Starbucks Internal Environment Essay
Starbucks is a worldwide brand with numerous advantages. Global Brand Recognition. Starbucks has its own goal. It has established itself as a meeting spot for consumers between their homes and workplaces. There’s an ambiance where customers may unwind, meet friends, and do business with one another while surfing the Internet. Nowadays, the majority of people recognize the Starbucks logo immediately after seeing a green mermaid and want to purchase the company’s products and enjoy the ambiance inside there.
Starbucks pays close attention to the quality of its goods. Their coffee is well-known for its delicious taste and fragrance.
Prices start at $12
Prices start at $11
Prices start at $12
It’s been claimed that the primary values of an organization are its culture. Starbucks has done very well with it. Their target clients believe that they can identify with the company’s culture. There are two distinct cultures visible at Starbucks.
Attention to detail
The founder and CEO of Starbucks, Howard Schultz, is noted for his attention to little details that some corporate executives consider unimportant. The reason why Starbucks has become so well-known and popular is that it not only sells excellent coffee but also provides its customers with a feeling of warmth and welcome. The sensation results from the addition of numerous small elements.
The workplaces are meant to provide both visual appeal and practical benefit. Employees are concerned about the store’s ambiance. It includes carefully chosen background music, pleasant colors, comfy furniture, and enough light, among other things.
Starbucks sells high-quality coffee beans, premium teas, coffee accessories, and equipment, as well as buildings and vehicles. There are currently 215 Starbucks stores in Malaysia. Starbucks also has 24 drive-thru concept stores throughout the country. The drive-thru concept shops are found in Pahang, Klang Valley, Penang, Johor, and Perak regions. In addition to that, in October 2015, it opened a new concept store at Gardens Mall. It is the first premium Starbucks Reserve Store in Malaysia. In 2017, Starbucks aims to establish another 25 outlets in Malaysia.
We offer a wide range of coffees, many of which are rare and hard to find in the US. We have a large variety of beans from all around the world. The company has been working in the coffee industry since 2000 and produces high-quality whole bean coffees as well as different varietals of coffee beverages such as Italian-style espresso, rich-brewed, and cold blended. In addition to that, it sells coffee-related goods and equipment, as well as other types of premium teas.
Starbucks is also recognized for its excellent treatment of employees. It has been given the Silver Award Winner in Employer of Choice. In 2015, June Beh, the director of Starbucks Malaysia and Brunei, was named the Gold Award Winner in Human Resources Leadership from HR Asia. Starbucks has also received a Malaysia Best Employer Brand Award from the Employer Branding Institute in 2016.
Starbucks is also seen as a reputable business since it actively participates in charity and volunteer activities. Starbucks, for example, will commemorate World Service Month in April by organizing community service projects across the world.
Company culture and incentive system
Starbucks has established professional certification programs and leadership development programs to improve the skills and knowledge of its employees. In this highly competitive business market, it will evaluate the operation plan to ensure that resources are used efficiently while also enhancing operational efficiency. It is also able Furthermore, it is capable of training qualified partners (employees) through its training initiatives and excellent coaching.
Starbucks is also skilled in the development of its items. It has introduced a few festival-themed goods such as Exclusive Assorted Zesty Pineapple Delights for Hari Raya, Exclusive Coffee Wafer Rolls for Chinese New Year, and a variety of mooncake flavors during the Mid-Autumn Festival. For beverage, it has launched seasonal beverages such as Chocolate Hazelnut Macchiato, Burnt Caramel Macchiato, and others.
Distribution, Sales, and Marketing
Starbucks is able to sell, distribute, and market its products. The information provided by the partners (employees) to potential consumers or clients must be accurate and genuine. Distribute high-quality items and services to clients, and avoid denigrating competitors. In addition, various types of marketing and promotional tactics have been employed throughout 2016.
For example, using a digital platform to interact with customers via various promotions, I modified Starbucks goods according to consumers’ preferences. Local artists were invited to help doodle or draw on Starbucks items for customers and utilize digital platforms to engage with clients.
The origin of Starbucks is traced back to 1971 when the first Starbucks coffee shop opened in Seattle’s Pike Place Market (Patterson et al. 2010). In 1992, Starbucks became a publicly listed corporation. By this time, the company had 140 locations open. By 2008, Starbucks was opening 8 new shops each day. Currently, Starbucks is the world’s leading coffee chain operator.
Starbucks, for example, has managed to develop a relaxing atmosphere that allows consumers to unwind away from home. Marketing communication is used by businesses to differentiate, position, and tangibly represent the service. In this situation, the brand is extremely important in conveying the company’s image. Branding symbols should be readily recognized. The company’s image should also have desirable characteristics.
In the case of Starbucks, the company’s logo still features a mar maid image that was used when it was founded in 1971. The management, nonetheless, recently altered the logo by eliminating the words “Starbucks Coffee.” This is a positioning method intended to allow Starbucks to offer other items rather than coffee, such as music, alcohol, and ice cream.
