swot-analysis-of-starbucks

SWOT Analysis Of Starbucks In A Nutshell

Starbucks is a global consumer brand with direct distribution, recognized brands, and products that make it a viable business. Its reliance on the Americas as a primary operating segment makes it a weakness. At the same time, Starbucks faces risks related to coffee beans price volatility. Yet the company still has global expansion opportunities.

Starbucks’ Strengths

  • Strong brand: across the globe Starbucks stores are the most recognized coffee shops in the world. With their blend of coffee, other products, and with its beautifully designed, yet standardized stores, Starbucks feels like a second home for many.
  • A viable and proved business model: Starbucks has also a consolidated and viable business model which had the chance to grow organically in the last decades:
  • Product and geographical diversification: Starbucks has been investing substantially in expanding its global operations. Thus, diversifying its revenue streams.
  • Direct distribution: Thanks to its stores present in most cities across the globe, Starbucks enjoys a direct distribution channel with its customers.
starbucks-business-model
Starbucks is a retail company that sells beverages (primarily consisting of coffee-related drinks) and food. In 2018, Starbucks had 52% of company-operated stores vs. 48% of licensed stores. The revenues for company-operated stores accounted for 80% of total revenues, thus making Starbucks a chain business model
starbucks-mission-statement-vision-statement
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”

Starbucks’ Weaknesses

  • Operating income too dependent on the Americas: while Starbucks has been investing in diversifying its revenue streams across markets and geographies. It is still highly dependent on the financial performance of its Americas operating segment. Thus, if that will suffer the whole company viability might be jeopardized.
  • Owned stores can turn in massive costs: the company runs a mix of owned and franchises stores, where the company-operated stores help the company keep the right mix, over franchised. This helps Starbucks control and keep a great customer experience. However, those stores can burn substantial resources when the economy slows down.

Starbucks’ Threats

  • The volatility of coffee’s price: cost of high-quality arabica coffee beans or other commodities can change swifty and it can also decreases in availability which can cause a disruption in the ability of Starbucks to serve its customers at the best.
  • Interruption of our supply chain could affect also the ability of Starbucks to keep operating its business at the best.
  • Pandemic: The global pandemic has turned already in a huge threat for the company who will need to redefine part of its value chain in the coming years.

Starbucks’ Opportunities

Further global expansion: Starbucks is still among the most recognized brands in the world. As such, it still has a big potential of global expansion, which can enable the company to further grow.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here