Starting with internal analysis aids in laying the groundwork for developing a strategic plan that can adapt to a shifting clientele and make the most of existing resources (Bright et al., 2019). An internal analysis is mainly done using the SWOT analysis (strengths, weaknesses, opportunities, and threats). On the other hand, the focus of an organization’s external analysis is on the external factors that affect its operations, including its competitors. The external analysis PESTLE model (political, economic, social, technological, legal, and environmental) is essential as it helps thoroughly analyze the external factors that affect a business. The essay will therefore run an internal and external analysis of Starbucks (SHTAL et al., 2018).
As earlier seen, starting with the internal analysis lays the groundwork; therefore, for starters, the essay will look into Starbucks’ strengths, weaknesses, opportunities, and threats. As far as fast food and coffee chains go, Starbucks Corporation stands head and shoulders above the competition. Over time, it has expanded in terms of size and the number of dedicated clients. Another strength that Starbucks has is its fair treatment of employees. Starbucks is renowned for its excellent treatment of its employees and has been named one of Fortune’s Top 100 Places to Work.
Despite its budding strengths, the organization has a few weaknesses. One of their weaknesses is their high prices. Their hefty price tag, cited as an advantage in the preceding paragraph, is now a drawback. Many people who may consider Starbucks a regular part of their routine are put off by the high cost of their products, beginning with the most basic coffee selections. Despite its premium quality and moral principles, some people cannot afford to buy a cup of their coffee (Azriuddin et al., 2020).
An opportunity that arises for Starbucks is the introduction of new products and co-branding. Products from Starbucks would be well-received in grocery stores worldwide, and this trend is already well underway. Maximizing their massive name’s value through selling their premium brands at outlets other than their own would be a brilliant move. They can also choose to co-brand with other well-known businesses (Bright et al., 2019). Starbucks must face a few threats to continue expanding and maintain its position as the world’s leading coffeehouse chain. A threat that it faces is the fierce competition from cheaper alternatives like Dunkin’ Donuts. Although these competitor businesses do not put as much emphasis on their coffees and teas as Starbucks does, they provide items of comparable quality at far lower pricing.
The SWOT analysis covers the internal analysis, and the PESTLE model will be used for the external analysis. The political risk may be where to source raw materials and the need to follow laws and regulations, including tax and employment laws. On economic, the ongoing global economic recession is the prime external economic driver for Starbucks. Starbucks is in an excellent position to leverage emerging technological improvements for technology. In environmental the business practices of Starbucks are a source of worry for activists and advocacy organizations, and they need to adhere to environmental rules and regulations. For legal reasons, Starbucks must avoid breaking any rules in the United States and the nations from which it sources its ingredients. Caffeine producers and consumers need to be on the lookout for new government rules and laws that could affect the industry (Azriuddin et al., 2020).
In order to maintain its current market dominance, Starbucks needs to implement several internal changes and upgrades. A few recommendations will be suggested, including reducing prices and participating in community activities and sustainability practices. They could also introduce diversified products onto their menus, strengthening their position in the market.
Azriuddin, M., Kee, D. M., Hafizzudin, M., Fitri, M., Zakwan, M. A., AlSanousi, D., Kelpia, A., & Kurniawan, O. (2020). Becoming an international brand: A case study of Starbucks. Journal of The Community Development in Asia, 3(1), 33–43. https://doi.org/10.32535/jcda.v3i1.706
Bright, D. S., Cortes, A. H., Hartmann, E., Parboteeah, K. P., Pierce, J. L., Reece, M., Shah, A., Terjesen, S., Weiss, J., White, M. A., Gardner, D. G., Lambert, J., Leduc, L. M., Leopold, J., Muldoon, J., & O’Rourke, J. S. (2019). Principles of Management. OpenStax, Rice University.
Shtal, T. V., Buriak, M. M., Amirbekuly, Y., Ukubassova, Galiya S, Kaskin, Tlegen T, & Toiboldinova, Zukhra G. (2018). Methods of analysis of the external environment of business activities. Revista ESPACIOS, 39(12). https://www.revistaespacios.com/a18v39n12/18391222.html