Premium Essay

Economic Factors Affecting Starbucks

In: Business and Management

Submitted By Denzeltan
Words 1169
Pages 5
Principle of Management
Assignment 2
Introduction, brief description and core operation.
Starbucks started its humble beginning at a small little shop front down by Pike place market in Seattle. It had pride itself for roasting high quality whole-bean coffee, and producing one of the best coffees in the neighborhood. Today, more than forty years later, Starbucks had become one of the major coffee chains in the world with more than 18,000 storewide in 62 countries.
Starbucks main core operations derive from the sale of their beverages, retail and franchise operation; it also aims to provide the Starbuck’s experience. As stated on Starbuck’s mission statement, “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”. This statement shows that Starbucks is not just creating a business based on its product and services, it also aim to build a closer connection with their customers through a “people to people” approach. By creating the Starbucks experience with the customers, it enables them to provide an even better service to attract and retain its customer’s loyalty.
Economic/Global impact
Coffee beans and coffee beverage is made up the main core business that Starbucks operates on, with coffee bean as the second highest valuable commodity in market, it means that any economic factors might affect the costing of the coffee beans, which might result in price hike for their beverages.
External

Opportunities and Threats
Threats
Currency Fluctuation.
The U.S., being one of the world’s biggest economies was badly hit during the 2008 financial crisis; it had caused great shift and movement in other countries’ economy as well. Stock markets became bearish, raise in unemployment rates and the increase in the inflation rate had also further led to…...

Similar Documents

Premium Essay

Starbcuks

...A company must get to know about the targeted market environment before it decided to operate internationally. There are the macro-environment that affects Starbucks marketing decision, economic factors, socio-cultural factors, demographic factors, political factors, natural factors and also technology factors. Economics Factor Being a producer of first-rate and specialty coffees, Starbucks requires a market that able to withstand the demand for the coffee. Starbucks marketing decisions for an economy with high disposable income that leads to high quality of life country like US. It is an example of a developed country that has the high purchasing power and spending patterns which most of the citizen in US are willing to spend more in return for a quality product such as Starbucks coffee. It shown that economic factors affect the business function and largely alarm consumer purchasing power. This requires an important market research about economic and financial stability of a city before they move it in. http://www.ukessays.com/essays/marketing/internal-and-external-factors-affecting-starbucks-marketing-essay.php There are two economics factors that help a company to determine if the country would be a good market, which are the country’s industrial structure and income distribution. Country’s industrial structure is referring to industrial economy, raw material exporting economy or subsistence economy of a country. These show the employment, product and service needs......

Words: 916 - Pages: 4

Premium Essay

Starbucks: Environmental Factors

...Starbucks: Environmental Factors Dusti Snaith MKT/421 November 21, 2011 Creig Foster Starbucks: Environmental Factors Starbucks opened its first store in 1971 located in Seattle, Washington (Starbucks Corporation, 2011). The company quickly grew to the public company it is today. As of July 2011, Starbucks has more than 17,000 stores. With this growth has come environmental, social and ethical responsibility. Starbucks strives to continually do business in a socially, environmentally friendly, and ethically responsible way. Global & Domestic Environmental & Economic Factors Starbucks is affected by many high-level domestic and global environmental and economic factors. Making marketing decisions with these factors in mind help Starbucks succeed. Many people are suffering from job loss which has led to the loss of homes. Marketing in times of economic crisis needs to be sensitive to these situations. Starbucks is historically high priced, but since the economic crisis, they have made some pricing changes that help keep their customers. Starbucks is an international organization. Stock prices are falling and investors and lenders are increasingly conservative. As a publically traded company, Starbucks is required by law to disclose financial numbers. Investors are disappointed in falling sales and new investors are reluctant to buy stock. Starbucks is feeling the negative impacts of a down economy. Marketing in a down economy requires flexibility...

