Conducting a SWOT Analysis of Starbucks: Leveraging Strengths, Weaknesses, Opportunities & Threats

SWOT is an abbreviation of strengths, weaknesses, opportunities, and threats. Therefore a SWOT analysis refers to the breakdown of the four areas of interest that are determinants of an organization's future. The analysis provides managers with critical data that can be used in formulating company objectives. According to Haskova, K. (2015, p 11), Starbucks is the world's largest coffee beverage company. The company was jointly founded by Jerry Baldwin, Zev Siegel and Gordon Bowker in 1971 and later sold to Howard Schultz in 1987 (Haskova, K., 2015, p 11). The company has grown since then to become the most recognizable coffee brand in recent times.

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The growth of Starbucks is embedded on its strengths which include the following. The first one is the brand image rooted in quality, profitability and ethicality (Bohm, A. 2009, p 27). The company has established itself as a premium coffee house, a brand that has kept them profitable over the years. They have maintained good ethics in business while combining a good quality of products and services that are seemingly environment-friendly Bohm, A. 2009, p 28). Their worldwide presence and consistency between location s have given then an upper hand in securing more customers. Therefore, the company can afford to ask their customers to pay higher prices for their products and services compared to its competitors. This aspect ensures profitability and global recognition.

The other strength is efficiency and reinvestment strategy. Starbucks uses most of its profits in expanding the business. This way, they can open more branches and establish themselves in new territories. This aspect is evident due to the company's ever-increasing locations worldwide with appearances in over 55 countries (Starbucks (Ed.),. 2018). The rapid expansion of new areas also increases accessibility to more customers. In some regions, Starbucks has opened up shops in almost every corner hence becoming more noticeable. The third strength is employee treatment. Starbucks is known for providing proper care to its employees. Over 30 years ago, the company was among the first in the history of the United States to offer comprehensive health insurance for all its employees (Lombardo, J., 2018). In 2007, it was one of the Fortune Top 100 Companies to Work for, securing position 16 (Lombardo, J., 2018). The advertisement strategy is also a strength for Starbucks. Their presence on social media and mainstream media has always converged interests on many new buyers who have wanted to taste their products and after some time, loyalty is achieved.

The company also has its weaknesses, which include the high pricing of its products. This aspect is discussed above as strength but it can be seen as a challenge in the sense that not all customers can afford them (Bohm, A. 2009, p 32). The company maintains relatively higher prices on all its products including the most basic coffee options hence deterring many customers who may be willing to buy from Starbucks and make the brand part of their daily life. As much as the brand image is recognizable with premium quality and ethical values, some customers with limited money may not be willing to spend that much a cup of coffee (Bohm, A. 2009, p 32).

Another weakness is the company's inability to offer overly unique products. Starbucks is known to have a wide range of products such as pumpkin spice lattes, frappucinos, and big chocolate chip cookies, but it can be noted that some of their products are offered in competitor shops (Bohm, A. 2009, p 35). These competitors only lose out to Starbucks because of its big name. Equally, the company's product line is not pure and can suffer imitation which will present stiff competition.

There are various opportunities for Starbucks grab such as global expansion. The company has an opportunity of venturing into new global markets such as Africa and the Middle East, where it has an insignificant presence. Another potential market is Asia which has high financial development rates (Baertlein, L, & Rigby, B., 2015). The company can also choose to walk with other companies by establishing business partnerships. Given its worldwide presence, Starbucks has the potential to widen its product range to merge with the requirements of each region. They can also diversify and exploit other openings and introduce other conventional items in their new territories retailed in their bistros. An example is a CD-copying administration they made in 2004 their Santa Monica bistro (Tucker, C.M., 2017, p 59). Equally, Starbucks can potentially diminish costs by co-situating at bars, eateries and store chains beyond their US household. The company can also focus more on their assets and build more noteworthy relationships with their customers. They can establish Starbuck cards and offer free refills to loyal customers.

Despite the successful journey over time, Starbucks is faced with various threats. One of them is stiff competition from other big companies thriving in the same market. These companies include McDonald's and Dunkin' Donuts which are continually offering products that contend with those at Starbucks (Tucker, C.M., 2017, p 61). There is evidence of successful contenders who have imitated Starbucks like the 'Stars and Bucks' cafe in Palestine. Starbucks is also threatened by the risks involved when thriving in specific products. For instance, the company enjoys the popularity of coffees and teas in contemporary society. If people were to opt for caffeine pills rather than caffeinated beverages Starbucks could struggle to stay in the market. The company also suffers from rising coffee prices in the world market.

The company needs to lay foundations to get back to its warm impression of the "Starbucks encounter" by diminishing impersonation and rivalry. The analysis indicates that the company has more strengths and weaknesses than opportunities and threats. However, the company is balanced since the strengths and opportunities are favorable, while the threats and weaknesses are unfavorable. Thus, the company can act on its strengths and make them opportunities for future growth.

References

Baertlein, L, & Rigby, B., 2015. Starbucks 'Race Together' campaign brews backlash, Huffington Post. Retrieved from www.huffingtonpost.com/2015/03/18/starbucks-race-backlash_n_6898324.html

Bohm, A. 2009, The SWOT Analysis, GRIN Verlag, Copenhagen

Haskova, K., 2015. Starbucks Marketing Analysis. CRIS-Bulletin of the Centre for Research and Interdisciplinary Study, 2015(1), pp.11-29.

Lombardo, J., 2018. Starbucks Coffee Company SWOT Analysis & Recommendations. Retrieved from panmore.com/starbucks-coffee-swot-analysis

Starbucks (Ed.)., 2018. Starbucks - The Best Coffee and Espresso Drinks, Retrieved from www.starbucks.com

Tucker, C.M., 2017. Coffee culture: Local experiences, global connections. Routledge.