Starbucks Corporations Analysis & Intensive Growth Strategies

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Starbucks Corporations Analysis & Intensive Growth Strategies
Starbucks Corporations Analysis & Intensive Growth Strategies Report (Assessment)
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Updated: Aug 31st, 2022

SWOT Analysis
BCG Matrix
Ansoff Matrix
Suggestions for Post-Pandemic Era
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Starbucks Corporation is a leading multinational coffee company that runs a chain of roastery reserves and coffee houses in the U.S. and across the world. The business was founded in 1971 in Seattle, Washington, United States, where the organization has its headquarters. The first Starbucks was opened in Seattle, Washington on March 30, 1971by three founders namely, Jerry Baldwin, Zev Siegl and Gordon Bowker. The company presented to be a different kind from the beginning since it brought a feeling of connection and the rich tradition. Today, Starbucks is the worlds largest coffee company, with over 30,000 stores spread across 80 markets globally (Starbucks company profile, 2021). The company is successful because it is able to provide an experience that changed the way the world thought about coffee shops.

Mission Statement Analysis
A mission statement articulates an organizations primary purpose, which is an expression of why a company exists, and as such, every business needs to have one. It is one of the worlds ethical companies since its mission statement is in action. Starbucks company mission is to inspire and nurture the human spiritone person, one cup, and one neighborhood at a time (Starbucks company profile, 2021). From the statement, the company focused on creating an environment where all feel welcome and enjoy a sense of warmth and belonging. Additionally, the company is daring enough and challenging the status quo by embracing innovative ways to grow itself. The mission statement expresses the companys desire to be present while connecting with important business values, including dignity, respect, and transparency. Further, from the statement, the company shows the desire to deliver its best in all its service areas while holding itself accountable for the outcomes.

SWOT Analysis
Strength, weaknesses, opportunities, and threats (SWOT) analysis is a simple yet useful framework that is often applied in the evaluation of the status of companies. Starbucks has a long-standing history as a reputable brand with service spanning over fifty years. The fact that the company is a well-known international brand is a strength since it benefits from customer loyalty built over the five decades that the company has existed. Further, the company is renowned for its high-quality products, which has earned the multinational a profit margin of 18.28 percent (Hamed & Nobanee, 2020). Starbucks remains a leading coffee company with many years in the coffee business sector, which has greatly influenced customer loyalty and remains a critical strength contributing to its continued success.

One of the weaknesses of Starbucks lies in its internal business strategy; that is, the company only deals in premium products. Only a section of people can afford to pay the premium rates that the business charges for its goods and services. The lack of diversity of target clients means that customers who may wish to consume the companys products may be locked out. Further, even though Starbucks is multinational, up to 70 percent of its revenue comes from its operation in the United States (Hamed & Nobanee, 2020). The corporation is yet to establish more new stores in Africa beyond the handful that exist on the continent.

The corporation has excellent opportunities that, if well-harnessed, can further promote it as a leading coffee business. One of the ways to tap the prospects includes expansion into developing markets across the world. Currently, Starbucks focuses on developed nations; however, with the fast-growing economies of some of the developing countries, it would be great if Starbucks strategically begins to establish itself in such regions. Additionally, the company lacks a strong advertisement campaign, but with investment in marketing, the company can achieve higher levels of success than it is now. A strong marketing strategy will help the company to grow its customer base and in turn, raise its income.

Despite the opportunities, Starbucks faces some challenges, such as competition from other multinationals operating in the same industry. Fluctuations in customers tastes and preferences, as well as trends, can easily influence the annual turnover of Starbucks and result in a loss of revenue (Lee, 2020). Additionally, since the company is multinational, its operations are likely to be impacted by the ever-changing business operation environment regulations across the countries where it operates its stores. Following the laws may require additional operation costs, thus reducing the companys annual profits and, in turn, success and sustainability. Furthermore, the present situation linked to COVID-19 has brought a new set of threats, including restrictions such as lockdowns around the world, causing reduced profitability.