Words: 765 - Pages: 4

Premium Essay

Pestle of Starbucks Corp

...5. 5. 2016 PESTLE Analysis of Starbucks  What are you looking for? PEST ANALYSIS  MARKETING SWOT ANALYSIS     STEEP ANALYSIS BUSINESS  PEST Analysis, PEST Examples GET MORE ANALYSIS Subscribe to our mailing list and get our articles and updates to your email inbox. Enter your name here PESTLE Analysis of Starbucks  Jim Makos    1 Year Ago FACEBOOK    0 Comments   PREV ARTICLE   NEXT ARTICLE  PESTLE is a strategic analysis tool. It is often seen as the most effective analytical tools to analyze the Enter your email here impacts of external issues. It is an extended version of PEST analysis. Other forms of this tool are PESTEL, SIGN UP NOW STEEP, and STEEPLE. The acronym PESTLE stands for 6 factors which affect the business. The factors are: We respect your privacy Political Economic http://pestleanalysis.com/pestle­analysis­of­starbucks/ 1/9 5. 5. 2016 PESTLE Analysis of Starbucks Social Popular Recent Technological Legal Environmental In this article, I am discussing the PESTLE analysis of SWOT Analysis Examples for Every Business Situation December 30, 2013 Starbucks. The constant global economic recession has dented the macroeconomic environment which Starbucks operates in. The recession has hurt the consumer’s purchasing power. Recent market research re䈠౲ects that consumers have not cut down on their......

Words: 1434 - Pages: 6

Premium Essay

Star Bucks Four Function of Management

...Starbucks is the premier roaster and retailer of specialty coffee in the world.Starbucks was formed in 1985 and its common Stocks trades on NASDAQ Global Select market. Starbucks purchases and roast high quality whole bean coffees and sells them, along with fresh rich brewed coffees, Italian style espresso beverages, a variety of complementary food items, teas, and beverage related accessories and equipment. Starbucks also sells coffee and tea products and licenses its trademark through other channels such as licensed retail stores and through certain of its licenses and equity investees, they produces and sells a variety to drink beverages. The company objective is to maintain Starbucks as one of the most recognized and respected brands in the world. Its mission statement is: “ To inspire and nature the human spirit-one person, one cup, and one neighborhood at a time.” Currently Starbucks has spread its empire throughout the world with an estimated of 15000 shops worldwide and will continue to seek strengthening and establishing its brand to all parts of the world. With this scale of business, there will be many environmental factors that’s can affect Starbucks. Economic (The local, national and world economy impact): Economic growth- If growth is low, this will affect the sales of Starbucks as consumer disposable income will reduce to spend on luxury product like premium coffee. Exchange rate- Starbucks are affected by exchange rate as the value of currency in that......

Words: 1338 - Pages: 6

Premium Essay

Audit Project

...Risk factors from Item 1a of Form 10K Item 1A.   | Risk Factors |   Starbucks is including this Cautionary Statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”) for forward-looking statements. This 10-K includes forward-looking statements within the meaning of the Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this Report. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. The Company’s actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed below.   If any of the risks and uncertainties described in the cautionary factors described below actually occurs, Starbucks......

Words: 3907 - Pages: 16

Premium Essay

Case 1-1 Starbucks---Going Global Fast

...CASE 1-1 Starbucks---Going Global Fast 1. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets. Ans. I think the controllable factors that Starbucks has encountered entering the global market are similar to those in their domestic market. These factors include product, price, place and promotion. The Starbuck's name and image connect with millions of consumers around the globe. Internally, Starbuck's is able to make adjustments to fit a county's cultural tastes and expectations regarding their product, it's price, where it is available and how it is marketed. Starbuck's is also able to take part in market research to be sure their product has the right fit for each of its international locations. According to the company's website, they maintain a high level of success internationally by choosing international partners who share their values and commitment to bringing the Starbuck's experience to customers worldwide. The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, and corporate objectives. Some elements that are almost impossible to control by Starbucks management include: • Sovereign risks - governments of foreign countries may change their fiscal and monetary policies affecting the operations of Starbucks. • The Prices of coffee in world commodity markets - prices may be affected for......

