Environmental Scan for Starbucks Company - Essay Sample

Introduction

Environmental analysis is the process by which an organization's components are examined, both the internal and external factors are considered during the process of, and they both show the performance of the organization. The internal factors are used to outline the strengths, and the weaknesses of the company whereas the external factors are used to show threats that may arise from outside and the opportunities that the company has. The following essay, therefore, seeks to provide an environmental scan performed for the Starbucks organization (Banham, 2010).

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Starbucks is a company that has specialized with coffee roasting. The company purchases these beans and roasts them and later onwards sells them to their customers. The coffee sold at Starbucks is accompanied with various pastries, cakes and in addition to that, they sell some coffee-related accessories and equipment. The company prides itself for not only selling the coffee but also for the experience that comes with being at Starbucks and experiencing their various specialties. The company at the time operates in more than 50 countries, and it continues to invest across all borders to keep their brand growing.

The environmental scanning strategy is aimed at creating value and also sustaining competitive advantage. In the case of Starbucks, one can use this strategy always to stay ahead of the competition and also have constant feedback on their day to day operations. First and foremost, Starbucks company only specializes in coffee and coffee related products which means that whenever there is a problem in coffee growing and processing, then the company is likely to take a financial hit. Hence the scanning strategy can help the company to stay ahead of such incidences and also plan for mitigation measures whenever there is such an occurrence (Gupta, 2013).

Controlling the global coffee market is quite; hence the company needs to put some measures in place to survive a shortage of coffee beans in the market. This can be done by investing in storage warehouses that have been equipped with modern technology always to keep the coffee supple and fresh. This would mean that whenever there is an occurrence of a shortage in the market then the company can stay ahead of their competition because they will still be producing coffee and also add more value to their products because the customers will have a sense of security that even in coffee shortages the company is still able to produce coffee. All this will be attributed to the scanning strategy applied by the company which accesses the external factors that could affect the Runnings of the company.

In addition to that, the scanning strategy helps the company always to stay ahead of their competition. So many companies especially the ones that are just starting try to imitate Starbucks in all ways. From the way, they serve their coffee in the way they construct their chain stores. The disadvantage of this is that the smaller companies will sell their coffee at lower prices in a bid to compete with Starbucks. Hence the scan can be able to show how much of a threat these smaller companies are, and Starbucks would try their best to stay ahead of this competition or contain the situation.

Starbucks External Environment

Various forces can affect the day to day running of a company. Some of the most predominant happen to come from outside since most of the time internal forces can be contained. The five major forces that affect the Starbucks company externally include; competition, threats of being substituted, customers and also the threat of new entrants. Starbucks being a global company that has established itself in so many is every day always trying to stay relevant and also keep their customers, however, the external environment is not still friendly to the company's goals and missions.

First and foremost, competition with already established companies like Nestle and KFC is making the operations of the company be faced with many challenges. This companies produce coffee at lower prices as compared to Starbucks and try to create as many varieties of coffee as Starbucks does. This means that some customers would defect and begin taking their coffee from these cheaper outlets. Some of these companies have gone to great lengths especially through advertisements to ensure that their products are well known all over, posing a considerable threat to the Starbucks business (Geereddy, 2013).

In addition to that, the customer's preference could also change over time; this would mean that a time would come when people will stop preferring coffee and start proffering another beverage like tea or fruit juices. Hence the company would be forced to either change their main line of a specification or go out of business altogether. Furthermore, imitation from other coffee outlets is also affecting the company's productivity. This is because the imitators would do everything that Starbucks and lower their prices; hence the company would lose some or most of their customers to these imitators.

Starbucks General Environment

The general environment that influences the performance of the company includes; politics, economy, and technology. The political aspect of it includes things like inflation in the coffee market, recession and also interest rate fluctuations. Some countries may also opt not to export their coffee since most of the coffee brewed by Starbucks is imported and this may stall the day to day operations of the company. Moreover, some countries may refuse or hinder the development of the company in their countries. For example, if Starbucks wants to expand their chain stores to a state and due to political reasons, the establishment of the company is banned, then the diversity plan of the company would be put to a halt. Furthermore, Starbucks can be significantly affected by the political instabilities of various countries especially ally those countries where they import their coffee to and also export.

The economy also influences the company, for example in a thriving economy, there will be more customers being able to buy the coffee products at Starbucks. However, if the economy is terrible, then people will stop buying the coffee daily due to an increase in living expenses as coffee is viewed as a luxury and not as a basic need to human beings. Economic stability would also lead to the expansion of the company's outlets.

Technological advancements also affect the company. For example, the company recently partnered with iPhone company to give their customers points whenever they visit their shops, and this encourages the customers to keep coming back. Furthermore, technological advancements also attribute to better and different advertisements. The company's ads can reach full of people, and this encourages the growth of its customers.

Industry Operating Environment

Certain religions do not allow people to take coffee due to their beliefs; hence the company needs to evaluate such demographics and mitigate the issue. In addition to that young children are also not advised to take coffee; therefore the company needs to target the adults and maybe provide alternatives for the young children. In addition to that, it is believed that the majority of the coffee consumers are educated people as they always need the stimulation to either stay awake or concentrate while reading.

Lifestyle shifts also can affect the day to day operations of the company. For example, people can all of a sudden decide to shift their liking to coffee and start preferring tea. This would mean that the company will begin experiencing a loss of their customers and in turn, a low turnover would be encountered. Hence the company needs to continually upgrade their products or introduce new products like tea to prepare for a lifestyle shift in case it occurs.

Conclusion

In conclusion, environmental scanning helps any company to stay ahead of their competition and continuously improve its services and products. It is recommended that the company conducts an environmental scan at least every two years to operate at maximum efficiency. The various external factors and operating environments discussed above all help when it comes to conducting an environmental analysis as they show what directly affects the company's day to day running.

References

Banham, H. C. (2010). External environmental analysis for small and medium enterprises (SMEs). Journal of Business & Economics Research, 8(10), 19-26.

Gupta, A. (2013). Environment & PEST analysis: an approach to the external business environment. International Journal of Modern Social Sciences, 2(1), 34-43.

Geereddy, N. (2013). Strategic analysis of Starbucks corporation. Harward [Elektronnii resurs].-Rezim dostupu: http://scholar. Harvard. edu/files/nithingeereddy/files/starbucks_ case_analysis. pdf.