SWOT analysis

                       SWOT Analysis

SWOT is a tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, straightforward model that assesses what an organization can and cannot do as well as its potential opportunities and threats. SWOT is a tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, straightforward model that assesses what an organization can and cannot do as well as its potential opportunities and threats.

In coffee industry, Starbucks is very popular one, so why Starbucks is so successful? I have made a SWOT analysis to have a more comprehensive image of it.

        Starbucks SWOT Analysis 2013

Strengths 1. Sound financial records 2. No. 1 brand in coffeehouse segment valued at $4 billion 3. Starbucks experience 4. Largest coffeehouse chain in the world 5.   Employee management	Weakness 1.Coffee beans price is the major influence over firm’s profits 2.Product pricing 3.Negative publicity
Opportunities 1.Extend supplier range 2.Expansion to emerging economies 3.Increase product offerings 4.Expansion of retail operations	Threat 1.Rising prices of coffee beans and dairy products 2.Trademark infringements 3.Increased competition from local cafes and specialization of other coffeehouse chains 4.Saturated markets in the developed economies 5.Supply disruptions

As we can see, there are several strengths in the diagram. Firstly, Starbucks is increasingly gaining profitability for the past few years. It has surpassed its nearest competitors with 24.54% return on investment and 29.16% return on equity. Besides, Starbucks is a well-established brand since it provides high quality coffee and excellent customer services. Of course, Starbucks has rich experience about how to deliver their blended coffee, premium music and suchlike to their customers. Finally, Starbucks builds solid relationship with their employees since it offers extensive range of benefits.

Turning then to weakness of Starbucks, in the first place, Starbucks’ profitability really depends on prices of coffee beans which is a commodity and cannot controlled by it. In the second place, it is obvious that coffee in Starbucks is relatively more expensive resulting from superior coffee and considerate services. Last but not least, the company continuously receives negative publicity over its poor efforts of becoming greener company.

I’d like to turn now to the opportunities of Starbucks. Firstly, Starbucks has to extend supplier network in order to reduce the dependence of suppliers and to save on shipping costs Because Starbucks doesn’t grow its own coffee beans having to buy them from various suppliers. Secondly, Starbucks is able to expand its coffeehouses in developing countries and also make expansion of retail operations. Above all, Starbucks could be put more efforts to do some variations, adding new products or packaging.

My final point covers the threats of Starbucks. I have mentioned that Starbucks relies on other countries’ coffee beans, so raising prices of coffee beans and diary products really puts pressure on it. Moreover, Starbucks face increasing competition from local cafes and specialization of other coffeehouse chains. Local cafes understand local market better and offer much lower prices while large coffeehouse specializes. Eventually, Starbucks is prone to experience supply disruptions owing to political, economic and weather conditions.

 I have made efforts to make a SWOT analysis, it is better to combine with the Ansoff Matrix to have a sensible strategy developing firm better and better.