Starbucks Swot Analysis
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Starbuck SWOT
No matter how successful a company may be, before they became successful they had to take a long look into the mirror. Companies must reflect upon their strengths, weaknesses, opportunities, and threats, while considering the trend associated with each. The essential process of strategic planning is through a SWOT analysis; a self-evaluation and strategic plan for the future. The Starbucks Coffee Company is a fortune 100 company, coupled with the SWOT analysis and the ability to act and make appropriate changes when required has made them the number one gourmet coffee retailer in the world.
Strengths.
Starbucks Corporation earns approximately $600 million annually
Global coffee retailer; 9000 cafes in 40 countries.
Starbucks is ranked as a Fortune Top 100 Company.
Weaknesses.
Strong presence in the United States; need consider other countries, in order to spread business risk.
Dependent on the retail of coffee; may prevent them to diversify
Opportunities.
Good at taking advantage of opportunities; joint-ventured with Hewlett Packard in 2004
Has opportunities to expand its global operations
Possibly joint-venture with other manufacturers of food and drink,
Threats.
Unsure of market; coffee drinkers
Exposed to cost increases; coffee and dairy products.
Market is vulnerable to the entry of many competitors
Stakeholders
As a Fortune 100 company, Starbucks understands the importance of its stakeholders and aligns their focus toward communication strategies and strong relationships with stakeholder groups. One of their primary objectives is to guarantee that Starbucks purchases coffee in a reasonable and unbiased manner so that consumers feel confident about the coffee they buy and drink.
They work diligently to “develop and sustain positive relationships with policy makers, governmental, non-governmental organizations, and other groups concerned with social justice and environmental issues in coffee growing regions; to help ensure a steady supply of high quality coffee beans and to protect Starbucks reputation and overall license to operate” (Reid, Diana L. 2006). Primary stakeholders include the following:
Starbucks employees
Customers
Shareholders
Partner vendors such as other stores or service accounts
Government organizations
Non-government organizations / focus groups (human rights, environmental issues)
Media
Starbucks is the worlds largest coffeehouse chain, with that status comes a variety of stakeholders and how the company interacts with those stakeholders affects their profits. There are internal and external stakeholders. Starbucks depends on their stakeholders and their contributions to the corporation, whereas the livelihood of these stakeholders, such as customers, suppliers, and coffee growers, depend on Starbucks. Although Starbucks has done a superior job of contributing to the needs of its stakeholders, improvements are needed in the way of its development and ecological performance. Research shows that these improvements will be major factors guiding the companys strategy in the next years to come. Ultimately, at the end of the day, a large part of satisfying stakeholders relies on who you communicate with and what you communicate to them; ideally the message should be coupled with your organizations mission, goals, and operations.
Most importantly Starbucks classifies the environment as a valuable stakeholder. The environment affects the quality of life for every citizen in the world. Starbucks has the opportunity to affect the environment, particularly because of the throwaway goods it produces; including other products that contribute to the oil consumption and garbage contribution. “The company has a division devoted to corporate social responsibility and is working toward reducing their considerable environmental impact” (Allison, 2008).
A look at the financial statements reveals that selling coffee can be profitable. Between the years of “1997 to 2001, revenues increased from $975,389,000 to over $2,648,980,000 in sales, the number of stores almost quadrupled, and comparable stores sales have been up between five and nine percent every year for the past five years” (Kennon, Jushua, 2012). In addition, Starbucks maintains a low level of long-term debt, which means higher profits. Investors, who initially recognized Starbucks value, have been heavily rewarded for their investment.
Market Information
During the past year global revenues for Starbucks reached $11.7 billion, an 11 percent increase. Starbuck executives claim this increase was due to an 8 percent rise in global store sales; an estimated 60 million additional customers visited stores. In addition, by means of leveraging efficiencies and forcefully managing spending, operating cost remained steady at $1.7 billion. By the end of fiscal year 2011, the Starbuck Corporation experienced record earnings of $1.62 per share, up 31 percent from last years $1.24 per share. According to CEO Howard Schultz, “we returned approximately $945 million to shareholders, more than doubling the amount returned in fiscal 2010” (Starbucks FY 11 Annual Report, 2011).
The following table shows the quarterly high and low sale prices per share of Starbucks
common stock.
Cash Dividends