Part 1: Macro and Micro environment analysis
Starbucks is the name that every American is aware of because in the nation and across the world, it is one the largest coffee chain. Mentioned firm is known for providing high quality of coffee at a premium price. The company is operating in a number of the nations of the world. The company was established in the year 1971 and its business owners dream was to do trade in coffee beans that have a good and high quality of taste. Major USP of the Starbucks is that consistently do innovation in its product line and offer coffee with new and better taste to the customers at its workplace (Anders and Fedoseeva, 2017). Firm also take care about change in the people value system and accordingly it offer coffee to them & main reason behind company fast growth.
Out of varied product lines company currently is focusing on specialty coffee. As per available statistics specialty coffee cover 50% of company’s total revenue and 30% of total cups consumed in Starbucks premises relate to the Specialty coffee. Presently, the firm is offering wide variety of coffee, soft drinks, tea and snacks. The firm is doing so because some of its rivals are offering quality coffee at low price likes Mc Donald. In order to compete with these rival firms is also offering snacks to people in its premises. In last fiscal year, Starbucks earns revenue of $26,508 million and firm operating income is $4,077 million. Net income earned by the company is $3,594 million. Total assets of the business are $19,219 million. It can be said that firm is operating its business at large scale.
Starbucks is offering coffee at high price relative to rivals and higher class people are its major target customers. Due to high price only, high class people can afford a company wide variety of coffee (Jang, Kim and Lee, 2015). Costa Coffee and Dunking Doughnuts as well as Mc Donald are major rivals of the Starbucks. In terms of quality and price Starbucks is ahead of its rivals as Starbucks is offering much high quality of coffee then rivals at very high prices. In order to prepare high quality of coffee firm make purchase of coffee beans from areas where the natural environment is very suitable for growing coffee. Firm after due quality checking make purchase of coffee beans from the farmers.
Starbucks has a strong supply chain network across nations and it has direct access to the farmers. There is no middle man through which coffee beans are purchased. Thus, at the right price firm procure very high quality of coffee beans and due to this reason able to offer high quality of coffee then rivals in its premises (de Luca, Pegan and Vianelli, 2020). This gives a competitive advantage to the Starbucks over rivals.
Suppliers have a huge interest in the Starbucks because it is this company which directly makes a purchase of coffee beans from them an appropriate price. With an increase in revenue or growth of the company demand for coffee beans increase, which means more earning opportunity for the suppliers. They have less influence on Starbucks and they come in the minimal effort quadrant. Investors and creditors have direct influence on the company because they directly provide fund to the business firms and assist it to meet working capital needs and capital expenditure needs (Abdurrahman, 2018). These stakeholders have higher interest in the company and due to this reason come in the key players quadrant. Without the support of these stakeholder companies cannot grow. Starbucks pays interest to the creditors and dividend to the shareholders (Introducing Mendelow matrix., 2020). More firm grows, demand of loan and dividend payment increased. Thus, both these entities have an interest and influence on the Starbucks.
Starbucks employees should personally interact with the customers and according to their needs serve them coffee and also educate them about coffee beans (Isnuwardiati and Sugito, 2017). Starbucks must aggressively advertise its offers and provide information about its products on social media. On an annual basis AGM is conducted where company CEO interacts with the shareholders. Time to time meeting must be conducted with creditors and information is given to them about the company condition and loan is obtained from them.
Books and journals
Abdurrahman, A. 2018. ESTABLISHING COMPETITIVE ADVANTAGE TO IMPROVE BUSSINESS PERFORMANCE. Jurnal Ekonomi dan Bisnis Indonesia. 3(1).
Anders, S.. and Fedoseeva, S. 2017. Quality, Sourcing, and Asymmetric Exchange-Rate Pass-Through into US Coffee Imports. Journal of agricultural and resource economics. 42(1835-2017-2103). 372-385.
Borrella, I., Mataix, C.. and Carrasco‐Gallego, R. 2015. Smallholder farmers in the speciality coffee industry: opportunities, constraints and the businesses that are making it possible. IDS Bulletin. 46(3). 29-44.
Bovea, M. D., Pérez-Belis, V.. and Quemades-Beltrán, P. 2017. Attitude of the stakeholders involved in the repair and second-hand sale of small household electrical and electronic equipment: Case study in Spain. Journal of environmental management. 196. 91-99.
De Janvry, A., McIntosh, C.. and Sadoulet, E. 2015. Fair trade and free entry: can a disequilibrium market serve as a development tool?. Review of Economics and Statistics. 97(3). 567-573.
de Luca, P., Pegan, G.. and Vianelli, D. 2020. Customer Experience in the Coffee World: Qualitative Research on the US Market. In Handbook of Research on Retailing Techniques for Optimal Consumer Engagement and Experiences (pp. 257-283). IGI Global.
Fuller, M.. and Rao, N. Z. 2017. The effect of time, roasting temperature, and grind size on caffeine and chlorogenic acid concentrations in cold brew coffee. Scientific reports. 7(1). 1-9.
Guimarães, E. R. and et.al., 2019. The brand new Brazilian specialty coffee market. Journal of food products marketing. 25(1). 49-71.
Han, H. and et.al., 2018. Drivers of brand loyalty in the chain coffee shop industry. International Journal of Hospitality Management. 72. 86-97.
Isnuwardiati, K.. and Sugito, P. 2017. Demand chain management: An effort to improve competitiveness and business performance. International Journal of Science and Research, 6(8), 983-987.
Jang, Y. J., Kim, W. G.. and Lee, H. Y. 2015. Coffee shop consumers’ emotional attachment and loyalty to green stores: The moderating role of green consciousness. International Journal of Hospitality Management. 44. 146-156.
Linh, D. H.. and Anh, T. V. 2017. Impact of stakeholders on the performance of green banking products and services: The case of Vietnamese banks. Economic annals-XXI. (165). 143-151.
Mighty, M. A. 2015. Site suitability and the analytic hierarchy process: How GIS analysis can improve the competitive advantage of the Jamaican coffee industry. Applied Geography. 58. 84-93.
Murray, J. 2017. Adopting stakeholder advisory boards. Am. Bus. LJ. 54. 61.
Neacsu, A. N. 2018. Quality management on the coffee market. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V. 11(1). 109-118.
Nguyen, D. K., Sousa, R. M.. and Uddin, G. S. 2015. Testing for asymmetric causality between US equity returns and commodity futures returns. Finance Research Letters. 12. 38-47.
Part 1: Macro and Micro environment analysis