CURSO:

GLOBAL BUSINESS STRATEGY

TRABAJO FINAL:

STARBUCKS COFFEE COMPANY

PROFESOR:

ROMANI BRAVO, JUAN CARLOS

INTEGRANTES:

ALEGRE PAJUELO, MARÍA

ZEVALLOS, MARIEL
SARMIENTO, JOHANA
SARAVIA CERCEDO, MARITZA

2018-I
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II. CHAPTER 1: EXTERNAL ANALYSIS AND EFAS TABLE

PEST ANALYSIS

1. Political-legal:

 Employment laws depend on the position or country and it might represent a

threat and a difficulty for the company’s global strategy.
 Regional integration is a current trend and external factor that presents an
opportunity for Starbucks to globally expand.
 Also, most governments around the world are improving infrastructure, which
creates the opportunity for Starbucks to access more markets or suppliers.
 However, bureaucratic red tape persists in most countries. This external factor is
a threat because it makes business expansion more difficult for Starbucks,
especially in developing countries.
 Employment laws keen on social and environmental norms to follow sourcing
strategies that are appropriate to the “Fair Trade” practices that have been
agreed upon by global corporations and the governments of the developing and
the developed countries.

2. Economic:
 The high economic growth of developing countries and the declining
unemployment rates create opportunities for Starbucks to gain more revenues
from various markets around the world
 The rising labor cost in developing countries (China, India and South America) is
an external factor that threatens Starbucks because it increases the company’s
spending for ingredients, especially since the firm sources much of its coffee
beans from developing countries.
 Unstable currency exchange rates and the taxes in different countries for
domestic market can lead to loss of earnings.

3. Sociocultural:
 Growing coffee culture and a growing middle class around the world, represents
an opportunity to increase its revenues based on increasing demand for specialty
coffee.
 Opportunity to widen its array of more to attract health-conscious consumers to
Starbucks cafés.

4. Technological:
 Rising mobile purchases. Starbucks has the opportunity to improve its mobile
apps and linked services to gain more revenues through mobile purchases, has
tied up with Apple to introduce app based discount coupons, it can expect to ride
the mobile wave with ease.

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 New technologies coffee farmers use, represent also an opportunity to improve

its supply chain efficiency.
 However, the rising availability of home-use specialty coffee machines is a threat
to Starbucks because it increases the availability of substitutes to Starbucks
products.
 Wi-Fi capabilities in its outlets

5. Eco-ambiental:
 There is a business sustainability trend nowadays which focuses on business
processes that ensure minimal environmental impact that goes from company’s
supply chain to recyclable packaging.
 Global warming and other environmental issues in a global level

EFAS (External Factor Analysis Summary) TABLE

WEIGHT
EXTERNAL FACTORS WEIGHT RATING ED COMMENTS
SCORE

OPPORTUNITIES
O1: To expand globally.
O1: Regional integration 0.07 3 0.21
of markets O2: To access more
markets or suppliers.
O2: Improving
0.03 2 0.06
governmental support for O3: To gain more
infrastructure. revenues from new
O3: High economic markets where company
growth of developing 0.17 5 0.85 has few stores.
countries.
O4: To widen its array of
O4: Growing coffee 0.22 5 1.1 products, without
culture and coffee affecting quality and
consumption
benefits.
O5: Rising mobile 0.07 4 0.28
purchases O5: To improve its
mobile apps and linked
O6: Technology transfers services to gain more
to coffee farmers 0.06 3 0.18
revenues.
O7: Business
O6: To improve its
sustainability trend and
Growing popular support 0.05 2 0.1 supply chain efficiency.
for responsible sourcing
O7: To enhance its
and environmentally
friendly products. performance in
responsible sourcing.

