Starbucks Corporation: Strengths and Weaknesses Case Study

Starbucks Corporation specializes in the processing of different coffee brands. The company stamps its authority in several countries via its company-owned outlets as well as authorized retail stores. Starbucks’s extensive geographical reach, extended to more than 50 countries, not only enhances its bargaining power in the beverages market, but improves its market share.

The corporation’s continued growths in business environments where is I already operating, as well as emerging and new environments manifests the company’s mission of realizing the global presence and limits its reliance on small market share. Nevertheless, the company’s prosperity may be badly affected by the increasing coffee prices around the world.

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Strengths

Large market share

Lynd and Gross (347-356) suggest Starbucks’ broad geographic influence and sustained growth of the market share enables it to cash in on the fortunes presented by the consumers present in the more than 50 nations. Its multinational markets are evenly spread across the six continents of the world, because of the company’s quest to control these markets via direct stores ad authorized dealers.

By the end of 2010, Starbucks was operating 6,707 company-run retail outlets in the United States and 2,126 in foreign markets, with Canada operating 799, the United Kingdom 601, Thailand 133, Germany 142, China 220, and 231 spread across the world (Tălpău and Boşcor 51-58).

Rapid expansion strategies

The corporation enters into business deals with established local giants, in order to boost its revenue. This enables Starbucks to acquire retail stores that run its authorized outlets. Starbucks receives payments and other royalties from these partnerships (Ferrell and Hartline 677). By December 2010, the firm had 4,424 licensed outlets in the United States market and the more than 3,500 licensed outlets in foreign markets (Perera et al 174-185).

The royalty and accreditation fee revenues from the United States and authorized retail stores in foreign markets accounted for half of the returns of the company, acquired from specialty operations. These accounted for almost one fifth of the entire revenues of the corporation in 2010. In view of this, Starbucks has never looked back in its effort to capitalize on market opportunities to extend its the outreach of the company-run retail stores (Argenti 91-116; Schultz 50-55).

Sound business deals

Schultz (50-55), indicates Starbucks is good at acquiring better business deals across the world. For instance, in 2010 it entirely took control of Starbucks Brazil, after acquiring Cafes Sereia do Brasil Participacoes. As a result, the company’s operations in Brazil have since transformed into a company-run corporation, thus allowing Starbucks to concentrate on improving its operations in Brazil, which is a significant consumer market in Latin America.

The corporation is also striving to spread its market tentacles by entering into partnerships with local firms in existing environments as well as the growing economies. During the third quarter of 2010, Starbucks partnered with Corporation de Franquicias Americanas on strategic regional development basis. The Central American giant is expected to lead the growth of licensed Starbucks outlets across the region (Theodore 30-34).

Lots of products to satisfy customer needs

According to Tălpău and Boşcor (51-58) the acumen of the corporation’s R&D enhances the process of building competitive product brands. This offers a wide range of options which satisfy the diverse customer tastes and preferences. For instance, the company’s outlets offer several brands of normal and decaffeinated coffee drinks. Additionally, Starbucks produces a wide range of Italian-style espresso drinks, iced shaken stimulant beverages, cold blended beverages, premium beverages, and roasted whole grain coffees (Theodore 30-34).

In 2010, Seattle’s Best Coffee made a debut into the ready-to-drink products in the country. The venture is valued at $1.4 billion. This came as a result of the initiation of its new brands of iced lattes kept in cans.

Therefore, by weighing its R&D competence against market dynamics, the company has been successful in constantly revitalizing its brand portfolio to enhance the market share across the world (Ferrell and Hartline 193-196; Heather and Richard 1324-1327). These strengths imply that Starbucks is a major player that cannot be ignored in the global beverage industry.

Weaknesses

Product recalls

Although, Starbucks Company boasts of the numerous strengths, it has a fair share of the weaknesses that need addressing (Argenti 93-95). Product recalls tops the list of the company’s weaknesses. This negatively affects the reputation of the company. Moreover, of late, the company has been lately witnessing an increase in instances of pulling some of its products from the shelves.

For instance, in early 2010, Starbuck pulled from the shelves 11,000 and 1,200 quantities of glass water containers from the United States and Canada regions, respectively (Argenti 93-95). The disapproving development happened after quality evaluators established that the container was weak and could break.

Poor expansion and safety measures

Starbucks has of late recorded poor expansion programs. As a result, the company has lost colossal sums of money in an effort to expand its market share. Questions have also been raised about the ability of the company to guarantee its consumers hygienic products.

Starbucks has pulled from the shelves a number of its items made of peanut butter foods from its outlets following an eruption of typhoid bacteria in the United States. These doubts about product quality, which often results in recalls, negatively impact the essence of the Starbucks products, triggering a major reduction in the market share commanded by the company (Perera et al 174-185).

High cost of Starbuck products

Gallaugher and Ransbotham (197-212) pointed out that high cost of Starbucks products substantially reduces sales, as most consumers cannot afford them (Lynd and Gross 347-356). Some analysts have begun to express their worries about the capability of the company’s management team to handle the challenging business environment: there are high chances of Starbucks eventual failure to achieve any boost in revenue (Perera et al 174-185).

More devastating about the company is that there have been increasingly familiar indications that Starbucks won’t be capable of raising the value of its products much higher, despite the internal need to handle its increasing budgets more effectively. This may reduce its expansion plans, and limit the revenue.

Conclusion

In general, in as much Starbucks struggles to extend its market share, stark weaknesses weaken its corporate operations. Starbucks is widely seen as incapable of guaranteeing consumers safe products. The quest to expand Starbucks presence in new market areas has impacted overspending; it negatively affects the employee welfare.

Nevertheless, to reclaim its reputation and serve the world more efficiently, the company should improve product quality and adapt to the different cultural environments of the environments where its stores are located across the world. In a nutshell, the elimination of Starbucks’ weaknesses, especially product recalls can improve the company’s reputation and revenue.

Works Cited

Argenti, Paul A. Collaborating with Activists: How Starbucks Works With NGOs. California Management Review, 47.1 (2004): 91-116. Print.

Ferrell, O.C., & Hartline, Michael. Marketing Strategy. New York, NY: Cengage Learning, 2010. Print.

Gallaugher, John, and Ransbotham, Sam. Social Media and Customer Dialog Management At Starbucks. MIS Quarterly Executive, 9.4 (2010): 197-212.

Heather, S. Knewtson, and Richard W. Sias. Why Susie owns Starbucks: The name letter effect in security selection. Journal of Business Research, 63.12 (2010):1324-1327. Print.

Lynd, Staughton, and Gross, Daniel. Solidarity Unionism at Starbucks: The IWW Uses Section 7: Commentary. WorkingUSA, 10.3 (2007): 347-56.

Perera et al. Case Study: Starbucks- Adding Value to Brand Equity through an Innovative Brand Image. Journal of the Academy of Business & Economics, 9.4 (2009): 174-185. Print.

Schultz, Howard. How Starbucks Got Its Mojo Back. Newsweek, 157.12 (2011): 50- 55. Print.

Tălpău, A., and Boşcor, D. Customer-Oriented Marketing – A Strategy That Guarantees Success: Starbucks And Mcdonald’s. Bulletin of the Transilvania University of Brasov. Series V: Economic Sciences, 4 (2011): 51-58.

Theodore, Sarah. Starbucks brews new coffee concepts. Beverage Industry, 98.1 (2007): 30-34. Print.

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