Sunday, November 10, 2019
Starbucks Strengths and Weaknesses
After reading StarbucksÃ¢â¬â¢ Ã¢â¬Å"Management Discussion and AnalysisÃ¢â¬ portion of its 10-K, it is apparent that the company currently possesses a highly competitive position and progressive management strategy. StarbucksÃ¢â¬â¢ top position in its industry and management strategy comes from the fact that this company has multiple areas of strength and lacks overwhelming weaknesses. Strengths and weaknesses with regard to a firm like Starbucks are based on the internal factors relating to a company.The internal analysis of Starbucks shows that it enjoys much strength as a company. When analyzing the strategic management of a company, a strength is defined as a firmÃ¢â¬â¢s Ã¢â¬Å"resources and capabilities that can be used as a basis for developing a competitive advantageÃ¢â¬ (QuickMBA). The Ã¢â¬Å"Management Discussion and AnalysisÃ¢â¬ section of the Starbucks Annual Report features many strengths according to this definition. StarbucksÃ¢â¬â¢ capabilities go way b eyond simply selling coffee at Starbucks shops in America.In fiscal 2012, Starbucks experienced a 7 percent growth in global store sales, 50 percent increase in Ã¢â¬Å"Channel Development,Ã¢â¬ and 20 percent raise in licensed stores revenue (SBUX 2012 Annual Report, 25). This fact alone presents multiple strengths Starbucks has. Starbucks has stores and a positive presence implanted in multiple countries divided into the three sectors of the Americas, Ã¢â¬Å"EMEAÃ¢â¬ (Europe, Middle East, and Africa), and Ã¢â¬Å"CAPÃ¢â¬ (China/Asia Pacific). Additionally, Starbucks maintains the operating segment of Ã¢â¬Å"Channel DevelopmentÃ¢â¬ which focuses on the sale of Starbucks and Tazo branded K-Cups and other beverage innovations.As stated before, this segment of StarbucksÃ¢â¬â¢ operations witnessed a 50 percent increase in revenues in fiscal 2012 which shows how strong Starbucks as a firm really is. On top of these optimistic facts, Starbucks simply continues to show its stre ngth with regard to its market dominance and brand-name recognition throughout America and other countries. On the other side of the internal analysis of Starbucks, few weaknesses are present within the company. A weakness can be looked at as Ã¢â¬Å"the absence of certain strengths. For example, a lack of patent protection, weak brand name, poor reputation among customers, high cost structure, lack of access to the best natural resources, or a lack of access to key distribution channels can all be classified as a CompanyÃ¢â¬â¢s weaknesses (QuickMBA). Starbucks, however, does not appear to possess any of these weaknesses. Especially since Green Mountain CoffeeÃ¢â¬â¢s expiration of their patent for K-Cup, Starbucks has not been hindered by access to key distribution in their Channel Development sector (Daily Finance).This area of focus may be one of StarbucksÃ¢â¬â¢ weaknesses though because, unlike Starbucks franchises throughout America that basically stand untouched compared t o other coffee shops, Starbucks branded K-Cups compete with many other viable brands such as Green Mountain Coffee in the home-brewed portable coffee sector of the coffee industry. Additionally, StarbucksÃ¢â¬â¢ expansion into other countries, although proving to produce positive income, can be looked at as a weakness. For example, StarbucksÃ¢â¬â¢ presence in Europe has received some resistance due to the strong European Ã¢â¬Å"cafe cultureÃ¢â¬ and preference for different Ã¢â¬Å"regional tastesÃ¢â¬ (NY Times).In summation, Starbucks has a positive future and experienced a fiscal year filled with strengths and few weaknesses in 2012. Its main strength as a firm is the powerful brand and presence that has been established by Starbucks. This strength is supplemented by StarbucksÃ¢â¬â¢ expansion into multiple countries and different areas within the market for coffee including K-Cups. StarbucksÃ¢â¬â¢ weaknesses seem to be associated with its strengths stemming from expansi on, which is seemingly normal and acceptable.To increase the firmÃ¢â¬â¢s strengths and mitigate its weaknesses, Starbucks senior management plans to Ã¢â¬Å"focus on achieving sustainable growth from established international markets while at the same time investing in emerging markets, such as ChinaÃ¢â¬ (Starbucks Annual Report, 27). Additionally, Starbucks management seeks to expand upon its Channel Development segment by developing new innovations and ready-to-drink beverages, which will simultaneously bolster their internal strength and disintegrate the current weakness of having less establishment and dominance in this area of the coffee industry.