Starbucks Analysis

July 28, 2017 Cultural

Starbucks Analysis Driving forces: External: a) Different consumer tastes and preferences b) An already established coffee culture in Europe c) Local competitions d) Price sensitivity of the consumers e) Social concerns regarding caffeine, and it addictive properties also need to be considered. Internal (from the organizations’ perspective): a) To reach larger economies of scale by selling to more customers in other countries. b) To reduce the risk of over dependence on one country by spreading sales in multiple countries. ) Starbucks is much more concerned with the quality of their product versus price. d) To replicate the success at home in new settings Strengths: a) A strong home market and brand reputation b) Wide product offerings c) A differentiated ambiance d) Value Employees. Starbucks considers its employees “partners”. e) The Starbucks “experience” is about passion for a quality product, excellent customer service, and people. f) Name Recognition. g) Quality Products and Ethical Sourcing ) Starbucks promotes ethical sourcing, contributes heavily to their communities, as well as continually strives to buy, sell and use environmentally friendly products. i) Technological Factors -Starbucks has been continually looking for ways to enhance the customer experience. WiFi Weaknesses: a) Mode of entry meant less control b) Overpriced c) Lack of consumer research d) Innovation e) creativity Opportunities: a) Big market with an established taste for coffee b) Brand America image c) Working with other local suppliers d) Creation of additional products Threats:

The Liability of Foreignness The inherent disadvantage foreign firms experience in host countries because of their non-native status. Liability is manifested in two dimensions: a) The numerous differences in formal and informal institutions in different countries (e. g. , regulatory, language, and cultural differences). Failure to recognize these rules may cost foreign firms dearly. b) Local competitors Also, ? With a weakened economy also comes an increase in purchasing cost for coffee related products and dairy products; both of which impact the return on investment and profits for Starbucks. Customers discriminate against foreign firms, sometimes formally and other times informally ? Rising costs of Coffee and Dairy products ? Given the current grave economic crisis, consumers are vying towards less expensive alternatives than the luxury coffee Starbucks provides. This effect could alter Starbucks current pricing strategies. c) Strategic recommendations: a) Reevaluate the mode of entry b) Subsidize the cost structure in Europe to gain a strong foothold c) Diversify in culturally similar countries ) Focus-differentiation to create a niche market ( could be based on age etc). Starbucks differentiation and focus strategy pushes customers to brand loyalty which will make it difficult for new entrants to overcome. e) Creation of additional coffee related products and an expanded menu. f) Develop and motivate there “partners” as they are there best assets. g) Starbucks must ensure that the type and quality of coffee it offers is always the same. This means they would use the same suppliers that integrate their standards.

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