Starbucks sells a premium product which based on the laws of economic these types of product have a declining demand during bad economic times due to lower consumer disposable income. This paper will analyze Starbucks Cafe. Some of the tools that will be used to analyze the company include SWOT analysis, financial analysis, alternative solutions, and recommendations. SWOT Analysis One of the strengths of Starbucks Cafe is its tremendous brand value. The company is the market leader in the industry by a wide margin. Starbucks has 16,660 outlets, while its closest competitor in the United States has less than 500 stores. The firm enjoys a huge market share advantage over the competition. The product variety of the company is another strength of the company. A third strength of the firm is its tremendous corporate social responsibility program. In 2009 Starbucks doubled its purchases of fair trade coffee and it implemented a program in which it donated 5 cents out of every sale of certain beverages towards the AIDS cause. A weakness Starbucks faces is that the coffee market has become saturated in the United States. There are over 22,000 coffeehouses in the United States. A second weakness Starbucks Cafe has is that its product is priced higher than many competitors. The economy in 2008 was facing a recession and the demand for luxury items is lowered during recessions. A third weakness the firm faces is that its profitability declined in 2008. Lower profitability can lead to liquidity problems. An opportunity the firm has is to achieve growth in other international markets by expanding its licensing revenues of packed foods. The company currently sells Starbucks packaged branded foods at 37,000 stores in the United States, but its only sells these products in 4,000 stores internationally. The company could increase its revenues considerably by tripling the amount of stores that carry Starbucks packaged products internationally. A threat that Starbucks faces is the entrance into the gourmet coffee marketplace of McDonald’s. McDonald’s has double the outlets of Starbucks, thus the company can take away market share from Starbucks since their premium coffees are more economical than purchasing Starbucks coffee. Financial analysis In 2008 Starbucks Cafe achieved global sales of $10,383 million. The sales of Starbucks increase by 10.32% in comparison with the previous year. Despite its impressive revenues the company generated a net profit of $64.3 million. The net income of the company was lower by $143.8 million in comparison with 2007. The net margin of the company in 2008 was 0.62%. The industry average net margin in the food store industry is 1.6% (Dun & Bradstreet, 2011). The firm’s net margin was in relative terms 62.5% lower than the industry. One of the reasons the profitability of the company went down in 2008 is because its operating costs increased by $529.2 million compared to 2007. Porter’s Five Force Model The rivalry in the gourmet coffee segment of the food industry is intense. Starbucks is the market leader and many competitors target Starbucks since they all want to steal market share away from them. Dunking Dunuts ran and ad that says, “Friends don't let friends drink at Starbucks.” (Starbucks in 2009: Coffee Goes Cold). In the United States there are 21,400 coffeehouses. The threat of
A lot of people believe that the United States is the land of opportunity. The story of Howard Shultz, founder of Starbucks, would make you believe that the phrase is completely true. Mr. Shultz after acquired the brand name Starbucks and he turned the company from a six outlet operation into the global leader in the coffeehouse industry with 16,680 outlets worldwide…
This essay discusses that the new coffee shops will provide the customers with the chance to make a variety of choices regarding the products and services offered in the market. The coffee shops will mostly rely on customer service and quality products as a strategy to retain existing customers and attracting new customers.
Response Essay II Cold War era Presidents were faced with a number of issues unique to that time period, particularly the sense that the general specter of Soviet-style communism was the single most important issue confronting the United States. Because of this, all other issues were influenced by this larger more supposedly fundamental concern.
The expansion would be accomplished through the way of distance learning entry mode. In Africa, LSBF will target both graduate as well as undergraduate students. LSFB will use demand oriented pricing strategy in order to market the education services in Africa.
Should Starbucks Make The $40 Million Investment? Why? 7 C. Irrespective Of Your Answer To The Previous Question Now Assumes That Starbucks Has Decided To Go Ahead With The $40 Million Investment. How Would You Go About Evaluating Whether This Investment Was Worth Making?
It dominated the international affairs for several decades. It was an open yet restricted rivalry between the two major powers that emerged after the Second World War. It was waged on economic, propaganda, and political fronts and the recourse to weapons was limited.
This has worked to evolve consumer behaviour patterns that have gone to the extent of even establishing lifestyles and segments based on Starbucks' products consumption patterns. This paper takes up the study of such evolving consumer behaviour through an in-depth literature review and analysis and by means of administering a questionnaire amongst the consumers of coffee products at Starbucks' coffee houses.
This way, I save more time because I am able to do many things while waiting for my coffee and have a wide array of flavors to choose from.
I am not advertising Starbucks. In fact, I am puzzled with how this coffee company attained such a huge international success.
In 2009, Starbucks on the other hand had 727 stores and 400 of them were situated in London. Costa and Starbucks seem to be on top of these three, followed by Caffe Nero when it comes to the number of branches already located in the UK. This means that among the three,
The factors above are influenced by methods of harvesting, topology of plantation and cultivation practices. Coffee is processed by two methods; Dry method; this is done to Robusta coffee, though has been used over a long period of time.
2 pages (500 words)Coursework
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