SWOT analysis of Starbucks
This article is about a detailed SWOT analysis of Starbucks. It addresses the strengths and the weaknesses of Starbucks. It also addresses the opportunities and the threats facing the company.
Strengths of Starbucks
Starbucks is an American coffeehouse chain. It was founded in Seattle in 1971 and currently operates in 70 countries with more than 24,000 stores. It has been in business in the UK since 1998 (Starbucks Corporation, 2017).
Starbucks is one of the largest coffeehouse chains in the world. It is positioned as a premium coffeehouse chain. It is famous for its excellent quality products. This allows Starbucks to charge customers relatively high prices which results in more profits for the company!
Starbucks regards employees as its partners and offers a number of recognition rewards e.g. daily awards, quarterly awards, and yearly awards. It aims to attract people from all walks of like to develop a diverse workforce. It employs about 14,000 partners in the UK and interestingly, 70% of them are aged between 16 and 24 (Starbuck Corporation, 2017). There are a lot of opportunities for the partners to move up in the company. Starbucks in collaboration with Arizona State University offers all eligible U.S. partners full tuition support to achieve a bachelor’s degree.
Weaknesses of Starbucks
Starbucks pursues a premium pricing policy to be consistent with its brand positioning strategy. While such pricing policy attracts high to middle ends of the market, it is certainly not what many working class customers are willing to subscribe to. They would rather prefer McDonald’s and other coffee outlets to Starbucks.
Starbucks has saturated much of its home market, the USA. Its growth falls below expectations in Asia as well (Turner and Kaplan, 2017). According to some sources, another problem for Starbucks is understaffing in many of its US stores, even though the company is well-known for its good employee relations and welfare.
Opportunities for Starbucks
While the US market is saturated, there are many opportunities for Starbucks to grow in Asia, Europe, and Africa. In fact, India, China, and the UK are some of the most important markets outside USA for Starbucks, and further growth in these markets is feasible and lucrative. Growing middle class in China and India is indeed a great opportunity for the company.
Introducing new products and diversifying into related and un-related markets are some other opportunities worth exploring. Starbucks has both means and experience to explore these opportunities.
Threats to Starbucks
The last element in the SWOT analysis of Starbucks is the threat/s facing the company. Competition is fierce in coffee business like most other businesses. Starbucks faces tough competitors in many of its global markets. For instance, Caribou Coffee, Peet’s Coffee & Tea, The Coffee Bean & Tea Leaf, Dunn Bros, and Seattle’s Best are some of the main Starbucks’ competitors in the US market. Likewise, Caffè Nero and Costa Coffee are the two main competitors in the UK. In fact, Costa Coffee is the market leader in the UK coffee market.
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Last update: 16 April 2019 (First published on 12 January 2018)
Starbucks Corporation (2017) Our Heritage, available at: https://www.starbucks.co.uk/about-us/our-heritage (Accessed 20 December 2017)
Turner, N. and Kaplan, J. (2017) Starbucks growth in Asia falls below expectations, available at: http://www.independent.co.uk/news/business/news/starbucks-asia-expansion-growth-market-coffee-cafe-chain-a8034951.html (Accessed 20 December 2017)
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Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.