starbucks extensive global supply chain B u s i n e s s F i n a n c e
Starbucks has many internal strengths that allow it to stand out as the largest coffeehouse chain in the world. These strengths provide protection to the company and allow it to continue to grow. One strength is the strong branding of Starbucks. Most people know Starbucks and know that Starbucks provides an exceptional high-end product to its customer consistently. Starbucks has a loyal customer base and many regard Starbucks as the best coffeehouse in the world. Starbucks is a household name, synonymous with great coffee. Another strength is Starbucks extensive global supply chain. Starbucks purveys the highest quality coffee beans from all over the world. Starbucks only purveys from the best suppliers and each supplier is hand selected for quality of product. Another strength is Starbucks ability to diversify through subsidies and alleviate market and industry risk. Some notable acquisitions by Starbucks have been Ethos Water, Seattle’s Best Coffee, and Teavana. All of these strengths promote the growth of Starbucks and provide insight into their desire to continue to grow.
Although Starbucks is the largest coffeehouse chain in the world, they still possess internal weaknesses that limit or reduce business capabilities and opportunities. One weakness of Starbucks is the high price point of its products. Although a high price point allows for maximization of profit margins, it makes it unaffordable to some potential customers. This weakness reduces market shares in lower disposable income areas. Another weakness is Starbucks generalized product. Although the chain must provide a standard generalization of its product that can be purchased at any Starbucks location, this generalization does not allow Starbuck’s products to align with the culture or environment of each store location, reducing Starbucks ability to target markets and adhere to customer preferences. Starbucks must develop strengths that overcome these weaknesses in the market.
There are several external opportunities for Starbucks to grow and develop their business in the market. One opportunity is to expand into developing markets in other countries. Often a country that is beginning to welcome outside companies and becoming more engaged with global markets will provide great opportunities for new revenue. These developing markets are changing from less developed low-income areas to more modern and industrial economies with a higher standard of living. Another opportunity for Starbucks would be to align and partner with a major retailer to sale their product. Starbucks could improve distribution of their product if a retailer were able to sale Starbucks product at their locations. This could include merchandise, instant coffee, roasted and ground coffee, ready to drink individual coffees, etc. These opportunities will allow Starbucks to expand and grow in the global market.
There are several external threats that diminish or limit business performance. One threat to Starbucks is the low-cost options offered by other restaurants. This can reduce Starbucks market shares by competing with a lower price product, taking potential customers. Another threat is the possibility of other restaurants and coffeehouse imitating Starbucks. Other companies can imitate the environment, atmosphere, look, and even taste of Starbuck’s products. Another threat is the support from communities of local small coffeehouses and restaurants. This threat is often accompanied by smear campaigns against large global businesses and their devious practices. Starbucks can develop branding strategies and marketing campaigns to overcome these potential threats to their market share.