swot starbucks

KOLEHIYO NG LUNGSOD NG LIPA Marawoy-Dagatan, Lipa City, Batangas 4217

Kolehiyo ng Lungsod ng Lipa

Brgy. Marauoy-Dagatan Lipa City

Business Administration Department

In Partial Fulfilment

of the Requirements

in Strategic Marketing Management

SWOT Analysis: Starbucks Corporation

Submitted by:

FUNDAMIERA, Janine Elizabeth S.

LANDICHO, Ronel John O.

GUTIERREZ, Christine D.

NAYANGA, Karla Anne G.

QUITAIN, Geraldine Jane S.

Submitted to:

Miss Marie Joahnna Magaling Aranda

Subject Instructor

April 8, 2014

BUSINESS ADMINISTRATION Department

Operations Marketing Financial

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Strength

1. In a short, succinct statement, Starbucks’ vision is “To inspire and nurture the

human spirit – one person, one cup, and one neighborhood at a time.”

Through the years, Starbucks have shown their attachment with their

vision that all Starbucks’ customers are aware of the company’s vision and

became part of it. This vision has also been used in Starbucks advertisement

and has been a guiding statement in their management. Until now, the spirit

of this vision can be felt in any Starbucks’ retail stores which resulted in a

continuous patronage of Starbucks’ drinkers.

2. In 2009, Starbucks began grinding coffee each time a new pot is brewed so

that customers will smell the coffee aroma all day long.

This change is part of the company’s effort to reinvigorate the

“Starbucks experience” in the face of heavy competition.

3. Starbucks strives to elevate the simple task of drinking coffee to a new level

with its retail outlets seen as a place for socialization, relaxation, and

reflection.

Starbucks’s stores are designed to make customers comfortable. In

addition, they also provide electrical outlets and wireless access.

4. Starbucks introduced the Starbucks’ card with the hope of strengthening

customer loyalty by improving service.



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Customers are able to register their Starbucks’s cards on the

company’s website and receive nutritional information about Starbucks’

products, shop online, search for careers, and much more.

5. Starbucks’ products can be found in convenience stores, grocery stores,

department stores, movie theatres, businesses, schools, and even airports.

This effort will provide the company the opportunity to increase sales,

and product availability as well as to reach different market segments.

6. Starbucks is rated by ten Fortune as one of the best top 10 places to work.

Starbucks relies more on its image advertising than traditional

advertising where customers not only view the retail outlet but how

responsible the company is to their communities and employees.

7. In response to recent economic times, the company has also adjusted prices

on certain of its more popular products in an effort to show responsiveness to

the more budget-conscious consumer.

This change might have a direct affect to the company’s revenue but it

will serve as a way on reaching a different market segment which in return will

generate profit for the company in the long run.

8. Licensing revenues increased primarily due to higher product sales and

royalty revenues as a result of opening 438 new licensed retail stores in the

U.S. segment and 550 in the international segment in the last 12 months.



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Starbucks only strength when it comes to sales is its growing revenue

from licensing operations not only in the U.S. segment as well as the

international segment.

9. Starbucks closed 600 underperforming stores in the United States in 2008

and plans to open only about 200 stores in 2009.

The U.S. market has been penetrated by different specialty stores that

Starbucks experience a dramatic slowdown in their sales. This decision can

be a company’s strength since Starbucks is now on the realization of limiting

investment on the U.S. market and began focusing on the international

market where more opportunities awaits.

10.Starbucks expects to add approximately 20 net new stores to its global store

base in fiscal 2009 by closing approximately 425 company-operated stores in

the United States and adding of approximately 60 company-operated stores

internationally.

11.The company plans to open approximately 65 net new licensed stores in the

United States and approximately 320 net new licensed stores internationally.

12.Capital expenditures for fiscal 2009 are expected to remain unchanged at

approximately $600 million.

13.Starbucks ensured quality coffee by opening a Costa Rican support office for

coffee farmers and rewarding environmentally responsible farms through its

CAFÉ Practices program.



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Weaknesses

1. Starbucks’ income statements and balance sheets reveal continuous growth

in revenues, but a 47 percent drop in earnings in one year.

For the 26 weeks ending March 2009, Starbucks’ revenues decreased

7 percent to $4.95 billion and net income decreased 72 percent to $89.3

million. The U.S. company operated retail business continued deteriorating

trends.