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THREATS
T1: Variability of 0.03 3 0.09 T1: Employment laws
employment regulation depend on the position
around the world. or country.
T2: Bureaucratic red T2: It makes business
0.06 3 0.18
tape in developing expansion more difficult
countries.
T3: It increases the
T3: Rising labor cost in 0.05 4 0.20
company’s spending for
suppliers’ countries. ingredients.
T4: Unstable currency T4: It can lead to loss of
exchange rates and 0.10 4 0.40 earnings.
taxes in different
countries for domestic T5: It increases the
market. availability of substitutes
to Starbucks products
T5: Rising availability of 0.02 2 0.04
specialty coffee T6: It affects the
machines for home use production and sourcing
capability of raw material
T6: Global warming and
other environmental 0.07 3 0.21
issues in a global level

TOTAL SCORE 1.00 3.90

Own Elaboration

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III. CHAPTER 2: INTERNAL ANALYSIS AND IFAS TABLE

1. Corporate Governance (Starbucks, 2017)

Have a code of ethics in which they insist on keeping the secret of the recipes of
beverages, as well as alignments in the laws of the country and the requirements
necessary to act correctly.

Every factor of production is legal and ethical: The Company is committed to

adhering to the laws and being sustainable to maintain its validity for many years, the
social responsibility of its corporation is supported by the directors to be allies of
companies that share their interests of sustainability.

2. Corporate culture:

According to the Panmore Institute (2017), Starbucks Coffee’s organizational culture

is a key success factor in the business, and it uses it as a distinction against
competitors.
The company describes its organizational culture as a culture of belonging, inclusion
and diversity. In this regard, the main features of Starbucks’ organizational culture
are:

 Servant Leadership (“employees first”)

 Relationship-driven approach
 Collaboration and communication
 Openness
 Inclusion and diversity

Starbucks has gone through significant changes in its organizational culture. These
changes are based on issues and problems leaders like Howard Schultz and
Howard Behar identified. As a way of enhancing business performance, Starbucks
instituted reforms in its organizational culture. Today, the company’s organizational
culture is a distinct characteristic that builds competitive advantage and develops a
consumer population of loyal Starbucks fans.

3. Corporate key values

According to Starbucks webpage, in its mission to share moments, it reflects the

values of the company that is the community. In its shared environments it reflects:

 Solidarity and a warm atmosphere among the hosts

 Acting with courage, challenging the status quo and finding new ways to
grow our company and each other.
 Being present, connecting with transparency, dignity and respect.
 Delivering our very best in all we do, holding ourselves accountable for
results.

Primarily Starbucks performance is driven, through the lens of humanity.

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IFAS (Internal Factor Analysis Summary) TABLE

INTERNAL WEIGHT RATING WEIGHT COMMENTS

FACTOR SCORE

STRENGTHS S1: Locations are

everywhere as one of the
S1: Largest coffee 0.15 4 0.8 company’s main goals
chain in the world S2: Company seeks
quality and
S2: Quality
0.10 4 0.4 standardization
product
worldwide.
S3: Brand Identity. 0.10 4 0.4 S3: Variety in products
with incorporation of
S4: Strong values 0.25 5 1.25 lactose-free drinks, with
and ethics vegetable milk. And
creations of new
S5: Employers 0.10 4 0.4 products.
benefits S3: The company
consistently maintains its
brand, even without
direct marketing.
S4: The company only
buy products with Fair
Trade certified.

WEAKNESSES W1: By becoming

overexposed they risk
W1: Limited 0.10 2 0.2 losing the unique quality
alternatives to eat they were founded on.
0.05 3 0.15 W2: While creating more
W2:Overexposure
products, some are left
W3: High rotation behind and forgotten,
of personal 0.05 3 0.15 losing value.
W3: Workers consider
W4: Dependency Starbucks’ work as
of suppliers 0.05 2 0.1 temporary, and company
lose money when they
W5: High prices are trained and after a
compared to 0.05 3 0.15 few months, they give up.
competitors W4: Coffee suppliers
have a very variable
price of their products
and this directly affects
profitability of the
Company.

