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SWOT analysis of Starbucks

SWOT analysis of Starbucks

SWOT analysis helps in ascertaining the loopholes of businesses that can be eliminated with the help of the potential strengths. SWOT is one of the most important tools for conducting an internal analysis of any particular company. The intricacies of the company can be deciphered with the help of SWOT.

Strengths

Starbucks has various strengths due to which it has emerged as one of the best coffee making companies all over the globe. The company has managed to build a strong and firm image among the large number of diverse customers. It produces great varieties of coffee which can refresh the customers in the best possible way. Moreover, there is a strong supply chain as well. It has large number of suppliers in different countries and they are chosen in a very effective manner. The criteria for selecting the suppliers are quality of service, cost effectiveness and others. It has managed to acquire other companies that operate in the same line of businesses like Ethos water, Teavana etc. in order to grow as well as expand. These are the core competencies of Starbucks which it uses to its own advantage.

Weaknesses

Starbucks generally charges very high price for its products. The products are indeed high in quality but the affordability is less. It is not possible for all the customers to afford such high range of products on a regular basis. The affordability is especially low in the Asian countries. The people find it very difficult to buy these products too often. The products are becoming imitable as well. There are local competitors as well that can possibly give a tough competition to Starbucks as far as the quality of product and its pricing is concerned. This indicates that the company needs to harbour on the core competencies or strengths in order to eliminate the weaknesses and issues that are affecting the business.

Opportunities

The biggest opportunity is the ability to diversify in the various other markets. The company has the ability to enter into the other viable markets so that it can increase its revenues and profitability in the long run. It also has the opportunity of creating alliances with some pertinent retailers that can make instant coffee or beverages of high quality. It can make the most of its opportunities by resorting to the diversification as well as the merging strategies. This will help the company to ensure that the core strengths are used in the greatest possible way. The company has the ability to enter into the Asian countries so that its overall profit can be increased in a larger way. This will augment the revenues and reduce the overall costs and expenses.

Threats

Starbucks gets tough competition from the sellers who sell coffee at a low and affordable cost. There are local companies that sell the beverages at much economic rates. This may restrict the company’s scope of acquiring a larger share in the market. Imitation is one of the major threats that is encountered by Starbucks. The practice of copying the taste and feel of the restaurant can lead to massive loss of goodwill. However, the high price of the products is the biggest threat. It is important that the restaurant incorporates a competitive pricing strategy of its products in order to compete accordingly with its rivals.

Recommendations

There are numerous challenges that are encountered in the coffee house business. The biggest problems are imitation, socio cultural trends and others. It is highly recommended that the restaurant innovates as often as possible. It should ensure that its products are unique and innovative at the same time. The purpose of the company should be to satisfy the unserved needs of the large and diverse group of customers. The company should also try to make the prices reasonable so that they become affordable to the customers from different income groups. The cost cutting and the innovation are the two significant strategies that needs to be implemented by Starbucks.

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