Today’s business environment that organizations operate in is constantly changing. Therefore, organizations have to frequently analyze this environment in order to foresee any challenges they may encounter and plan on how they may minimize or overcome them so as to achieve the desired results. With almost 9000 worldwide, Starbucks Corporation has to analyze both its internal and external environment. An examination of this company’s internal and external environment using SWOT analysis will provide a good basis for comprehending the foundation of its present success, understanding its turnaround and what the future might hold it. Examples of internal and external factors that could influence the company includes; politics, environment, competition, financers, suppliers, technology and customers (Williamson, Cooke, & Jenkins, 2003).
Starbucks’ internal environment is influenced by its strengths and weaknesses. In regards to strengths, this company is very profitable. For example, Starbucks not only generated revenue of over $5000 million in 2004 but also made earnings in excess of $600 million (). Moreover, the company has a good reputation because of the fine coffee products and services it offers. It is not surprising that the company was among the Fortune Top 100 Companies to work for in 2005. True to its mission statements “Starbucks is committed to a role of environmental and leadership in all aspects of our business,” the company rides on strong ethical values.
Starbucks’ weaknesses emanates from its creativity and product development. While the company is renowned for creativity and new product development, their innovations remain vulnerable to the possibility of faltering over time. Another major undoing of Starbucks stems from its strong presence in the U.S. experts argue that the company needs to venture into other countries so as to spread business risk.
Starbucks’ external environment is influenced by the opportunities and threats that exist in the industry. As aforementioned, the company needs to seek for a portfolio of countries to market its products. As such, Starbucks has the opportunity to diversify and expand its global operations. In this case, the company can expand to emerging coffee markets such as the Pacific Rim nations and India. Another opportunity that the company can pursue is co-branding with other food and drink manufacturers.
In regards to threats, nobody knows whether the coffee markets will expand and stay in favor of consumers, or whether other types of beverages and leisure activities may replace coffee in future. The company is also threatened because it is exposed to upsurge in the cost of coffee and other dairy products. The company is also threatened by competitors. It is important to note that Starbucks’ main competitive threat emanates from other sectors such as hotels and restaurants rather than from the specialty coffee industry.