Words: 295 - Pages: 2

Premium Essay

Itm Assigmnet

...Title Starbucks Singapore 1. Introduction Starbucks is from domestic to an international coffee company that serves a wide variety of foods, hot and cold beverage. Every month, they will create new drinks. They are the largest coffeehouse company in the world. Starbucks had started in 1971.They were a roaster and retailer of those whole bean and ground coffee and other things. They done their work at one single store is at Seattle’s Pike Place Market. Now the modern days, they are privileged to connect with millions of customers everyday without fail and now they had even more retails stores in over 60 countries. 2. Discussion 2.1 General Environment Analysis (Choose 4 out of 6) 2.1.1 Economic Theory explanation from textbook: local companies are affected by … … For instance, in year xxxx, Starbucks faced a challenge during the Economic Crisis (-). What did they do to overcome this? What happened? (-). 2.1.2 Socio-culture Theory from textbook: … Starbucks has adapted to the international market by … (-): give 2 different countries 2.1.3 Technological Theory from textbook: … Phone apps? / Online membership? 2.1.4 Environment Theory from textbook: … Look at starbucks corporate social responsibility (http://www.starbucks.com/responsibility/environment/climate-change) For each of the above four, you are to include a theoretical description followed by the real-life application to your company. Adopt textbook sources as references for the THEORIES......

Words: 627 - Pages: 3

Premium Essay

Internal and External Factors Affecting Starbucks

...Internal and external factors affecting Starbucks Founded in 1985, Starbucks is one of the largest coffeehouse companies in the world with over 16,000 stores in 50 countries. This report evaluates major internal and external factors affecting Starbucks using various analytical techniques. Based on the Starbucks brand in UK, it identifies suitable marketing strategies for Starbucks to expand its business in the UK market within the next two years. In line with the chosen marketing strategies, recommendations for the marketing mix are discussed. Founded in 1985, Starbucks is one of the largest coffeehouse companies in the world, with over 16,000 stores in 50 countries (Starbucks Annual Report, 2009, p. 1). Starbucks sells high-quality whole coffee beans along with fresh, rich-brewed coffees, cold blended beverages, a variety of complimentary foods, coffee related accessories and a selection of premium teas primarily through Company-operated retail stores (Starbucks Annual Report, 2009, p. 1). In May 1998, Starbucks successfully entered the European market through its acquisition of 65 Seattle Coffee Company stores in the UK (Starbucks, 2009). In 1998, since opening its first UK store in London, Starbucks has been growing rapidly at a steady rate with over 660 stores opened by the end of 2009 (Starbucks Annual Report, 2009, p. 3). This report aims to evaluate major internal and external factors affecting Starbucks using different environmental analysis methods such as SWOT......

Words: 5287 - Pages: 22

Premium Essay

Starbucks: Internal Assesssment of Strategic Variables

...Starbucks: Internal assesssment of strategic variables CONTEXT: Starbucks was started in 1971 and is famous for its quality fresh-roasted coffee beans. An internal variable that Strabucks have is its resource and capabilty. It is a financially sound company which have a rapid pace of growth both domestically and internationally. The majority of their stores are located on the international market in over 62 countries contributing significantly to them being the market leader in the coffee industry. To be able to operate on such a global scale signifies strength of the company’s internal resources and capabilities. During the recession in 2008, their stock price went down significantly, but the profits were hardly affected. Starbucks also focus its resources on giving back to society as well; helping to improve social and economical conditions for small coffee farmers, provide financial help to community literacy in developing countries in which it operates and a major contributor of the Worldwide relief Development Organization. Its present consolidated revenues for quarter one of 2014 were $4.2 billion which is and increase of 12% over quarter one of 2013; this was due to 5% growth in global store sales. With the resources that Starbucks have had enabled them to expand globally on a rapid pace not to mention its manpower team (employees) whom is of utmost value to the organization making it what it is today. From initiation, the starbucks business culture have......

