Industry Examination; A Case Study of Starbucks
BUS499 Business Administration Capstone
Industry Examination; A Case Study of Starbucks
Starbucks' Greatest Strengths and Weaknesses and Strategy Used for Maximum
Some of the greatest strengths that Starbucks has included its brand image and an
extensive global supply. Starbucks is considered to have one of the leading, strong, and most
popular brand, that factor coupled with an ever-increasing loyal customer base, has catapulted
the organisation to the very top. Additionally, the extensive global supply network has supported
the operations of the company. The company carefully selects its suppliers based on the quality
of products that they offer like quality Arabica beans that is, in turn, sells to the customers (SEC,
2018). Weaknesses can be viewed as the internal factors that limit the company's abilities, some
of the greatest weaknesses that Starbucks has included the relatively high priced products and the
potential of their products being imitated by other organizations. Starbucks has been known to
target the high-end buyers and markets, and that can be seen from the store locations that usually
are located in well-to-do or high-end streets and locations.
Also, the company maximizes the profits but in the process also limits access by reducing
the affordability of its products to a vast number of clientele. The downside with such an
approach is that it limits the company's market share by locking out those clients that have lower
disposable incomes. Also, many of the products that the company sells can be imitated, and they
have by other competitors who also sell similar beverages, imitate the store arrangements, and
provide similar products (SEC, 2018). The company should leverage its strengths and use
strategies such as diversification, innovation, and its global supply network to reduce its
weaknesses and take advantage of the strengths for increased performance.
Starbucks' Tangible, Intangible Resources, Core Capabilities, and Competencies
The tangible resources of Starbucks include the store locations, the roasting plants, and
other subsidiary companies owned by the company. The company has approximately 19,700
stores that it runs in more than 60 global locations, and it also owns other companies such as
Torrefazione Italia, Teavana's Heaven, Seattle's Best Coffee among many others (SEC, 2018).
On the other hand, the intangible resources comprise procurement processes that it uses to get its
coffee beans, and it also includes the Starbucks logo, the training programs, and skills of the
team. The primary core capabilities and competencies of Starbucks are associated with the brand
equity and continuous growth of the company, which has helped it withstand the entry of
competitors and other market forces.
Highly Ranked General Environment Segments Based on Influence and their Impact on
Starbucks' external environment is influenced highly by competition and consumers. The
competitive and rivalry forces and the bargaining power of the customer are strong forces based
on the Porters Five Forces Analysis (Porter, 2008). Starbucks remains as an industry leader and
is considered as one of the largest coffeehouse chains globally that also employs innovative
approaches which leverage the company's strengths to overcome its weaknesses taking
advantage of the opportunities. The company operates in a variety of industries considering that
over the years, it has expanded its product offerings intending to complement its core business of
selling coffee. Nevertheless, the organization faces stiff competition, and the consumers also
have a stronger force in determining how the company functions.
Most Significant Competitive Forces and how they have been addressed
The main competitive forces are competitive rivalry and the threat of substitutes.
Starbucks faces a lot of competition in both the food and specialty coffee segments, and the
situation has been made so because of the large number of firms and the difficulty in switching.
Additionally, the company faces the threat of substitution of services and products that it offers.
Starbucks has addressed the competitive forces by use of technology throughout the
organization. For example, it has enrolled nearly 15 million individuals in its loyalty program.
Additionally, it uses the information that it gathers through such forums to get more details of its
consumers as well as how it can further boost its services (Rachel, 2018). It utilizes data
analytics and ethnography, which it uses in the analysis of consumer behavior and then leverages
the information in boosting its sales and overall company performance (Lemus et al. 2015).
Competitive Forces and Company's Action in Enhancing its Ability in Addressing them
To further enhance its abilities in addressing the competitive and other industry forces,
the company can change its approach to a customer-oriented one that pays close attention to the
needs of the consumers. In such a competitive industry, the primary factors that Starbucks
watches out for when selecting which store to visit include the convenience, type of service,
product quality, and the prices (SEC, 2018). The company can also consider developing better
pricing models such as the use of bundle pricing to deal with the threat of competition.
Developing branding and creative marketing can also help build the brand image and boost its
performance as well as its overall outlook within the community.
Greatest External Threat to Starbucks and how they may be addressed
The greatest external threats faced by Starbucks include the heavy competition that it
faces in various locations to other low coffee sellers that sell their products at competitive rates,
and the imitation of its products and its operations. Both locally and internationally, Starbucks
competes against a big number of organizations which is made even more challenging given the
wide variety of products that it offers. It competes against other major restaurant chains and
coffee outlets in the markets that it operates in across the world and they are mainly in the quick
service and the ready to bring beverage divisions (SEC, 2018). Some of the major competitors in
the specialty coffee segment include Dunking Brands, Costa Coffee, McDonald's, among others.
The other major threat which is imitations consists of the organizations that try to imitate the
types of products that the company offers as well as the look and feel of the stores and products.
Many other small and medium-sized coffee shops are also springing up and copy the same model
taking advantage of the socio-cultural trends to influence the perceptions of the consumers and
limit the growth of the larger players.
For Starbucks to rise above such competition and imitation, the company needs to
counteract the impact of the trends. The company can leverage its brand image, length
experience in the industry, and extensive distribution network to increase customer loyalty as
well as offer more innovative products to counter those being offered by the competition. The
company should carry out aggressive innovations in product development, which will make the
company and its products increasingly harder to imitate. The company should also counter the
competition by considering pricing approaches, and that includes developing products that are
affordable to a wide number of consumers. The company should also focus on the critical factors
that the consumers desire and use in making the decision on which store to visit, and for
Starbucks it has all the parameters such as the quality of products that it offer, the convenience as
well as the type of service that are fairly priced (SEC, 2018).
Greatest Opportunity Presented to Starbucks and how it may be Leveraged
The greatest opportunities that Starbucks has included the ability to expand in
international markets, especially in emerging economies in Africa, the Middle East, and parts of
Asia. The company can widen its global reach and therefore increase its revenues by expanding
to the developing markets. The advantage of such a prospect is that it helps to draw attention
from the highly competitive traditional markets like North America, specifically the U.S., where
the company generates much of its revenues. Given the long experience and good performance
of the company over the years, Starbucks has great stamina and skilled staff which provides a
great opportunity for the company to think innovatively and develop strategies for diversification
which can boost its overall stability especially with the entry of newer and more competition.
The company will, therefore, be able to maintain a competitive advantage which is the
organization’s ability to do things better than its competition a principle that forms the very
center of thriving businesses (Porter, 1991). The company also has an opportunity that it can use
to widen its supplier network and broaden the supplies range where it sources intending to
diversify its sources of inputs for better control. By so doing the company will have less
sensitivity to the volatile coffee bean prices, making itself resilient to such risks associated with
supply (SEC, 2018).
Lemus, E., Feigenblatt. O.F., Orta, M, and Rivero, O. (2015). Starbucks Corporation: Leading
Innovation in the 21st Century. Journal of Alternative Perspectives in the Social
Sciences. 7. 23-38. Retrieved from
Porter, M. E. (1991). Towards a Dynamic Theory of Strategy. Strategic Management Journal,
Vol.12. Retrieved from: https://doi.org/10.1002/smj.4250121008
Porter, M. E. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business
Rachel (2018). Starbucks' secret ingredient: data analytics. Digital Innovation and
Transformation, Harvard Business School. Retrieved from
United States Securities Exchange Commission (SEC). (2018). Form 10-K Starbucks
Corporation. Retrieved from
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