Stackbucks Analysis Essay

4113 Words Mar 30th, 2014 17 Pages
Introduction

The aims of this assignment is evaluate Starbuck’s internal and external environment and by doing so, provide strategic recommendations based on the analysis. The following table is a summary of the cooperation.

Name | Starbucks Corporation | Industries served | Coffeehouses, Restaurants | Geographic areas served | Worldwide | Headquarters | U.S. | Current CEO | Howard Schultz | Revenue | $ 14.9 Billion (2013) [25% Profit Gains] | Total no. of retail stores | 20,184 (2013) 13,279 in the United States | Employees | 200,000 (2013) | Main Competitors:Around the world | McDonald's Corp., Dunkin' Brands Group, Inc., Nestlé S.A., Green Mountain Coffee Roasters, Costa Coffee, Caribou Coffee Company |
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Starbucks also doesn’t rely on just a few suppliers but quite a few from around the world. (Appendix 1) Furthermore, Starbucks has formed long-term contracts with these suppliers along with fair-trade practices, reducing the probability of supplier issues. Multinational companies almost always have an advantage in this situation.

Bargaining power of buyer: Low

Customers don’t really have a bargaining power when it came to premium coffee such as Starbucks. The fact that one can make coffee at one’s home/office along with various substitutes available does challenge the above statement, however, the sheer scale of Starbucks’ business reduces the bargaining power of any single group of buyers- especially since most Starbucks customers aren’t so price-sensitive. It is evident that the customers choose Starbucks on the basis of its comfortable environment, high quality of product and product differentiation (variety of signature drinks) and its service rather than the price charged. However, if Starbucks isn’t careful, it’s rivals are pretty close and buyers may switch if necessary.

Intensity of Competitive Rivalry: Moderate

Starbucks’ primary competitors are quick-service restaurants and specialty coffee shops. Their customers choose among specialty coffee

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