersonal style, coffee quality, and price.

High competitors, such as Coffee Bean & Tea Leaf, Caribou Coffee, and Dunkin’ Brands Group, Inc.

Sells at high prices in contrast to its competitors.

Provides benefits for employees who work a minimum of twenty hours per week.

It is dependent on the retail of coffee, which can cause them to struggle while expanding to other countries.

Opportunities

Takes advantage of increasing stores through licensing agreements (Starbucks Investor Relations, 2013).

Possibility of utilizing the company’s cash and short-term investments to create new product innovations and marketing systems (Starbucks Investor Relations, 2013).

To include fair trade products to sell in the retail stores.

Global expansions in India and the Pacific Rim (Griffin, 2012, 58).

Increasing co-branding strategies within the hospitality industry, such as hotels, especially in Europe.

An increase in technological involvement between customers and Starbucks, such as providing payment through smartphones or the opportunity of pre-ordering for special and frequent customers.

Increase in drive-through locations in Britain to target the British “on-the-go” audience.

Threats

A decrease in consumer traffic or average revenue per transaction.

An increase in competitors and their product initiatives.

Loss of customers due to a preference for similar low priced products.

Overall economic status affecting consumer expenditure.

Negative publicity regarding possible health threats in consuming the product.

An inevitable increase in costs, such as commodity costs.

Increased health care costs and competitive wages.

Recommendations to Maximize Future Success

1. Starbucks should provide a more personalized service to target the European audience, especially in Paris. In doing this, customers with a low spending mentality will more likely connect with Starbucks at a more emotional level. As a result, this specific audience will more likely acquire the new taste of the Starbucks coffee combined with new flavors that are familiar with those in Paris and its surrounding areas.

2. This analysis suggests Starbucks should create several beverage options and new blends to increase customer acquisition in countries like France, especially, in the city of Paris. Additionally, the possibility of focusing on a design and approach that will appeal to this target audience might lure and wow these potential customers (Russell & Taylor, 2011, 19). As a result, customers will more likely accept and receive the new taste of Starbucks coffee.

3. To target the audience in the United Kingdom, this study suggests increasing Starbucks drive-through locations to meet the needs and lifestyle of the British culture. Additionally, attention should be given to the audience in Ireland and Germany by personalizing the service and coffee taste to align with their cultural preferences (Chesters, 2012, 1). Focusing on increasing customer acquisition in these areas will more likely result in high profits.

4. To continue thriving in a competitive market, Starbucks should increase customer satisfaction by providing a higher level of quality customer service. Additionally, increasing personalization between the staff and customers will more likely provide a unique customer experience. As a result, customers will visit stores they like; thus, purchase coffee from Starbucks, as oppose to its competitors.

5. This analysis encourages Starbucks to continue its international expansion. Through globalization, Starbucks will increase their relationship with foreign suppliers and increase its partnerships with international firms (Russell & Taylor, 2011, 9). As a result, an increase in customer acquisition and new market development.

Works Cited

Chesters, Laura. "Starbucks tastes relaunch success in UK." London Evening Standard 27 Apr. 2012, sec. Business: 1. London evening standard. Web. 18 Nov. 2013.

Griffin, Ricky W.. "The environments of organizations and management." Fundamentals of management. 6th ed. Mason, OH: South-Western Cengage Learning, 2012. 58. Print.

Russell, Roberta S., and Bernard W. Taylor. "Introduction to operation and supply chain management." Operations management: creating value along the supply chain. 7th ed. Hoboken, NJ: John Wiley & Sons, 2011. 9, 19. Print.

"Starbucks Investor Relations." Annual Reports Investor Relations Starbucks Company. Starbucks Corporation, n.d. Web. 18 Nov. 2013. <http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsannual>.