TOTAL 1.0 4.00

Own Elaboration

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IV. CHAPTER 3: SFAS MATRIX

SFAS (Strategic Factors Analysis Summary) TABLE

S I L
H N O
O T N
R E G
T R
STRATEGIC WEIGHT RATING WEIGHT M COMMENTS
FACTORS SCORE E
D
I
A
T
E

O1:without
affecting the
O1:Favorable 0.1 3 0.3 X quality and the
infrastructure benefits
O2:Diversificatio 0.15 5 0.75 X
n of product S1: The
0.2 4 0.8 X company
T1: Price consistently
variability maintains its
T2:Intense 0.15 3 0.45 X
brand, even
competition without direct
from local marketing.
0.25 5 1.25 X
S1: Brand
Identity 0.15 3 0.45 X W3: Workers
consider
W1:High Starbucks’ work
rotation of as temporary,
personal
and company
lose money
when they are
trained and after
a few months,
they give up.

TOTAL 1.0 4

Own Elaboration

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V. CHAPTER 4: SITUATIONAL ANALYSIS

4. Strengths

 Largest coffee chain in the world. Operates almost 20000 stores in 60 countries.
 Constancy: Standardized products with the same good quality in different
locations and great variety of coffee for the manufacture of different drinks.
 Strong corporate identity: Starbucks experience, consists in incomparable
customer service, excellent attention, high quality music, friendly staff, and warm
atmosphere.
 Highly valued brand in the coffee sector (valued at four thousand million dollars).
 Strong ethical values, commitment to the environment, and community activists.
 Wide range of benefits for employees and a high payment rate

5. Weaknesses

 Limited alternatives to eat.

 Overexposure of brand. Starbucks has a reputation for developing new products
and creativity. However, they remain vulnerable to the possibility that their
innovation may falter over time, and acceptance of it will eventually come to an
end with slowing growth.
 High rotation of employees. As the flexible work system, with a 30-hour day, is
more comfortable for young people, 60% of the baristas are students, so there is
indeed a proportion of our high turnover that is normal and natural.
 Greater focus on the US market.
 Dependency to suppliers. The profitability of Starbucks depends heavily on the
prices of coffee beans, which is a raw material that is beyond Starbucks' control.
Due to hedge funds, weather conditions and many other factors, Starbucks
cannot estimate the price of coffee and therefore the profitability of the company.
 High prices of products compared to competitors (McCafé, Dunkin Donuts, Juan
Valdés, etc) related to a great coffee experience and great customer service.

6. Opportunities

 Greater probability of Co-branding with other food and beverage manufacturers,

in countries of South America, Arabia or Africa, to ensure the availability of
supplies and reduce shipping costs.
 Emerge of International markets, such as China, India and Pacific nations, where
company has a limited number of stores.
 Growth of coffee consumption and changes in social habits. According to one
study, gourmet coffee beverage consumption among 25-39 year olds jumped
from 19% to 41% between 2008 to 2016. This change in coffee consumption
started a shift in workplace coffee options. Millennials aren’t necessarily drinking
more coffee than other generations, but they are spending more money on

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coffee. In other words, they are spending more money on higher quality coffee
experiences.

7. Threats

 Price variability of raw material, meanly due weather conditions and persistent
volatility in the currency markets. In short, market dynamics don’t always “follow
the book.” In fact, the sheer complexity of the global marketplace can make them
extremely counter-intuitive.
 Numerous competitors and new entrants. Saturated markets in developed
economies and increased competition from local coffee shops and specialization
of other coffee chains.
 Similar products at cheaper prices. Local cafes can offer lower prices and more
adapted to their customers.

