Starbucks Coffee Company
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Beauty is only skin deep, companies must look within to secure longevity. Before a company can successfully bring a mission statement and vision to fruition, they must take a good hard look at their business plan. A company must reflect upon internal strengths and weaknesses, external opportunities and threats, and consider the trends associated with each. The fundamental process of strategic planning is through the encompassment of SWOT analysis. Taking a chance will be inevitable if a company fails to self-evaluate and strategically plan for the future. Starbucks Coffee Company is a paradigm of effective strategic planning through SWOT analysis. Astute analysis coupled with the ability to act swiftly has catapulted them to the position as the number one gourmet coffee retailer. They continue to document increased revenue annually and maintain a majority share of the gourmet coffee market.
StrengthsStarbucks serves up strong drinks and remains strong as the leader in the coffee industry market through product diversification, customer loyalty, and high visibility. Starbucks caters to the addictions and satisfies the needs of socioeconomic groups attempting to beat the daily grind. Got Milk? Starbucks does, and they put a spin on the famous marketing campaign to add calcium to the diet; they have created a dairy appeal for youths. Whether younger or older, customers with sundry palates may find something desirable amongst Starbucks’ diverse products. They are sure to delight the senses with gourmet coffees, flavorful teas, baked pastries, and a myriad of seasonal hot and cold specialty drinks for any age. Starbucks has built a reputation and developed a loyal customer base. Starbucks has created a safe environment where people are free to design creative coffee concoctions; an environment that has instilled trust while in the company of comfort. Trust is a powerful tool that has provided Starbucks with the ingredients necessary to brew success.
WeaknessesSelf-cannibalization, price, US market reliance, and problems in some international operations makes Starbucks vulnerable in the coffee market, but the Starbucks SWOT team is consistently trying to look in the crystal ball to avoid any setbacks. Strategic planning includes identifying market areas and locations conducive to profitability. One key to retail prosperity is “location, location, location”, but with so many locations, possibly too many, this strategy could lead to “self cannibalization.” A quick glance around the corner in any major city will reveal a Starbucks café at almost every turn. Although data are not available as to the impact of proximity, stores may eventually find themselves in a turf war competing for the same customer pool. The impact of propinquity may become more evident if the price for a cup of coffee continues to climb. The typical java junkie in New York City, on average, spends $3 for a Starbucks latte. Understandably, the increasing prices of coffee beans, dairy, and sugar elevates costs and forces Starbucks to pass those costs to the consumer. Each challenge has posted an opportunity, but time will tell whether people from different cultures will embrace the concepts of this American social obsession.
OpportunitiesThough many companies have fallen victim to failure due to unresolved weaknesses, Starbucks has adopted the attitude that opportunity is not only now here but everywhere. Through expansion into retail operations, technological advances, global expansion, brand extension and product distribution Starbucks has embraced opportunities with reckless abandon. As an answer to a weak international portfolio, Starbucks has initiated plans to infiltrate the global market by opening 15,000 new stores internationally over the next few years. Starbucks has also realized an opportunity in developing smart partnerships in order to enhance brad extension.
This is accomplished through product distribution and refining ingredient technology. In acclimating the adage that two heads are better than one, Starbucks has formed alliances with Pepsi in developing on-the-go Frappuccino beverages and Jim beam liquor to offer customers a fresh Starbucks buzz. Further, Starbucks and HP have partnered to provide customers with Hear Music so they can create and burn CDs that are as unique to the customer as their drink of choice. Starbucks is a model example on how a company can assess opportunities and develops innovative ways to capitalize on them in a continuous drive for success.
ThreatsEven with the vast success of this company through innovation and expansion, external factors create cause for concern as well as a platform for future planning to combat potential threats. Competition, unstable prices of coffee beans and dairy products, a questionable economy, and political tensions in global markets continually threaten the bottom line of Starbucks Corporation. The corner street carts and kiosks lend themselves as more convenient to downtown commuters on foot. Further, fast-food enterprises increasingly join the convenience cause and offer coffee as an added service to satisfy coffee craving customers. Escalating dairy prices, gas prices, and the cost of coffee beans may force the price of a Frappuccino over $5 and Starbucks may lose appeal to a frugal American society. Never the less, Starbucks has successfully turned a weakness into strength and has figured out a long time ago to sell an experience, not just a beverage. To threaten the Starbucks team is going to be a dare and allow the corporation to move on to the next trend.
Success can only be maintained through continually analysis of the strengths, weaknesses, opportunities, threats and trends of organizational factors. Starbucks provides a model of innovation and consistent evaluation of the products and partnerships possessed by the corporation. The magic is not contained by the reflection of success but by the planning executed when all factors of SWOT and trends are paradigm.
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