SWOT analysis of Starbucks (Starbucks SWOT)
This is a detailed SWOT analysis of Starbucks. It aims to provide the readers with valuable insights into the strengths and the weaknesses of Starbucks. It also aims to evaluate certain opportunities and threats that the company should explore and diagnose to keep its operations smooth and to grow further. Starbucks Corporation is an American multinational company, headquartered in Seattle, Washington.
Strengths of Starbucks
Starbucks is an American coffeehouse chain. It was founded in Seattle in 1971. It operates in 80 countries and has more than 32,000 stores. It has been in business in the UK since 1998 (Starbucks, 2022). It has thousands of stores in European countries such as the UK, Turkey, France, Germany, Spain, Russia, and the Netherlands (Lock, 2021). Its total number of stores in the USA is over 15,000 and has more presence in California than any other U.S. state.
Starbucks is one of the largest coffeehouse chains in the world. It is positioned as a premium coffeehouse chain. It is famous for its excellent quality products. This positioning allows it to charge its customers relatively high prices which results in more profits for the company!
Starbucks has a wide variety of products that consumers can choose from. With such a diverse menu, there is something for everyone. In addition, the company often comes up with new products to address the demands of customers.
Starbucks has won a number of awards and accolades over the years. For instance, it won Channel 4’s £1 million diversity competition just few years back. It also won Best Company for Women, Best Company Work-Life Balance, Best Company Perks & Benefits and Best Company Happiness in 2020.
Starbucks regards employees as its partners and offers a number of rewards e.g. daily awards, quarterly awards, and yearly awards. It aims to attract people from all walks of like to develop a diverse workforce. It employs thousands of partners both in the USA and the UK and interestingly, 70% of them are aged between 16 and 24 (Starbucks, 2022). There are a lot of opportunities for the partners to move up in the company. Starbucks in collaboration with Arizona State University offers all eligible U.S. partners full tuition support to achieve a bachelor’s degree.
Weaknesses of Starbucks
Weakness in the next issue to examine in the SWOT analysis of Starbucks. Starbucks pursues a premium pricing policy to be consistent with its brand positioning strategy. While such pricing policy attracts high to middle ends of the market, it is certainly not what many working-class customers are willing to subscribe to. They would rather prefer McDonald’s and other coffee outlets to Starbucks. Particularly, at a time of economic challenges, this proves to be very true. According to a number of sources, Starbucks announced a loss of massive $3.2 billion in revenue during the fiscal third quarter of 2020 because of global lockdown.
Starbucks has saturated much of its home market, the USA. Its growth falls below expectations in Asia as well. According to some sources, another problem for Starbucks is understaffing in many of its U.S stores, even though the company is well-known for its good employee relations and welfare.
Starbucks got caught up with a number of controversies in the past. Accusation of tax avoidance in Europe, labour disputes in the USA, opening stores without planning permission by local authorities in the UK, and overpricing in China are some of the controversies that impacted on its image negatively.
Opportunities for Starbucks
This part of the SWOT analysis of Starbucks focuses on opportunities. While the US market is saturated, there are many opportunities for Starbucks to grow in Asia, Europe, and Africa. In fact, India, China, and the UK are some of the most important markets outside USA for Starbucks, and further growth in these markets is feasible and lucrative. Growing middle class in China and India is indeed a great opportunity for the company. Likewise, the opportunity for further growth in Turkey, Germany, and France is massive.
Introducing new products and diversifying into related and un-related markets are some other opportunities worth exploring. Starbucks has both means and experience to explore these opportunities.
As consumers become more health-conscious and want healthier alternatives, there is a growing demand for lower-calorie options. Starbucks has already taken advantage of this opportunity by providing an extensive menu with many healthy options such as low-fat milks, low calorie drinks etc. It can grow further in the healthy food area. It can capitalize on it by selling these products as well as coffee. This should increase the number of its customers in-store.
Threats to Starbucks
The last element in the SWOT analysis of Starbucks is the threat/s facing the company. Competition is fierce in coffee business like most other businesses. Starbucks faces tough competitors in many of its global markets. For instance, Caribou Coffee, Peet’s Coffee & Tea, The Coffee Bean & Tea Leaf, Dunn Bros, and Seattle’s Best are some of the main Starbucks’ competitors in the US market. Likewise, Caffè Nero and Costa Coffee are the two main competitors in the UK. In fact, Costa Coffee is the leader in the UK coffee market.
Legal challenges and fines may be costly for Starbucks as they impact on its both finance and public image. For instance, one of its stores in Dublin (Ireland) was ordered to pay €12,000 in damages to an Irish woman of Thai descent as her order accompanied with a racist drawing on the cup (Beresford, 2021). Likewise, it was fined in the past for profiteering, and breaching waste collection time in different countries.
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Last update: 16 February 2022
Beresford, J (2021) Dublin Starbucks fined over racist ‘slanty eyes’ drawing on customer’s cup, available at: https://www.irishpost.com/news/dublin-starbucks-fined-over-racist-slanty-eyes-drawing-on-customers-cup-201838 (accessed 16 February 2022)
Lock, S. (2021) Number of Starbucks stores in Europe as of January 2021, by country, available at: https://www.statista.com/statistics/541629/number-of-starbucks-stores-in-europe/ (accessed 16 February 2022)
Starbucks (2022) Our Heritage, available at: https://www.starbucks.co.uk/about-us/our-heritage (Accessed 16 February 2022)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.