Starbucks Micro and Macro Environment

Keywords: starbucks swot, starbucks pest, starbucks porters

For any company survival will depend on its adjoining environment located. This means the fads in political, inexpensive, social, scientific, environmental and legal environment, which can influence business. Below the environmental factors are described

(P)olitical Issues:

Taxation insurance plan - If government imposed high taxes on farmers in countries producing beans from where Starbucks buy their espresso, than Starbucks needs to pay higher price for his or her caffeine they purchase. This effect will ultimately move to the client, because they need to higher price.

Government steadiness - Starbucks should carefully check out the political steadiness of any country before they would like to plan for expand to. It could have an impact on in taxation and legislation when the federal government change.

International steadiness - The global economy must be transported into attention as it could have an effect on Starbucks' sales and marketplaces.

Employment law - A decrease in licensing and permit costs in those countries producing the coffee bean for Starbucks will lower the production costs for farmers.

(E)conomic Issues:

Interest rates - An increase in interest levels means investment and expansion. And also mortgage repayments rate will surge so customers have less money to invest on luxury products such as coffee. Low interest levels have the slow effect.

Economic Development - If financial growth is lower in the country of location of Starbucks then sales will collapse. Customer incomes have a tendency to go down in cycles of negative expansion leaving less money to invest.

Inflation rates - Inflation is a term for increasing prices. It is solution by using Retail Price Index (RPI) in the UK.

Competitors charges - Aggressive pricing and sales from competition creates a cost conflict for Starbucks, which can lower.

(S)ocial Issues:

Population demographics - They have to identify and aim for their customers to target their products with them.

Attitude to work - They need to find area where local population have high attitude to work. So their recruitment will be easy, training will be effective and personnel turnover will be low.

Standard of education/skills - Creating new premises Starbucks must look for specifications of education and skills locally. They need to be up to date to make any business operation successful.

Working conditions/health and basic safety - They need to completed high standard of friendly environment and uses health and security.

Location - this is a significant factor it ought to be in a quick access for both customers and staffs.

(T)echnological Issus:

IT development - Starbucks is well aware to increase and improve its Internet facilities and also tools to target customers, analyse data, and deliver new features to the marketplace in the shortest time.

New equipment's and functions - The technology like as espresso making machines and the pcs system development that Starbucks use to operate their till registers will allow their staff to work quicker and effectively.

Research and Development activity - Starbucks has huge budget and also have allocated the resources to obtain exact Research and Development data.


Trade and product restrictions - Starbucks have to ensure they don't really violate laws and regulations e. g. , religious laws. Also they have to be attentive on the tariffs have to payed for transfer / export goods.

Employment laws - Each country has some constraints on employment laws and regulations. Like pupil work law in UK, the general public holidays etc. Starbucks have to bank account these factors.

(E)nvironmental Issues:

Pollution problems - Customers increase a lot of rubbish that they leave the shop using their cup of coffee and then also leave it in the pub. So the packaging for the cup should be carefully accounted to make it environmental friendly.

Work removal - Starbucks have to carefully consider the process to dispose rubbish as there are tight laws generally in most countries.

Micro evaluation or Michael Porter's five makes analysis

Michael Porters has developed a famous model of the five competitive makes in his book. The competitive strategy that techniques he analysed for organizations and challengers. It will high light on sole, stand along and business or proper business unit rather than single product or product range in the market.

Porter has given these five competitive makes that form every company and every market. They are
  • Threat of new entrance
  • Bargaining vitality of suppliers
  • The risk of substitute products
  • Bargaining electricity of customers
  • Competitive rivalry

Threat of new entrance

Economics of size, high or low access cost, ease usage of the distribution route; other cost advantages are not associated to the size of the company, whether other opponents will behave. There will be a continuing pressure for Starbucks to reply and control these new challengers.

The easier it is good for new competitor to enter the market the more competition there is at the marketplace. Although this will not be considered a problem for Starbucks as they may have a large range of market share. Basically, it will be a threat for the new entrants. To be a company's volume raises, so does indeed its experience and knowledge, which tends to boost the potential risk for the new challengers.

Bargaining ability of suppliers

If little large numbers of suppliers control the market more than large number of fragment options, bargaining electric power of provider is expected to be high. Even suppliers got certain levels of power that is bound. But for Starbucks being 'the most famous specialty restaurant string in the world' getting sales of $9. 8 billion in '09 2009 and still increasing they still should be challenging coffee beans for quite a while. It is legal to say that the Suppliers need Starbucks, as much, if not more so than Starbucks need their supplies.

The suppliers of Arabica beans were mostly had by medium-size farm and typically sold their creation to process by local marketplaces. (Lee, 2007) Especially, these farms had been put in the Pacific Rim, Latin America and East Africa. (Lee, 2007) These farms were various and not related with each other, with parting, providing them small bargaining power. Even there is no straight substitute for the Arabica beans which have been used in special coffee development. Huge band of farms which have been supply the crop prepared it easy for buyers to escape burdens to any specific farmer, that was problematic for suppliers. The farmers sold the Arabica beans to specialty coffee retailers who were reliant upon their continuous business. Thankfully for Starbucks they buy their coffee beans straight from producing countries: Latin America (50%), Pacific Rim (35%) and East Africa (15%).

