Starbucks: The Strategic Choices

Introduction

With regard to Starbucks SWOT analysis, the company has been identified to have strong competitive advantages and opportunities for growth as well as eminent areas of threat and weakness with regard to its primary and secondary environments. These factors affect the overall managerial decision of the company as management strives to capitalize on its strengths and opportunities while minimizing the impact of its weaknesses and threats (Griffin, 2007, p. 67). This study identifies how the company can achieve this ideal situation through the operation of its SWOT analysis elements.

Capitalizing on Organizational Strengths

With a tremendous revenue collection of more than $600 million annually, Starbuck can use its revenue base to undertake various research and development projects to improve its operations (Marketing Teacher, 2010). More allocation of funds should therefore be made to revitalize the company’s marketing and operational strategies and development of innovative approaches to development. The company’s strong ethical principles are also a pinnacle to the company’s growth because it establishes confidence among investors and hence the company can demand more input in terms of operational or financial support from stakeholders (Starbucks, 2010). Its high rankings in the global market (among Forbes’s top 100 companies) is also a plus for the company because it can attract more qualified personnel, managers, strategists and expatriates to improve its efficiency in the global market.

Minimizing organization’s Weaknesses

Considering Starbuck has a good reputation on product development, there are rising fears that the company may decline on its ability to stay as a leading marketing entity in the industry (Marketing Teacher, 2010). To minimize this risk, the research and development projects identified above ought to be focused on product innovation as a continuous process. The company should also seek experienced and creative expatriates from the labor market as described in the strengths segment to spearhead and direct product innovation research processes.

Exploiting Opportunities

With regard to the company’s growth opportunities in new and emerging markets like India and other countries in the Pacific Realm, the company needs to engage various international penetration strategies to venture into the new markets. Primarily, this should be approached through mergers. However, the company should undertake proper market research to identify potential companies in the new markets and seek mergers. This initiative is often costly and therefore Starbuck should use its company’s strength of financial muscle to undertake a comprehensive market research and identify the most viable market partner. Such ventures have been observed to be successful in other companies such as Wal-Mart, Mc Donald and the likes.

Minimizing Threats

The presence of copycats and stiff competition has been identified as a major threat to Starbucks market sustainability. To minimize this threat, the company should amalgamate with other existing giant corporations in the industry and increase collective market dominance to provide little or no opportunity for new market entrants in the industry. This will create some form of market oligopoly whereby all participating companies will enjoy economies of scale.

Conclusion

Starbuck can effectively increase its market dominance by capitalizing on its opportunities and strengths and minimizing its threats and weaknesses. In this regard, management can effectively increase its market dominance through the adoption of the above strategies. Essentially, the company stands at a middle ground which can be a good stage for turning the company into a success or failure story; depending on the company’s willingness to adopt new strategies. All elements in the SWOT analysis and strategies described above should however be used complimentarily to improve the company’s performance.

References

Griffin, R. (2007). Fundamentals of Management. London: Cengage. Marketing Teacher. (2010). SWOT Analysis Starbucks. Web.

Starbucks. (2010). Starbucks Coffee Company. Web.