Starbucks External Analysis.Political/ Legal environment
Starbucks imports coffee beans from all over the world, and each has its own set of import taxes and customs restrictions. Furthermore, any political upheaval in the nations where Starbucks obtains its coffee beans would severely disrupt the company’s operations.
Starbucks is required to obtain all essential permits and forms before it can operate in a foreign nation (Buckstein, 2010). Local and federal legislation and rules will have an impact on Starbucks’ business operations.
Starbucks’ operations were significantly impacted by the global financial crisis of 2008. The recession brought forth an increase in corporate operational expenditures (BLS, 2011).
The coffee market is demand-driven, and when the economy is poor, customers see coffee as a luxury, which has a negative impact on sales (World Bank, 2010). Currency conversions and taxation have an influence over Starbucks’s operations through currency exchange.
Consumers throughout the world are becoming more concerned about ethical practices, which has prompted many businesses to modify their operating methods in order to meet them (Northey, 2007). Starbucks is no exception.
With a view to resolving issues brought up by clients regarding Starbucks’ social acceptability, the firm implemented the C.A.F.E system (ICO, 2011). In order to satisfy the increasing demands of an educated and health-conscious public, the business has had to modify its product offerings as well.
Consumers are more aware than ever of the importance of controlling their sugar intake, and Starbucks has had to make changes in order to meet the new market demands (Wall Street Journal, 2009).
Technological advancements have an impact on product innovation, product services, consumer store experience, and how organizations interact with other business partners. A firm may now use emails, text messages, and social networking sites to directly market its products to its intended audience (Moreno, 2008).
Starbucks has successfully altered its product mix to appeal to new market segments through the use of technology. A fantastic case is Starbucks’ VIA-ready brew (Starbucks, 2011), which allows customers to order and pay for their beverages online, as well as surf the web using a Wi-Fi internet connection (Oliviera, 2011).
Starbucks faces off against McDonald’s McCafe and Dunkin Donuts in the coffee market. McCafe maintains a low-cost strategy for its items on the one hand (Burritt, 2007). On the other hand, Dunkin Donuts emphasizes quality and provides customers with a wide range of coffee flavors to select from (Dicarlo, 2004).
Starbucks provides interpersonal services to its clients in which baristas, employees, and consumers have frequent contact (Miller, 2010).. The firm has attempted to adjust the taste of some of its products to appeal to customer preferences in specific areas (Patterson et al. 2010, p. 44).
The people behind the scenes at Starbucks who interact with clients play a critical part in strengthening customer connections. These contact persons serve as brand ambassadors for the company in this situation. The staff and Baristas at Starbucks are recognized by the management for their valuable contributions, which is why they provide rewards and incentives to celebrate their outstanding performance.
Internal Analysis. Products
Starbucks offers a broad range of over 30 different types of coffee. To meet the changing expectations, tastes, and preferences of its expanding customer base, the firm is constantly introducing new goods into the market. The following are some examples of recently introduced items: “Instant via Ready” and “Tazo Tea Infusions” (Patterson et al., 2010, p. 44).
Consumers associate Starbucks’ items with a higher level of quality. Because of the consumers’ perceptions, premium pricing is associated with a better class image. In this instance, Starbucks attempts to set itself apart from its competitors by relying on high pricing (Starbucks, 2011).
The majority of Starbucks shops are in high-traffic areas. The company’s coffee stores can also be found in various big chains. Starbucks “third place” idea, which encourages customers to spend time in its locations away from home, has helped transform its stores into a pleasant environment where people may unwind, surf the web, or listen to music (Patterson et al., 2010, p. 45).
One of the most important criteria for successful promotion is to allow company representatives and market participants to interact freely and smoothly without detracting from a firm’s ability to provide its services to the target audience in an efficient manner.
Starbucks has always relied on word of mouth and its large store presence as its advertising and promotional tools (Patterson et al., 2010, p. 45). Starbucks was certain that a unique and distinctive brand would lead to customer loyalty and repeat business. However, as competition intensifies, Starbucks must use more marketing methods.
The ability of a service company to target, acquire, get hold of, and retain the “correct” clients is critical to its success. Customer retention relationships rather than acquisition/transaction mentality are at the heart of many excellent organizations. Starbucks is one such business.
Given this, the business understands that a long-standing client is often a reliable source of income for many years. As a result, Starbucks has created the Starbucks Card (Starbucks, 2011) to encourage customer loyalty. To boost brand recognition and image among local communities, Starbucks has embraced a philanthropic attitude as a marketing tool. In order to improve brand awareness and image among local communities, the firm gives money to various non-profit organizations.