Threat of swap of products

It occurs when there is a product-for-product alternative or substitution of need. For instance bald mind reduces the necessity for head of hair gel, where there is common substitution and finally the attitude 'we could always do without. . . .

An example for Starbucks would be if an alternative to coffee was offered e. g. a customer switching from coffee to tea, caffeine to chill refreshments or caffeine to drink. Competitive rivalry: donate to strong rivalry between existing opponents in an industry.

Bargain power of buyers

Buyer power is likely to be high if lots of circumstances are set up. There exists an

awareness of potential buyers, on top of that if the quantities of buys of the potential buyers are high, the providing industry includes a sizable amount of small providers, there are alternative sources of supply, the component or materials cost is a high ratio of total cost, the cost of switching a provider is low or engages little risk, there's always a threat of backward integration by the buyer.

Competitive rivalry

Every day contests are growing slowly but surely contrary to the Starbucks as the business enterprise growth. Competition taking chance to reduce the price, launching a rival product, insistent progress of production to enhance the market talk about. Starbucks significant innovation their products which also competition start to continue. It is very hard for Starbucks as a rival to keep carefully the fixed cost from the changing cost.

Starbucks don't have any other competitive competitors that are of parallel size to them. So are there not any opponents in the market that would be measured in balance with them. However, they must retain their spectacular standards and always be on the watch out for new advances to be able to survive as the market leader.

SWOT analysis

Aim of SWOT research is to identify the main inner and exterior factors that are extremely significant to achieve the objective. It is essential to be genuine about the strengths and weaknesses to help identify the company's situation are today, and where maybe it's in the foreseeable future. The strengths and weaknesses are called interior factors and external factors are opportunity and dangers.


  • It is a global coffee brand with a higher reputation for excellent products and services
  • It has around 17, 000 stores in 49 countries.
  • It has strong ethical values, determination towards the environment and community activists.
  • It is one of the very most Top 100 companies which is benefit in 2005
  • Starbucks Gift Credit cards, Starbucks Cards and rewards.
  • Well-value, well coach and well-motivated employees, best working place
  • Established custom logo, developed brand image, copyrights, own trademarks, website and patents.


  • It has majority market share in america with more than three quarters of its stores found in the domestic market. In order to reduce business risk, growth is needed.
  • It has a reputation for attempting new products development and ingenuity. But, they always stay vulnerable to the opportunity that their invention can go wrong.


  • It has a chance to expand its global procedures.
  • Co-branding with other manufacturers of drink and food and brand franchising to other manufacturers of other products and services both has high potentiality of success rate.
  • Technological advantage
  • Emerging multinational markets
  • New circulation channels
  • Supply agreements


  • Its success has lead many competition and copycat brands create potential threats for market access.
  • Starbucks is subjected to increases the price of coffee and milk products.
  • Farmers are badly treated by phony publicity in supplying countries.
  • Fragile condition of worldwide production for area of expertise coffees.
  • Isolation of youthful, domestic market sections.
  • Cultural and Politics factors in foreign countries.

Marketing goal and strategy

Now we can identify external and interior factors of the business. Starbucks marketing targets are being constant using their business targets. Significantly their marketing goals should escort to sale. The marketing objectives should follow SMART aims.

SMART objectives are:

Specific: organizations objective need to be identify what they would like to achieve.

Measurable: organization has to measure if they are interacting with the aims or losing to take action.

Achievable: aims should be arranged, achievable and genuine.

Realistic: The company is likely to attain the goals with the resources available.

Timed: A timescale require being place for reaching the goals.

The 7th of Sept in 2010 2010, the company has released that they increase syndication of Starbucks about 13, 000 stores can be found at more than 55, 000 locations around all over the world. Starbucks is increasing its show of the $23 billion international espresso market. (VIA Ready Brew through international food stations in Japan, Canada and the U. K. ) Starbucks has stores in forty nine different countries as well as Canada, UK, Australia, Thailand, and Singapore (Starbucks 2010).

And in the U. K. total 80% espresso are selling every day, the product will be available in 2, 300 grocery retailers including Tesco, Sainsbury and Waitrose, elevating the total shape of syndication locations to more than 2, 900 retail locations.

At present, Starbucks has expended stores in forty nine different countries as well as Canada, United Kingdom, Australia, Thailand, and Singapore (Starbucks 2010).

Starbucks consider which is important to have a good relationship using their customers wherever they are simply situated. That is why; the company keep up with the high quality products and services. The corporation would not be as successful because they are now. Because they are being considered without diversity as they delight it. They may be recognized to be recognising of varied groups of men and women because they communicate in notes for new progress potential client. Jim Donald, Chief executive and CEO of the Starbucks Corporation states, "Whenever we embrace variety, we do well" (www. starbucks. com). Starbucks consider that without change, their company wouldn't normally have matured into the highly successful global company it has matured into today.

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