2. Moody’s Investors Service recently downgraded Starbucks’ credit ratings.

3. For the second quarter of fiscal 2009, U.S. total net revenues were $1.8

billion, a decline of $ 131.5 million, or 6.8 percent, due to decreased revenues

from company operated retail stores.

4. Many of Starbucks’ International operations are in early stages of

development that require a more extensive support organization relative to

the current levels of revenue and operating income in the United States.

5. International total net revenues were $433.7 million for the 13 weeks ended

March 29, 2009, down $59.7 million, or 12.1 percent, compared with the

same period last year, primarily due to the impact of a stronger U.S. dollar

relative to the British pound and Canadian dollar.

6. Global Consumer Products Group (CPG) total net revenues decreased by 2

percent to $94.8 million for the second quarter of fiscal 2009, due primarily to



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lower margin sales of packaged coffee as a result of discounting, as well as

lower volume to the trade.

7. This decrease was driven by restructuring charges of $106.8 million recorded

in the period.

8. The UK and Canadian markets reported negative comparable store sales for

the quarter.

9. International operating income decreased to $6.0 million for the second

quarter of fiscal 2009 versus $17.8 million for the same period a year ago.

10.Starbucks alone purchases only 2 percent of the coffee produced worldwide.

Opportunities

1. According to Howard Schultz, Starbucks’s CEO, media exposure concerning

the competition between McDonald and Starbucks helped the firm by creating

“unprecedented awareness for the coffee category overall.”

2. Company-operated retail revenues increased due to the opening of 236 new

company-operated retail stores in the last 12 months, favorable foreign

currency exchange rates, primarily on the Canadian dollar, and comparable

store sales growth of 2 percent for fiscal 2008.

The favorable foreign currency exchange rate for Starbucks’ business

resulted to an increase in their sales for the international segment. This is a



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short-term opportunity for Starbucks since foreign currency exchange

fluctuates from time to time.

3. Iced coffee is clearly a female drink according to many analysts; perhaps it is

low in calorie and high caffeine.

4. Gourmet coffee consumption rose with the drinker’s educational level. Those

who finished college bought 49 percent more gourmet coffee on average, and

those with some post graduate education bought 71 percent more.

5. Sixteen percent of the U.S. adult population consumed specialty coffee on a

daily basis, whereas 63 percent indulged occasionally.

6. The growth in popularity of specialty coffees has increased, as only 13

percent and 59 percent of people reported daily and occasional concumption

respectively.

7. Another trend that has surfaced in the past decade has been consumer

requests for organic coffees, and more emphasis was placed by retailers on

the growing environment of the beans.

8. Consumers are becoming more health conscious and are looking for sweets

and snacks that are low in carbohydrates, sugar and calorie.

9. International market has a stronger economy and accordingly, consumers

would be able to pay premium price for specialty or gourmet coffee.



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10.The SCAA, in its “Retail in the USA 2006” report, showed that at the end of

2006, specialty coffee sales had reached $12.27 billion, up from $11.05 billion

in 2005 and $8.3 billion in 2001.

Threats

1. The 2007-2009 global recession negatively affected the specialty coffee

industry.

2. Recent trends have shown that some of the consuming public is concerned

about the nutritional value of such products as those offered by the specialty

coffee sector and have even challenged the correctness of the labeling and

calorie information posted on the products available at retail outlets.

3. Smaller competitors are expanding their markets as well as their product line

offerings.

4. Competitors such as McDonald’s and Dunkin Donuts are becoming stronger

in offering specialty coffee along with other complementary products.

5. Dunkin Donuts have recently begun competing aggressively for Starbucks’

market share by offering their unique blend of coffees in grocery stores

nationwide.

6. Caribou, smaller, is the closest competitor to Starbucks in terms of product

offerings and concept.



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7. Peet’s Coffee and Tea sells its products in grocery stores, home delivery,

office, restaurant and foodservice accounts, through both company-owned

and operated stores in six states in the United States.

8. MCD, now serving specialty coffee, reported staggering total revenue of

$23.5 billion in 2008, generating a net income of $4.3 billion.

9. MCD is now running an ad saying “$4.00 coffee is dumb” as the firm attacks

Starbucks around the world with its $1.00 (and less) coffee.

10.Firms such as MCD and Dunkin Brands desire to lure all Starbucks’s

customers away to cheaper cups of coffee.



swot starbucks

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