Strategic Fit Analysis of Starbucks Coffee Company Essay

4153 Words Apr 16th, 2013 17 Pages
1.0 INTRODUCTION

This report deals with a Strategic Fit Analysis of Starbucks Coffee Company with focus on the United States Segment. Genus (1998) highlighted that strategic fit is the concept whereby strategy is a means for achieving a match between the external environment of an organisation and its internal capabilities, as part of a quest for establishing competitive advantage over rival competitors.

The researcher will evaluate the market environment that Starbucks occupies as well as the internal environment of the company. The researcher will also highlight strengths/weaknesses and opportunities/threats of the current Strategic Fit of Starbucks.

The Starbucks Coffee Company evolved from a single store in Seattle’s
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The recession of 2008 and 2009 affected both businesses with rising operational costs and lower profit margins, and consumers of the products that have seen product prices rise while wages remain the same and unemployment levels increase (Bureau of Labor Statistics, 2011). This resulted in consumers making severe spending cutbacks. The US consumers continued drinking the same amount of coffee per day which is on average 3.3 cups per day however they simply opted for lower cost options (Moreno, 2008). * Inflation rates –Starbucks will have an increase in business costs with inflation. Starbucks will need to evaluate the inflation rate for all of its affiliated countries in order to project the demand or sales of the coffee. * Competitors pricing - Competitive pricing from competitors such as McDonald’s Cafe and Dunkin Donuts can start a price war for Starbucks that can drive down profits and profit margins as they attempt to increase, or at least maintain, their share of the market. In Starbucks’ Annual Report for 2011, the company stated, “We continue to experience direct competition from large competitors in the US quick-service restaurant sector and continue to face competition from well-established companies in many international markets and in the US ready-to-drink coffee beverage market.” * Globalisation - Globalisation of the coffee market has meant mass production by

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