Words: 1493 - Pages: 6

Premium Essay

Starbucks

...------------------------------------------------- STARBUCKS MARKETING REPORT OF STARBUCKS Module code: D001 Module tutor: Moitaba Institution: Nottingham Trent International College Group: Group B T number: T0030643 Word count: 1679 words (-10/+10) 1: INTRODUCTION Starbucks Corporation, an American organization established in 1971 in Seattle, WA, is a head roaster, advertiser and retailer espresso (coffee) around world. Starbucks has around 182,000 representatives across over 19,767 organization worked and authorized stores in 62 nations. Their item blend incorporates roasted and carefully assembled high quality/premium valued espressos (coffee), an assortment of new nourishment things and different beverages. They likewise offer a variety of espresso (coffee) and tea items and permit their trademarks through different channels, for example, authorized stores, basic supply and national foodservice accounts. Starbucks additionally showcases its items blend with other brand names within its portfolio of organizations, which incorporate Teavana, Tazo, Seattle's Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks had all out income of $14.89 billion as of September 29th, 2013.2. (Starbucks annual report, 2013). This report will analyse on this business organisation (Starbucks) stating its PESTELE, SWOT analysis, customer analysis and proving recommendation according to the marketing analysis provided in this report. ...

Words: 1787 - Pages: 8

Premium Essay

Starbucks Business Environment

...Foresight Exercise - W1 Assignment Company nominated: Starbucks Corporation (Starbucks) Outline what the Probable scenario might be in 3-5 years time. Then consider if you could predict the future by creating it; what would be the Preferred scenario? Outline what the gap between the two scenarios are and outline some strategies that could be used to bring the Probable outlook closer to your Preferred outlook, thereby gaining competitive advantage. The business environment is the internal and external conditions with legal, social, economical, political or technological character that affects the operation of organizations. Current Scenario: Starbucks Internal Environment: (based on 2008 to 2010 Starbucks’ information) * People: Highly trained Baristas. Employees are called “partners” and has power of making decisions at the stores * In 2009, the corporation had a significant restructure, review of stores portfolio (which included a closing of about 182 stores in 2010 and 659 in 2009), headcount reduction of non-store support, product waste reduction and stores labor efficiency. * Product & services: Launching and expansion strategy in 2009 of the “Seattle’s Best Coffee” coffee places and in 2010 the ready brew Starbucks VIA (instant coffee sold at Starbucks stores and grocery markets). There is a trends to keep launching on a quarterly basis new products, some of them different from coffee, such as Food (sandwiches, muffins, etc), and Tazos tea flavors ...

Words: 1089 - Pages: 5

Premium Essay

Cofee and Economies of Scale

...will render the entire market failed. World coffee market fails in a number of factors for it to pass as a perfect competition market. Firms deliberate on the prices indicating that paying the farmers higher price will only increase glut. According to the article, Starbuck is large player in this market and if its customers see the corporation as a Third World profiteer there will be consequences on the entire chain. Accordingly, the factors not present include the inability of firms to be price takers and instead affecting the price of the commodity (Baumol and Blinder 53). Another absent is free entry and exit as the exit of companies like Starbuck corp. will hurt the entire chain. The argument by Starbuck that increasing the pay to farmers will only increase the demand of the commodity thereby increasing the glut is not true. In free markets, firms allow the prices to be from the market and firms will have to accept the prices. The only role that firms ought to play is trying to maximize profits using market prices (Machovec 21). Increasing the pay will enable farmers to have quality life and encouragement of growing the commodity better. However, persistence of the current prices increases the possibility of farmers reducing the coffee that they grow not growing coffee at all. This will cause crises in the market due to looming shortages. The meaning of this is that companies like Starbuck will have to pay farmers better if the market is to survive. Initially,......

