Starbucks Case Study

Table of Contents

Introduction

This is a leading American corporation with vast investments across the globe. The company mainly deals in specialty coffee. The company has considerable influence upon the United States economy. This is evident through the company’s extensive workforce as well as its revenue contributions. The company’s chairman, Howard Schultz has recently set a phenomenal target for the company in terms of annual sales. Based on his ambitious plan, he intends to triple the company’s annual sales to $23 billion in three years. In order to assess whether this target is attainable, it is vital to establish a comprehensive SWOT analysis.

SWOT Analysis

Strengths

Customer loyalty is a considerable strength for Starbucks. The company’s loyal customers are willing to pay high process for the company’s exceptional coffee. This is an essential perspective towards enhancing annual sales for Starbucks. The company’s strength also lies in its brand. The brand is easily recognizable in all parts of the world. Consequently, the company should take full advantage of this attribute to enhance its annual sales.

Another strongpoint of this company lies in its chairman, Howard Schultz. He is an innovative man who fully understands the operational framework of Starbucks. Additionally, Schultz’s leadership effectiveness is second to none (Steverman, 2009). Consequently, he has the capacity to steer Starbucks to the next level. The company’s profitability is also a strongpoint that will help enhance its performance.

Weaknesses

One of Starbucks’ most outstanding weaknesses is its vigorous expansion tactics. Although expansion can help in enhancing sales, it does not necessarily guarantee profits. In order to finance the expansion, Starbucks must invest a lot of capital. This can easily undermine its capacity to reach the high targets for sales. Apart from vigorous expansion, another weakness pertains to cross functional management. This approach can significantly jeopardize the firm’s capacity to boost its annual sales (McRoskey, 2008). Most of Starbucks’ products are considerably expensive than similar products from competitors. This can undermine the company’s capacity to attract new clients.

Opportunities

Despite the numerous weaknesses, Starbucks has numerous opportunities for growth and enhancement of revenues. Firstly, technological advancements might help the company implement effective strategies for cost minimization. This is helpful in terms of enhancing annual sales in local and international markets. Additionally, modern technological platforms will help in enhancing the company’s capacity to develop innovative products.

Innovativeness will help the company attract new clients and thus boost its annual sales. Brand extension serves as another significant opportunity for Starbucks. Through brand extension, the company will capitalize on the emerging markets in the American and global economies. This perspective is extremely helpful in terms of strengthening the company’s annual sales (Steverman, 2009). The maximization of these opportunities will serve as a significant attribute for enhancing the annual sales for the company.

Threats

There are numerous threats facing Starbucks in its quest to enhance its annual revenues. Firstly, the aggressive marketing tactics by the company’s competitors might undermine its capacity to reach its targets. For instance, McDonalds has become among the most aggressive competitors for Starbucks. Due to these trends, the company might lose a substantial proportion of its market share. Apart from competition, volatility of coffee prices is another significant threat for Starbucks. This mostly affects coffee producers in Africa and Brazil. This could undermine the company’s efforts to boost its annual sales.

The volatility of prices might also derail the company’s capacity to maintain consistency within its retail chain. The health implications of coffee are increasingly putting off potential consumers. For instance, some people are wary of the addictive nature of coffee (McRoskey, 2008). All these attributes might serve as substantial stumbling blocks for Starbucks in terms of operational efficiency and productivity.

Discussion

Based on the SWOT analysis, it is evident that Howard Schultz can lead Starbucks to reach $23 billion mark in three years. There are various perspectives that help in justifying this assertion. Firstly, the company has already established an acceptable brand. This applies to the local markets as well as on the global stage. If Starbucks maximizes on this popularity, it will easily attain the target.

The second perspective pertains to the leadership strategies of Howard Schultz. As the company’s chairman, Schultz understands what it takes to transform the fortunes of Starbucks. This is a massive advantage for Starbucks compared to its main competitors. The implementation of modern technological systems also justifies the capacity of Starbucks to reach its targets. Additionally, the company’s innovative framework will serve as a significant pillar towards the enhancement of annual sales. The integration of these perspectives would go a long way towards enhancing the company’s profitability.

Conclusion

The paper provides an analytical framework that justifies the capacity of Starbucks to reach the $23 billion mark in three years. Starbucks is easily recognizable in all parts of the world. Consequently, the company should take full advantage of this attribute to enhance its annual sales. Another strongpoint of this company lies in its chairman, Howard Schultz. Modern technological platforms will help in enhancing the company’s capacity to develop innovative products. Innovativeness will help the company attract new clients and thus boost its annual sales.

References

McRoskey, R. (2008). Starbucks: Big investors’ divorce grounds. Bloomberg Business week

Steverman, B. (2009). Is a turnaround brewing for Starbucks? Bloomberg Business week

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