SWOT MATRIX

Strengths
S1: Largest coffee chain in Weaknesses
Internal Factors the world W1: Limited alternatives to
S2: Standardized products eat
with good quality.
W2:Overexposure of brand
S3: Strong corporate
identity and strong ethical W3: High rotation of
values. personal
S4: Highly valued brand in W4: Dependency of
the coffee sector. suppliers
External Factors S5: Wide range of benefits W5: High prices compared
for employees and a high to competitors
payment rate

Opportunities SO Strategies WO Strategies

O1:Regional integration of -Being a company with -Opportunities for
markets quality and recognition, it expansion break
O2: Improving can be expanded in other geographical barriers.
governmental support for places with greater ease, Expanding their franchises
infrastructure. finding new markets where can make plans for
O3: High economic technology is allied with students to have a
growth of developing quality and positioning. franchise and work in it.
countries (China, India -Market the brand heavily in -Release medium priced
and Pacific nations) the less penetrated areas. products to attract middle
O4: Growing coffee Use the global brand image class customers in larger
culture and coffee to extend presence in numbers and increase
consumption, changes in emerging economies. sales in the Asian
social habits. -Extend the product mix countries
O5: Rising mobile while maintaining the focus
purchases on product quality.
O6: Technology transfers -The environment,

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to coffee farmers infrastructure and conditions

O7: Business offered by the establishment
sustainability trend and allows maximum use of the
Growing popular support opportunity to have
for responsible sourcing customers who hold
and environmentally business meetings,
friendly products. consuming the products of
the store.
-The company is supplied
with different types of
coffee, the best types of
coffee can be included to
facilitate their access to the
local and global market.
-Partner the other well-
known brands in the Asian
markets to penetrate the
market faster. Mutual
benefit for both from each
other’s capabilities

Threats ST Strategies WT Strategies

T1: Variability of -With strengths such as -Release a range of low
employment regulation innovation, quality, image, cost products to minimize
around the world. prestige, etc. Just as taking the cost challenge from the
T2: Bureaucratic red tape care of the image is a threat competing brands.
in developing countries. as a strength, Starbucks will -Marketing the quality of its
T3: Rising labor cost in seek to continue being the premium products to
suppliers’ countries. consumer's taste by looking minimize the threat arising
T4: Unstable currency for new products to suit the from imitation by the other
exchange rates and taxes client. brands that sell it cheaper
in different countries for -Focus on marketing and -With its vision, Starbucks
domestic market. advertising to attract and seek to continue in the
T5: Rising availability of retain more and more market, although faces
specialty coffee machines customers and reduce threats and weaknesses,
for home use competitive pressure. the Starbucks company will
T6: Global warming and -Marketing to the millennial continue to innovate its
other environmental generation to capitalize on products, points of sale,
issues in a global level changing demographic image, technology, ect.
trends.
-Advertising the quality of
products to differentiate
from competing brands and
reduce the challenge due to
imitation.
-Marketing the ethical image
of the business to reduce
competitive pressure

Own Elaboration

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REFERENCES

1. Profile of Starbuck company (2018), available in:

https://www.starbucks.com/about-us/company-information/starbucks-
company-profile
2. Universidadad autónoma de Nuevo Leon (2017) Starbucks Coffe Company,
available in: https://issuu.com/maycen21/docs/pia_starbucks
3. Forbes (2016) Article: How Creating A Culture Around Coffee Can Boost
Millennial Engagement At Work, available in:
https://www.forbes.com/sites/wesgay/2016/09/16/how-creating-a-culture-
around-coffee-can-boost-millennial-engagement-at-work/#6deaac16936a
4. National Coffee Association USA (2016) Article: Why Are Coffee Prices So
Volatile?, available in: https://nationalcoffeeblog.org/2016/02/23/why-are-
coffee-prices-so-volatile/
5. Randstad (2015) [entrevista] josé luis portela, gerente general de starbucks,
conversa sobre desafíos y rr.hh.), available in:
https://www.randstad.cl/tendencias360/archivo/entrevista-jose-luis-portela-
gerente-general-de-starbucks-conversa-sobre-desafios-y-rrhh_166/
6. Koehn, N. F. (2002). Howard Schultz and Starbucks Coffee Company.
Harvard Business School.
7. Starbucks corporation (2018) Our misión, available in:
https://www.starbucks.com/about-us/company-information/mission-statement

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