Howard Schultz founded Starbucks.
She is now undoubtedly one of the world’s most popular and among the biggest coffee chains today.
So what is a SWOT analysis indicative of in terms of Starbuck’s financials and the business module?
Well, the Starbucks SWOT analysis highlights the fundamental strength and weakness of this coffee major.
It also outlines the opportunities that enabled it to arrive at a current position.
It takes into account the various factors that led to its growth, the global trends and the future potential that can help the brand scale greater heights.
As is the norm with most of these analyses, it also highlights the key threats that Starbucks should be prepared to face.
But first a look at the major strength elements:
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Strength as Per Starbucks SWOT analysis
Well, the Starbucks SWOT analysis reveals that there are some crucial business basics that work for this Coffee giant.
Most important of them is the organizational structure and the internal strength that this firm has.
This comprises of the
- Renowned and credible brand that Starbucks is
- The strong brand recall amongst clients
- Extensive supply chain that transcends geopolitical borders
- Extremely diversified business model
- Ability to easily adapt to the demands of different countries
- Adapting the unique coffee drinking sensibilities of people globally
But undoubtedly the most important elements that come up in the Starbucks SWOT are the unique excellence of brand and quality that Starbucks signal.
It is no doubt the biggest factor that customers across the world are shifting to this brand and preferring it over others.
This is also seen as a critical avenue to peg their future growth on and maintain a lead over competitors from across the world.
The diversification drive and acquisition of subsidiaries like Ethos Water and Seattle’s Best Coffee has also ensured that the company is better geared to handle market uncertainty and economic downturn.
It no longer enhances the overall resilience to market dynamics.
What’s Starbuck’s Weakness?
But is there any specific weakness of the Starbucks brand that could derail the overall strength.
Well the Starbucks SWOT Analysis reveals that there indeed are some weaknesses that the brand needs to work on.
These include relatively higher pricing
- Higher chances of imitation
- Standard generalized range across markets
Well wherever in the world you might visit, there are some standard elements on offer.
Unlike what you would have seen in the case of McDonald’s or even KFC, Starbucks has hardly modified its menu in sync with local flavours though the overall ambience is very flexible and easily adaptive.
In fact, the ambience that you have seen in Starbucks also runs the risk of getting copied very easily.
The problem is there is nothing terribly unique about the cafe ambience, and it is just like other hundred casual cafes around you.
Also, Starbucks is not a great hit with the price conscious customers because of the relatively higher billing rates.
Those who are not particularly fanatic about the quality of the coffee often tend to choose a brand that might not be as great but is available at a lower price.
Opportunities as Per Starbucks SWOT Analysis
One cardinal aspect that comes to the foray as a result of the Starbucks SWOT analysis is the fact that both on the internal and external front, Starbucks has several growth opportunities that it could capitalize on to overcome its weakness.
Not only is it possible to tackle its weakness, but in the process, it can also optimize its strength to go big on these opportunities.
Let’s first look at the external elements:
- Growth opportunities in new markets like Asia, Middle-east and Africa
- Diversifying the overall product offering like in India, they offer the traditional Starbucks brews as well as the top quality local coffee brews too
- Exploring scopes of partnerships like in India they have partnered with Tata
These fundamental channels of growth will also help in keeping the overall Starbucks mission intact and help add more value to the brand as a whole.
It must be remembered that the opportunities are in sync with the company’s ability to adjust to modern demands in specific markets.
That is where they also need to re-look at internal aspects too.
They also expect that the partnerships with various regional and global players would help in faster and more meaningful expansion for the Starbucks brand.
They will be able to make greater inroads in local markets.
On the basis of the appeal for the local brands, they will be able to create a more lasting impression.
These expansion opportunities could also help in Starbucks dealing better with the pricing pattern.
Partnerships with local players would mean significantly larger and better price rationalization,
They will be able to offer a lot more products at affordable rates.
What are the biggest threats that the Starbucks SWOT analysis throws up in that case?
Well, the biggest and most significant one is no doubt the kind of competition that they face from low-cost coffee sellers.
These local sellers can quite easily imitate the cafe ambience that Starbucks offers.
For most customers who are not particular about the quality of the coffee, do not mind settling down for these relatively lower priced coffee sellers.
As a result, they can easily eat into the market share that Starbucks could have targeted and even gained other.
Additionally, the other key aspect is the social trend.
If there is an increasing number of customers who are weaning away from tea and coffee drinking habits, it could seriously dent Starbucks’ business prospects.
They are also very susceptible to the uncertainty in the tea and coffee price markets.
These are agricultural produce, and the factors like monsoon and heat wave/cold wave dictate their price.
As a result, there is no guarantee as to how prices might pan out going forward.
So Starbucks needs to create a business model that can easily address these uncertainties and give them a lasting value.
The Starbucks SWOT analysis, therefore, reveals that the company has significant challenges to deal with.
But if they can have an intelligent and smart approach, they can quite easily overcome these threat points.
While pricing and the possibility of imitation are some of the biggest problems that Starbucks could be facing, it is not a hopeless situation.
With some strong partnerships and intelligent brand positioning, they can create a better value and more sustainable business model.
It would help them to take advantage of the opportunities without succumbing to the weaknesses and challenges that the SWOT analysis throws up.
It will also give them the firepower to optimize its strength.