The SWOT analysis of Starbucks reveals the many strengths housed by the world’s biggest coffeehouse chain. Most people attribute Starbucks’ success to its delectable coffee beverages and other menu items. But the fact is, Starbucks has an incredibly unique business model that sets it apart from competitors.
What is SWOT analysis?
SWOT analysis is a strategic planning technique that identifies the strength, weaknesses, opportunities, and threats of an organization. Identifying these factors allow companies to gain a competitive edge in the marketplace. Sometimes, this process is also referred to an internal-external analysis.
Importance of SWOT Analysis of Starbucks
Now, you’re probably wondering why a huge brand like Starbucks would need to address its weaknesses and threats. Well here’s why: the market is likely to fluctuate and witness many changes as the time goes by.
In the face of these challenges, Starbucks needs to keep reinventing itself. This can also be done by coming up with innovate solutions to overcome unprecedented threats.
Starbucks SWOT Analysis: Explanation
By using SWOT analysis, companies can accurately identify its internal and external factors that’ll contribute to the long-term success of the company. Below we’ll be showing you a SWOT analysis example of Starbucks.
Starbucks has some incredibly grounded core values that differentiate it from its competitors. Its business model offers the perfect balance between social conscience and profitability. Some major strengths in SWOT analysis of Starbucks include:
- Innovation: Here, we must understand that innovation isn’t always about the most advanced technology. Sometimes, it’s about coming up with novel ideas to enhance customer experience.
- Global brand recognition: Starbucks definitely has an edge over its competitors because of its global brand recognition. With coffee shops in over 60 countries, Starbucks has garnered an extensive fan-base across the whole world.
- Product mix: Starbucks offers an incredibly diverse product mix and continues to launch new product lines to attract customer attention. At present, Starbucks offers a number of teas, coffees, smoothies, pastries etc.
Over the years, everything Starbucks has touched turned to gold, with each product launch doing better than the previous one. However, that doesn’t mean that the coffee giant does not have any weaknesses. The most notable ones include:
- High price points: Starbucks offers high-quality products at a premium price. Here’s where things get tricky because not everybody can pay $4 for a single cup of coffee. Because of expensive prices, customers have been forced to switch to cheaper alternatives to satisfy their caffeine addiction (often McDonald’s or Dunkin’ Donuts).
- Heavily dependent on coffee beans: Since Starbucks is primarily known for its coffee, it is highly dependent on the price and accessibility of coffee beans. To protect itself from price fluctuations, Starbucks must further diversify its product range to avoid such problems.
- Imitable products: Starbucks’ coffee products can easily be replicated by other café businesses and coffee shops. To overcome this, Starbucks must become more innovative.
Unlike strengths and weaknesses, this category comprises of external factors that can help a business grow. Starbucks has some major opportunities that could lead to global growth, this includes:
- Expansion in the Middle East: Starbucks currently has minimal presence in the Middle East, opening up new opportunities for expansion. The company can also expand into companies such as India and China where its coffee will likely be well received.
- Partnership with other firms: Partnership and alliances with other leading companies is sure to offer Starbucks a competitive advantage.
- New distribution methods: Starbucks launched a new delivery system called “Mobile Pour”. It’s possible that the company will experience success with new distribution systems that’ll also increase efficiency.
Despite being a successful business, Starbucks must pay attention to the threats and challenges it is likely to face. Here are some major threats that the famous coffee house chain must pay attention to:
- Possible shift from coffee culture: A customer shift towards healthier products can distort or impact the whole ‘coffee culture’. This could pose a threat to Starbucks if the company does not introduce healthier products that would cater to such customers.
- Fluctuation in the economy: An economic crisis can lead to customers shifting towards cheaper brands. This could cause Starbucks to incur a significant loss in revenue.
- Brand imitation: Competitors can adopt similar brand strategies following the same ambiance that Starbucks offers in its coffee shops. More trouble would arise if these companies were to release cheaper products.
The SWOT Analysis of Starbucks reveals that the coffee-chain can tackle new challenges and out beat its competitors with ease. However, this does not undermine the fact that the company should also focus on overcoming its treats and weaknesses.