Future strategy for next three years (Starbucks) - Essay Example

? Table of Contents 0External Audit of Starbucks; PESTLE Analysis: 3 2.0SWOT Analysis 7 3.0 Defining Marketing Objectives: 9 4.0 Marketing Strategies: 10 5.0 Marketing Programs: 12 References 13 1.0 External Audit of Starbucks; PESTLE Analysis: ISSUE IMPACT ON BUSINESS Political No threat to Government or democracy Armed Forces expected to pull out of Afghanistan No trade restrictions globally Provides a confident investment opportunity in the business and helps it grow. Will reduce taxes and will help make more profit. Helps explore new venues and is beneficial to the business. Economic Global recession Interest rates fairly stable Increased Unemployment Competition Has an adverse effect on the business. Leads to stable policies for the company. Less money to use by the consumers. This leads to less business for the company. Might result in lowering costs which would earn lesser profit for the company. Social Population size increasing Conscious attitudes towards obesity More number of consumers means more sales which mean more business. Less fat consumption leads to fewer sales of pastries reducing business. Some health researches indicate bad effects of coffee. This also damages business. Technological Easy-cook kettles for domestic and office use State-of-the-art technology where the company is based Clients shifting to making their own coffee which is bad for the business. Company can easily benefit from it to increase production if required. Legislative No registered cases against the company Legislation allows it to expand its business No legal issue is good for the company as it means all energies can be concentrated towards production, supply and profit. Good for the company. Environmental No natural disasters recently Stable weather patterns No crops damaged so beans and other raw materials are of good quality and provided well in time. This is essential for coffee business. No disasters predicted means smooth business. The external environment has its effects on the business and also helps in predicting the future of the business. If the predictions suggest that the business will go towards a decline, necessary actions can be taken to stop that from happening. At present, the political scenario is such that safe investment opportunities are being provided. The government policies on trade are consistent and there is no government change expected in the coming years. This means that a strategy can be devised confidently to expand the business, keeping in view the government policies. Taxes may be reduced after the troops pull out of Afghanistan. This would increase the margin of profit for Starbucks. Though the world is facing economic recession, the company is still doing well as it deals in products which are of daily use and cannot be skipped by most people (Faulkner 1995). . The factor which needs to be taking into consideration is that other brands have emerged and are emerging which can pose tough competition to Starbucks. Another factor which may contribute to lesser profits is that the public is becoming more aware of health issues like obesity and their cautious attitudes can make them stop using products high in fats such as pastries etc. This will have a negative effect on the business. Some of the factors discussed above provide opportunities for the company like reduction of taxes and availability of technology, while others pose threats like competition and health consciousness by the consumers. Keeping in mind these factors, the strategy would be formulated which would make use of the opportunities to overcome the threats posed to the company and make the company grow bigger. The business strategy would include steps like improving productivity, altering the price to defeat competition, and innovation in sitting environment to attract customers. The corporate objectives would be to make the company an outstanding International retailer. Furthermore, the team should be built and well trained to create more value (Warner 2010). . 2.0 SWOT Analysis STRENGTHS It is a leader in creating Italian style drinks. It provides high quality products. It is a well-recognized brand. It provides best services. It keeps time check. It is a global leader in coffee sales. It provides best tastes. It is a globally expanded business. It’s distribution in global market is effective. WEAKNESSES Less emphasis on profit. Similar concepts of business to other retailers. Lack of experience in a big market of price fluctuation. Similar policies and other business plans to that of competitors. Large initial investment. OPPORTUNITIES Based on sustainability it could reach the ‘gold standard’ as in the CSR reporting before. Because of quality check, the brand could attain further recognition. The direct retailing and distribution will minimize the fall in its quality. Working with other distribution alliances will help expand the business more quickly. THREATS Global recession is a threat to this business. Increased competition will help increase the standards of the products of other competitors. It gives less stress on gaining profit, in spite of high initial investment. Because of high competition there is a danger of losing its high quality brand. Starbucks is leading the world in its Italian style drinks and provides high quality standard drinks and coffee. In addition, it’s also providing accessories and confections throughout its retail stores. It is a recognized brand providing best services and best tastes with broad distribution throughout the globe. Although weaknesses and threats are there but are mild enough and can be ignored and opportunities and strengths are far ahead which would significantly boast the sales of the company in a positive way. Starbucks is a well recognized company which has more opportunities than threats. In the near future it is expected by the Starbucks Company to be flourishing in a big market, as its policies are clear and tight. It wouldn’t compromise on its quality, services and care for employees and workers but most probably would cut down its profits if the situation arises, which are the standard policies of a successful sustainable company. 