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
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Weakness
1.Coffee beans price is the major influence over firm’s profits
2.Product pricing
3.Negative publicity
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Opportunities
1.Extend supplier range
2.Expansion to emerging economies
3.Increase product offerings
4.Expansion of retail operations
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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.
