Starbucks Coffee SWOT Analysis

Starbucks Coffee SWOT analysis, strengths, weaknesses, opportunities, threats, internal forces, external factors, recommendations
A Starbucks café in Seoul, Korea. Starbucks Coffee’s SWOT analysis shows a strong global position to address weaknesses and opportunities. However, the firm must innovate to address threats in its external business environment. (Photo: Public Domain)

Starbucks Coffee Company stands as the biggest coffeehouse business in the world. The firm’s competitive advantage is based on its strengths, as shown in this SWOT analysis. In SWOT analysis, business strengths are evaluated to determine the ability to address weaknesses, opportunities and threats. This SWOT analysis of Starbucks Coffee presents the internal factors and external factors significant to the firm. Even though Starbucks is already a strong global brand, various factors threaten the business. As such, the firm must innovate its approaches to overcome these threats. The result of this SWOT analysis shows that Starbucks is strong, but it constantly faces major threats in various markets around the world.

Starbucks Coffee’s SWOT analysis shows that the company’s strengths far outweigh its weaknesses. However, this SWOT analysis also points to major threats that could prevent the success of new Starbucks cafés in markets outside the United States.

Starbucks Coffee’s Strengths (Internal Strategic Factors)

This component of the SWOT analysis model deals with the internal factor of business or organizational strengths. Starbucks Coffee’s main strengths are:

  1. Strong brand image
  2. Extensive global supply chain
  3. Diversified business through subsidiaries

Starbucks has one of the world’s strongest and most popular brands. The company also has a growing population of loyal customers who prefer Starbucks based on quality and the brand. In addition, the company has a global network of suppliers. The firm has also acquired businesses as subsidiaries, such as Ethos Water, Seattle’s Best Coffee, and Teavana. This part of the SWOT analysis shows that Starbucks is resilient through diversification and a global supply chain.

Starbucks Coffee’s Weaknesses (Internal Strategic Factors)

This dimension of the SWOT analysis model indicates internal factors like inadequacies that present challenges to business development. Starbucks Coffee’s main weaknesses are:

  1. Higher price points
  2. Generalized standards for most products
  3. Imitable products

The relatively higher prices of Starbucks products make them less accessible to the large population of lower-middle class and lower class consumers. Most Starbucks products are also based on generalized corporate standards that make the products less aligned with cultural demands in some markets. Also, Starbucks Coffee’s business is imitable in terms of products and café ambiance. This part of the SWOT analysis shows that Starbucks must innovate to overcome its weaknesses, especially the imitability of products.

Opportunities for Starbucks (External Strategic Factors)

This component of the SWOT analysis model focuses on external factors that a firm can use to grow its business. Starbucks Coffee’s main opportunities are:

  1. Expansion in Asia, the Middle East, and Africa
  2. Diversification of product mix
  3. Partnerships or alliances with other firms

Starbucks has the opportunity to expand in the Middle East and Africa, where the firm currently has minimal presence. The company also has the opportunity to expand in Asia, where economic growth rates are high. In addition, even though Starbucks already has a considerably diverse product mix, further diversification can help improve its competitive advantage. Partnerships and alliances can also strengthen Starbucks Coffee’s competitive position. This part of the SWOT analysis shows that Starbucks has major opportunities for global growth.

Threats Facing Starbucks (External Strategic Factors)

In this aspect of the SWOT analysis model, the focus is on external factors that could reduce business performance. The main threats to Starbucks Coffee’s business are:

  1. Competition from low-cost coffee sellers
  2. Imitation
  3. Independent coffeehouse movements

Low-cost coffee from firms like McDonald’s and Dunkin’ Donuts effectively compete against the more pricey Starbucks products. Also, other companies can imitate the business. Many competitors have already imitated Starbucks and succeeded, such as Stars and Bucks, a coffeehouse in the Palestinian Territories. There is also a growing social movement supporting independent coffeehouses and opposing large coffeehouse chains like Starbucks. This part of the SWOT analysis shows that Starbucks must ensure competitive advantage amid potential negative effects of the identified threats, especially imitation and competition.

Recommendations based on Starbucks Coffee’s SWOT Analysis

Starbucks Coffee’s SWOT analysis shows that the firm has the business strength to maintain competitiveness. However, the company must exploit opportunities for global expansion as soon as possible, to gain advantage over other firms also attempting to globally expand. To address the issue of competition with low-cost coffee products, Starbucks can emphasize quality and uniqueness in innovation of products to differentiate them. Starbucks can also increase efforts for trademark and intellectual property protection to reduce the threat of imitation.

References
  • Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis-where are we now? A review of academic research from the last decade. Journal of Strategy and Management3(3), 215-251.
  • Hill, T., & Westbrook, R. (1997). SWOT analysis: it’s time for a product recall. Long Range Planning30(1), 46-52.
  • Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of Management29(6), 801-830.
  • Koehn, N. F. (2002). Howard Schultz and Starbucks Coffee Company. Harvard Business School.
  • Piercy, N., & Giles, W. (1989). Making SWOT analysis work. Marketing Intelligence & Planning7(5/6), 5-7.
  • Smith, M. D. (1996). The empire filters back: consumption, production, and the politics of Starbucks Coffee. Urban Geography17(6), 502-525.
  • Starbucks Coffee Company (2015). Company Information – Starbucks Coffee Company.
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