Starbucks Firms External and Internal Analysis

Table of Contents

Summary
External Analysis
Internal Analysis
Recommendations
References

Summary

It is hard to disagree that many people enjoy drinking coffee outside. One of the most famous companies offering such a service is Starbucks an international and highly respected retail coffee and snacks store chain that provides people with high-quality goods and services. Despite the popularity of Starbucks, some doubt its advantages. What is more, some elements of the companys strategy and performance slow its development. It is insightful to conduct an external and internal analysis of Starbucks and provide some recommendations.

External Analysis

To begin with, it is possible to say that the general environment in which Starbucks operates is quite positive and beneficial for the company. Notwithstanding the time or situation, people always need coffee and offering them an opportunity to buy it when and where they need it means that the company will have its customers anyway. What is more, this industry allows globalization, which is valuable for the company.

Starbucks has a number of opportunities, and the first one is the expansion to developing countries where it would have fewer competitors. The second opportunity is to partner with other firms and introduce new products. However, Starbucks also faces some challenges, including high competition and a suffering image of the company. The latter relates to rumors that Starbucks sells low-quality coffee and is overrated, a waste of money, and for snobbish people (Tyko, 2022). The second threat may be explained with the help of Porters Five Forces Analysis. Many competitors in the market offer the same coffee and snacks for lower prices, which negatively affects the value of Starbucks. It has strong forces of the threat of substitution and competition, so this is the area the company needs to address.

Internal Analysis

Further, it is possible to conduct an internal evaluation of Starbucks. The resources it can leverage against its competitors are an extended supply chain, beneficial acquisitions, and a diversified line of products (Geereddy, n.d.). Indeed, these are the companys main strengths that support its competitiveness. What is more, almost all Starbucks cafes have unisex bathrooms, so the fact that the company supports LGBT people is a significant advantage (Helm, 2016). As for the resources it can use to complement its partners are brand image, loyalty program, and reinvestment strategy.

Further, Starbucks also has its disadvantages that slow down the development of the company. Among others, the weaknesses are unexpectedly high prices, imitational products, and the lack of transparency in paying European taxes (Jolly, 2021). If not addressed, these weaknesses may handicap the firm in the future because people will find cafes with cheaper coffee and more diversified products, and the operation of Starbucks in European countries may be stopped due to unpaid taxes. Finally, as for the current business strategy, Starbucks tends to reinvest its revenues (Geereddy, n.d.). It hopes to find better opportunities to use the money for the promotion, expansion, and development of the company.

Recommendations

Based on the information provided above, it is possible to offer some recommendations that will allow the brand to prosper and solve some issues. To begin with, it is suggested that Starbucks reviews its price policy and makes its goods and services more affordable. In that case, more people will choose it instead of McDonalds, Burger King, and Dunkin Donuts. Further, Starbucks needs to leverage its robust features, including partnerships with profitable companies, brand image and recognition, and inclusion. If the coffee chain manages to attract more representatives of minorities like LGBT, African Americans, and other groups, the company will prosper. Thus, this strategy may be very beneficial and promising.