Response to Case Study Questions
Starbucks’ problems and analysis of its failure
Australia’s coffee culture is well-developed and sophisticated, which is evidenced by the popularity of Starbucks. The country already had a robust urban café culture in place when Starbucks arrived in Australian markets in 2000. Australians appreciate smaller boutique-style cafés since they provide personalized attention, familiarity, and intimacy (Patterson et al., 2010).
In Australia, Starbucks was unable to replicate the boutique-style coffee shops’ experience. Many Australians have developed a more sophisticated taste after years of drinking coffee, and they may now drink a stronger and straighter coffee with no need for flavors or syrup shots to mask the flavor (Patterson et al., 2010).
Coffee drinkers in Australia are particular, which may explain why foreign coffee companies find it difficult to persuade them to switch. Starbucks failed to adequately consider the existing Australian coffee culture, which might have caused its failure.
Given the price of Starbucks’ coffee, the restriction on baristas and personnel to interact with clients was proving to be counterproductive to the company’s foundations. The imitation of Starbucks’ concept by competitors such as McCafe and Gloria Jean’s had a part in Starbucks’ failure because customers could no longer tell apart Starbucks’ unique selling proposition from its rivals (Cateora et al., 2011).
Lessons for other service firms crossing international borders
The failure of Starbucks in Australia may provide a lot of service businesses with important information. One of the takeaways is that, while recognizing and appreciating the value of local customs is always crucial, it’s also critical to recognize and appreciate the significance of national culture. Companies wanting to enter foreign markets must be prepared to confront numerous challenges (Cateora et al 2011). Multinational corporations should be able to adapt across geographic differences effectively.
Another lesson that businesses may take away from Starbucks’ failure in the Australian market is that it’s critical to keep sight of the values that initially made you successful.
The takeaway from this is that company success has much more to do with selling a feeling than it does with selling coffee, as depicted by Starbucks’ insistence on baristas and employees thanking the greatest customers within five seconds of walking into a store, as well as remembering the names of the most regular clients (Cateora & Graham, 2007). However, when the firm attempted to implement KPTs, it forgot about what made it successful in the first place.
The recommendations made below are intended to help Starbucks improve its business philosophy in the face of increasing competition and a challenging economic climate:
- Starbucks should continue to be more inventive and creative with its new goods. Such a shift would have a beneficial influence on the company’s business model.
- The firm should consider collaborating with other businesses in foreign markets to assist the local business to succeed. This would also help you overcome cultural biases.
- Starbucks could also consider collaboration partners such as airlines, multinational retail chains like IKEA and Wal-Mart, auto washes, and cinemas.
- Starbucks should consider entering into a collaboration with fast-food restaurants to enhance its coffee product, along with competing against strong direct rivals like McDonald’s, in order to make it easier for consumers.
Starbucks sells a unique experience, not simply coffee. The company’s shops are typically located near busy thoroughfares and major shopping malls, which attract a lot of foot activity. Starbucks has an excellent distribution channel.
Starbucks has relied on word of mouth and a solid brand as its main marketing tool for many years, but with increased competition and imitation, the company has been forced to move fast to increase client loyalty. Starbucks as a business under attack from numerous legal, political, economic, and social issues as it carries out its commercial operations.
Starbucks failed in its first attempt in Australia due to the fact that Australians were already accustomed to a coffee-drinking culture that had been started by boutique-like coffee shops. These businesses offered personalized, individualized, and personal service that Starbucks could no longer provide.
Australian coffee drinkers had previously acquired a more discerning taste as a result of years of drinking coffee, implying that they desired stronger and straighter tastes that did not require additional flavors or syrup hits to mask the flavor.
The study suggests that Starbucks should consider forming partnerships with local coffee businesses to avoid failure owing to cultural differences and company principles. To stay ahead of the curve, Starbucks should also continue to develop creative items in order to respond to the evolving tastes and demands of its expanding client base.
Even to those who do not consume the company’s goods, Starbucks is an instantly recognized brand. This part will show you why most individuals have heard of them even if they aren’t coffee connoisseurs. Over the years, Starbucks’ staff of specialists has assisted the firm in building an empire, giving it the most recognized coffeehouse logo in the world.
Starbucks has kept its competitive advantage above the competition by maintaining a wide range of assets. They are able to maintain leadership in the market by continuing to manage, maintain, and upgrade these strengths. This was accomplished by obtaining precious, unique, or difficult-to-replicate real assets, increasing the number of sustainable coffee farms, and giving back to farmers in their communities through continuous innovation and development.
Starbucks has design teams all over the world to create coffeehouses that suit the needs of any new community they enter. All of these aspects aid Starbucks in maintaining a competitive edge over its rivals. To stay ahead of their competition, Starbucks strives to come up with the next big concept. Starbucks must be cautious not to jeopardize its competitive advantage by declining to be inventive, reducing support for farmers, and keeping assets that are distinctive in the future.