BCG Matrix
Boston Consulting Group (BCG) Matrix is also referred to as a growth-share matrix with four components that help companies in their long-term strategic planning, and growth opportunities and determine products to either further continue or discontinue (Kader & Hossain, 2020). Starbucks cash cow is the coffee business which has been the companys main source of revenue since its inception despite competition from some existing businesses and from some new entrants.

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When COVID-19 struck, many businesses, including Starbucks, were severely affected, leading to diminishing returns. The pandemic did not give other similar businesses in the coffee industry an edge over Starbucks. The global coffeemaker had to shut down its in-store cafes at the height of the pandemic. The company relies on its loyal consumers known as Rewards members to make a comeback post coronavirus. The giant coffee company is angling toward more drive-thru and take-out locations rather than the traditional restaurants.

Therefore, looking at the BCG matrix, Starbucks lies in the star since it has both high market and annual growth in the region. Starbucks needs to put more resources to harness the market and industry opportunities that are linked to the companys present potential and advantages. Looking at the BCG Matrix, Starbucks lies in the high growth, high share quadrant, or the star. Starbucks position as a leading corporation in the industry does not bar it from targeting more stars. To do so, the company can target new innovative products produced sustainably and marketed through creative approaches for both new and existing markets.

Ansoff Matrix
Ansoff matrix is a tool applied when companies need to promote their growth strategies, particularly when selecting the most suitable future expansion and advancing market share. For market development, Starbucks continues to expose its products in new markets by establishing new stores under either franchise or license arrangements. In terms of product development, Starbucks often launches fresh products in its current markets as part of the companys merchandise development strategy (Nyandat, 2019). However, for diversification, the multinational has a firm grip on the entire supply chain of its goods and services right from farmers all the way to the consumers, thus limited or no chance of vertical integration.

Starbucks is an environmentally-conscious organization and has been making efforts aimed at achieving environmental sustainability. The store has partnered with expert environmental conservation to enhance its sustainable operations. The company is undertaking efforts to transform the existing stores into more eco-friendly spaces and innovative ways to conduct operations, manufacturing, and delivery sustainably. Modifying products and processes to take care of the environment is one way through which Starbucks can continue to hold on to its position as an industry leader. The modified items would be effective for launching new markets across the world.

Starbucks aims to reduce its emissions by half and plans to cut its water consumption by a similar ratio. Further, the company is planning to reduce its waste by fifty percent. If applied adequately alongside improved services such as more efficient delivery, all these strategies can reinforce the companys position as a global coffee giant. Whereas these plans will cost the company, the effects will include increased customer base and turnover, increasing profitability, and success. Competitors are also creating strategies to harness the growing attraction to companies that engage in sustainable production, but Starbucks has a number of advantages over the rest, including its financial base.

Suggestions for Post-Pandemic Era
Starbucks remains a leading corporation in the industry within which it operates, however from the analysis above; the company needs to adjust some elements. The business should consider prioritizing some of the strategies that it has been running in the background. The market is getting saturated with multiple new entrants who, alongside the existing competitors, are presenting a challenge. This requires concrete measures and strategies that may involve creating new products and services, including sustainable production methods that align with the gap identified in the BCG Matrix of Starbucks. With adequate investment in innovative and creative ideas, the company can regain the revenue lost during this raging pandemic and emerge as a thriving multinational in the sector.

Hamed, F.S., & Nobanee, H. (2020). Financial statements and analysis of Starbucks. Research Gate.

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Kader, A., & Hossain, H. (2020). An analysis of BCG growth sharing matrix. International Journal of Economics, Business and Accounting Research, 4(1).

Lee, K. (2020). Case study: Starbucks Coffee. The University of Huelva.

Nyandat, C. (2019). Starbucks international strategy. Grin Verlag.

Starbucks company profile (2021).

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Reading time 5 min
Type Report Assessment
Pages 5
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Subjects Business Company Analysis
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