Words: 931 - Pages: 4

Premium Essay

Pestle Analysis Starbucks

...is a method of examining the many different external factors affecting an organisation - the outside influences on success or failure The PESTLE analysis will be used to identify and understand the important factors Starbucks must consider in all areas of the business. Political:
* Taxation policy - high taxation imposed on farmers in those countries producing the coffee bean will usually mean Starbucks pay a higher price for the coffee they purchase. Any fluctuations in taxation levels in the industry are almost certainly ultimately passed on to the consumer. Recently (June 13, 2003) Tanzania's Minister of Finance harmonized and rationalized local government taxation to boost rural productivity of the coffee bean. Tax was lowered for these 'small holder' farmers and this saving will have been passed on to purchasers of coffee like Starbucks.
* Deregulation - A decade ago, the USA pulled out of the ICA (international Coffee Agreement) that set export quotas for producing nations and kept the price of coffee fairly stable. Coffee quotas and price controls ended. Since the deregulation farmers have suffered and their earnings have dropped. Many have struggled to make a living so have given up.
* International trade regulations/tariffs - Trade issues will affect Starbucks predominantly when exporting and importing goods. When another country's government imposes a tariff it not only results in an efficiency loss for Starbucks but large income transfers can become inconsistent......

Words: 2320 - Pages: 10

Premium Essay

Starbucks Going Global Fast Case Solution

...Summary Starbucks is one of the largest chains of coffee shops in the world, started their business in the early 80s as a tiny chain of Seattle coffee shops, grew rapidly in the 90s and now owns 5,689 coffee shops in 28 countries. This chain of coffee shops is very well managed by a well seasoned management team popularly known as H2O, because of Howard Schultz (Chairman and Chief Global Strategist), Howard Behar ( Head of North American Operations), and Orion Smith (CEO). Although, the company has expanded enormously, since it went public in 1991 but has also encountered a number of problems. The problem it faced had it mounted in home and abroad. The company had its success through the baby boomers in the 90s, but now the Generation X is not liking the environment of the shop and the young generation feel out of  place in the coffee shop, above all the price of coffee seems to be little expensive to them. The Starbucks did not have much competition like Mc Donald’s and the likes in the initial days but now they have competitors such as Tully’s coffee shop. They also had problems of employees’discontentment. The expensive and aggressive marketing strategy has given Starbucks market dominancy. They earn $181.2 million in the year 2000, sales were still growing but it started growing in a decreasing rate, because their aggressive strategy and attitude towards competitors not only they grew rivalry with local business people but they lost customer. It was difficult for...

Words: 1330 - Pages: 6

Free Essay

Strategy

...Chairman, President and Chief Executive Officer o Cliff Burrows, President, Americas o John Culver, President, Starbucks Coffee China and Asia Pacific o Jeff Hansberry, President, Starbucks Channel Development and Seattle’s Best Coffee o Arthur Rubinfeld, President, Global Development o Michell Gass, President, Starbucks Europe, Middle East and Africa o Annie Young-Scrivner, Global Chief Marketing officer and President, Tazo o Troy Alstead, Chief Financial Officer, Chief Administrative Officer o Paula Boggs, Executive Vice President, general counsel and secretary o Peter Gibbons, Executive Vice President, Global Supply Chain Operations o Stephen Gillett, Chief Information Officer, Executive Vice President, Digital Ventures o Kalen Holmes, Executive Vice President, Human Resources o Vivek Varma, Executive Vice President, Public Affairs o Mary Egan, Senior Vice President, Global Strategy Company Direction The company’s mission is “to inspire and nurture the human spirit, one person, one cup and one neighborhood at a time” (Starbucks.com, 2012). In order to stay true to their statement, Starbucks has always pursued the perfect cup of coffee by buying the best beans and roasting them perfectly. Starbucks’ management team has also paid enormous attention to customer satisfaction through employees’ training and involvement in daily operations. Starbucks has values and principles that guide employees so as to accomplish its mission. The most basic principles......

Words: 1051 - Pages: 5