3.0 Defining Marketing Objectives: From the SWOT analysis it is evident that there are opportunities which can be taken advantage of. On the other hand, threats also exist which need to be reduced or eliminated. As the company is doing well economically at present and has reserves, it should be a major objective of the company to grow in size. As there is no hindrance to exploring other global venues for business, teams should be sent at various locations around the globe to provide technical and economic feasibility reports for starting business there. These reports should be reviewed and business should be set up where it is more feasible. Production should also be increased to cater for the ever-increasing population. Another objective should be to partner with other reputable firms and make joint outlets (Adekol & Sergi 2007). This will not only be good for the publicity but will also bring more adversity and technical training to the staff. Some objectives drawn from SWOT analysis and their SMART objectives are listed in the table below. Objectives SMART Objectives Set up business in new venues Set up Starbucks coffee bars in 3 more countries by August 1st, 2016. (in 3 years) Increase production Increase production by 10% in next three years. Partner with major brands to make joint cafe bars Be partners with at least 4 major brands and have at least 4 joint coffee bars in every country where Starbucks does business in next three years. Increase the number of distribution partners Add 5 more distribution partners to the current partners in the next three years. 4.0 Marketing Strategies: As the company has various opportunities available to it, it can adopt a number of marketing strategies to make use of those opportunities. Here two examples of marketing strategies are explained. If the company adopts the growth strategy, it will try to find or create new markets. Also, it can try to take a greater share of the market with its present products (Rouse 2001). Starbucks can expand its business to other countries where it does not exist and may also increase its shops in the countries where it already exists. Another way to go about growth would be to capture the market of the competitors by increased production, advertising or even by altering the price or quality of its products. Another option would be to adopt the Affinity marketing strategy. In this, Starbucks can make partners with another brand to make a joint outlet in which case, both the brands will benefit from it. This way not only more income can be generated but also customers of the other partner brand can be introduced to Starbucks products and customer relations can be made. It is in the best interest of the Starbucks Company to adopt both marketing strategies simultaneously. Starbucks adopts both growth and affinity strategy. Having favorable circumstances in terms of having permission and finances to set up business in new countries, it adopts the growth strategy. Not only will this increase the business but it will also further promote the brand name on a global level (Shimizu 2012). Though the primary focus in on growth strategy, but the company will also adopt affinity strategy as the brand publicity and sale from it is reasonably more than the investment. 5.0 Marketing Programs: Bases on the marketing strategy identified in the previous section, some actions are to be taken to ensure growth and brand recognition for the Company. Five actions to be taken are identified and are listed below. Sending teams to identify best markets for doing business globally. Making joint cafe bars with reputable brands as partners. Improve sitting environment and services in areas where competitors have their coffee bars. Hire and train staff. Increase production and distribution partners. The first action stated has been chosen as it is the first step towards expanding the business globally. After the best sites for opening franchises is identified, further process of acquiring building and finding distributors can be carried out. The second action of joint venture will not only increase the earnings but will also be a publicity stunt. The consumers of the other brand will also get introduced and familiar to Starbucks items. Customer relations can be made this way. The third action focuses on getting a greater share of the market. This can be done by attracting the customers of the competitors to our coffee bars. Improving sitting environment and easy accessibility can be one way to do it. For the growing business it is important to hire and train staff already so that new coffee bars can start giving optimal outcome as soon as they are set up. The last action is also necessary if the growth strategy is to be implemented effectively. Growth would mean more production and better distribution. References Top of Form Top of Form Faulkner, D. (1995). International strategic alliances: Co-operating to compete. London: McGraw-Hill. Top of Form Adekola, A., & Sergi, B. S. (2007). Global business management: A cross-cultural perspective. Aldershot, England: Ashgate. Top of Form Rouse, W. B. (2001). Essential challenges of strategic management. New York: Wiley. Top of Form Warner, A. G. (2010). Strategic analysis and choice: A structured approach. New York: Business Expert Press. Top of Form Shimizu, K. (2012). The Cores of Strategic Management. Hoboken: Taylor & Francis. Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Read More