SWOT Analysis of Starbucks
If you have an interest in the Starbucks SWOT analysis, you are in the right place. Based in the United States of America, Starbucks runs one of the biggest coffeehouses the world over. And despite the product it sells, the company keeps raking in billions of dollars annually. Starbucks is a brand that’s not afraid of penetrating any market. And currently, the company has over 30,000 retail locations across the globe.
The company started with serving cold and hot coffee to customers but now has other complementary products. These include items such as coffee machines, well-packaged coffee beans, and mugs, including other related gift items. Let’s look at Starbucks SWOT analysis.
The Strengths of Starbucks
When it comes to profit, Starbucks has been making impressive profits. So it is evident that the coffeehouse is doing something remarkable and different from its competitors. Starbucks has also carved out a niche for itself. It’s as one of the highly sought after coffeehouses across the globe.
So what are the strengths Starbuck possesses that bring them loads of profit year after year?
- Ability to Identify Opportunities and Reinvest
Any company that’s growth-centered will always think of reinvesting. The focus will be to use part of the profits generated from the business to expand. Starbucks falls into this category. The company makes huge profits and puts it back into the business to grow bigger. The company does have a clear growth strategy, which shows in the number of branches they have built thus far. Plus, the company’s branches keep increasing now and then, and across the globe.
- High-Quality Product and Standard
Starbucks has competitors. But the company has managed to increase its customer base, branches, and profit because of the quality of the products it offers. The company also charges its customers a bit higher than other competitors.
Its coffee brands and other complementary products are consistent across all its branches concerning quality. So even if its products cost a bit higher, customers are always willing to pay a premium to get them.
- Employee Rating
Employees are usually the strength and backbone of any company. Their commitment will affect any company massively. Well, Starbucks hasn’t been poor concerning how they treat their employees. In addition to its conducive work environment, Starbucks handles its thousands of employees well.
- Value of the Company
Compared to its competitors, Starbucks does have a higher capital base. The company has a net worth of $30 billion, which is quite massive, considering the industry they are operating in.
- Volume and Size
The size and volume of the product are also strengths that Starbucks possesses. Because of its size and capacity, Starbucks can make their coffee brands more affordable to the middle class. They can also provide for a range of consumers and still make an enormous profit. Unfortunately, their competitors may not be able to match them in this regard.
Weaknesses of Starbucks
Starbucks is a company that others may wish to be like. When you consider their financial capacity and growth rate, all you will see is a company positioned for nothing but the top. However, like every other successful company out there, Starbucks has its share of weaknesses. Let’s take a closer look at them.
- No Unique Products
Starbuck doesn’t have a product they can call their own. They offer products that other coffee shops also provide. Among their range of products are pumpkin spice lattes, cookies (big chocolate chips), among others. Most of the coffeehouses around town whose resources are nowhere near Starbucks sell these items. The only significant reason most people choose to buy from Starbucks is because of the name and possibility that one is splashing the cash on a quality product.
- Not Diversified Well Enough
Starbucks cannot meet the needs of consumers looking to drink and bite at the same time. And as a consequence, consumers would instead visit Burger King or McDonald’s, which are companies that can provide both services. Consumers who have tight schedules might be looking to drink and bite to save time, making Starbucks’ competitors a more favorable destination.
Opportunities of Starbucks
- One great opportunity Starbucks has is in the area of building brand reputation. They have diverse ways they can become more and more socially responsible, and also tie their business strategies to socially responsible actions. These steps can help to address most of the threats the company is facing and help enhance brand reputation.
- Starbucks can take full control over things that affects their business massively, such as raw material pricing. Supply disruptions are one significant factor affecting its business, which the company can address by extending its supplier network. This will also offer the company better options, particularly on things like raw materials such as coffee beans.
- Starbucks has a lucrative opportunity to increase the number of branches it operates across the globe, including its profit. The company can penetrate markets where consumers with tighter schedules are more interested in having their coffee and breakfast together.
Threats of Starbucks
- Some factors still threaten Starbucks’ profitability. These include the cost of coffee beans and dairy products. These two items can have a massive impact on the company’s profitability as they regularly fluctuate.
- The company also faces high competition, not only from international but local coffeehouses, including specialty stores. Some consumers prefer to patronize these local stores and are not moved by big brands or their names.
- The company’s profitability can also face huge threats when there’s an economic downturn. Consumers will no longer have the financial power to purchase coffee. And even if some of them manage to buy, they might not acquire the same quantity they use to buy when there was no economic downturn. Again, some of the consumers may also prefer buying from local stores, given their price point.
This SWOT analysis for Starbucks is what is obtainable out there. Looking at the report, you will find that the company faces numerous threats, but there are solutions to the problems or threats it is experiencing. So that’s it about Starbucks’ financial report.