Starbucks is the industry leader in the coffee shop industry with a strong, memorable, and marketable brand image. It has achieved a global international presence and relies on an extensive international supply chain. The Starbucks coffee-based drinks are famous for their variety and consistency alike, with each recipe relying on a replicable yet unique formula. The standardization allows the target customers of Starbucks, younger coffee drinkers with a capacity to travel, to be confident in the taste of their regular morning coffee. This taste is often signature, with a large amount of syrup and whipped cream, in a branded, often reusable cup. Additionally, the company relies on an efficient and sustainable financial management strategy. It has a history of successful acquisitions and a beneficial ratio between paying shareholders their dividends and reinvesting into further business development. Finally, the Starbucks employees are treated with utmost respect within the company. They are encouraged to enhance their professional and academical success, with Starbucks having developed higher education funding schemes for its workers.
Starbucks’ main weakness is a direct consequence of one of its key strengths, namely the signature taste of coffee drinks the company produces. Starbucks products are comparatively highly priced, placing the firm towards the luxury end of the market spectrum. As Starbucks aims to maintain an image of the global corporation accessible to customers worldwide, high prices might become a barrier to accumulating a target demographic (Khushman, 5).
Additionally, despite the uniqueness of many of the flavors presented in Starbucks’ assortment, most of them are relatively easy to replicate or mimic. The formulas of the signature drinks can be imitated somewhat successfully, and the coffee shop industry is a very trend susceptible one in general. Furthermore, the firm’s production efficiency is affected by the prevalence of generalized standards for most products independently of their individual characteristics, and rigid food disposal policies. Finally, Starbucks has a history of negative procurement practices and tax avoidance, leading to the mixed legal reputation of the firm.
Currently, Starbucks operates in 83 countries worldwide, with the company’s management constantly analyzing new expansion opportunities. By opening Starbucks shops in a developing market, the company could harness the benefits of lack of competitors in the industry and growing demand for flavored coffee drinks. In particular, Starbucks could partner with local firms to diversify their expansion method for the markets that at the moment do not possess franchise-friendly commercial environments.
Additionally, further diversification and introduction of new products might stimulate consumer interest and enhance the firm’s revenue. Starbucks has already adopted this approach to a degree by selling signature roasted coffee beans, branded flavoring syrups, and merchandise. However, the firm could take one step further and introduce a range of coffee-specific cookbooks, with suggested ingredient lists linking back to the branded coffee beans and syrups.
Starbucks is consistently threatened by the competition from the lower-budget coffee shop firms, both international and local. The company targets younger coffee drinkers, who are on the look for new flavors and engage with other accounts actively on social media. Statistically, this demographic is often characterized by being financially constrained, and can therefore be motivated to switch brands with lower prices, especially considering the imitability of Starbucks’ drinks. Furthermore, the trend of responsible consumption brings increased attention to independent local coffee shops, which modern young people are eager to support (Khushman, 10). Finally, the controversies such as California court ruling requiring Starbucks coffee has a cancer warning and racist arrests in a Philadelphia-based branded shop have negatively affected the firm’s publicity.
Khushman, Amer. An Evaluation Of Entrepreneurial Activities And Growth Strategies – The Case Of Starbucks Coffee House, Social Science Research Network,. 2021., pp. 1-14.