Essay on Starbucks: the Future of Coffee.

2158 Words Nov 21st, 2008 9 Pages

During the past three years Starbucks has experienced yearly revenue growth approaching one billion. We have maintained a clear and concise mission, “to establish Starbucks as the most recognized and respected brand in the world” (SEC Annual Report, 2005). In addition, we have developed an aggressive strategy that leverages core competencies with a working business model and growth plan to accomplish our mission. However, in order to continue to maintain our growth indefinitely, we must continually evaluate our strengths, weaknesses, opportunities, and threats (SWOT) to ensure that our business model and strategies are robust and can sustain future growth in a constantly changing competitive environment.
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Table 2 summarizes Starbucks current weaknesses.
Table 2: Summary of Current Weaknesses
Weakness Diminishing Growth Opportunity Brand Dilution Market Saturation
Level Low Medium Medium
Combined Weakness Medium-Low
Key Points -Critical Mass Theory-At a certain market cap, it may be impossible to expand as a significant percentage of market cap. -May encourage re-commoditization-Lose control of brand image-Have to trust third parties for brand image -Too many stores close together may cannibalize sales

Threats Starbucks should consider five potential threats to its business model and strategic plan. First, buyer preferences and economic changes could cause a re-commoditization of coffee products. This would mean that people are not willing to pay a premium for the Starbucks brand or retail environment and would settle for cheap 50 cent generic cups of coffee. Starbucks should remain vigilant and counter potential re-commoditization with increased tangent services that customer surveys and other indicators show are valued by customers. The second threat is forward or backward breaks in the supply chain. Natural disasters such as hurricanes and tsunamis could damage coffee growers and create a deficiency in quality beans. Starbucks should develop alternative coffee growers in different regions to prevent a disruption in bean production. Also, terrorism may be a threat to

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