INTERNAL AND EXTERNAL FACTORS ANALYSIS

Internal Analysis

The internal analysis is meant to provide a review of Starbucks’ organizational strengths and
weaknesses. The analysis culminates in an Internal Factor Evaluation Matrix (IFE Matrix)
which summarizes and evaluates distinct strengths and weaknesses according to their
importance to Starbucks’ overall business strategy

Internal Factor Evaluation Matrix

The Internal Factor Evaluation (IFE) Matrix can be utilized to evaluate the major internal
strengths and weaknesses in functional areas of Starbucks company to make new strategies.

Key Internal Factors Weight Rating (1-4) Weighed

Score
Strengths
Market share 0.15 4 0.60
Product line and variety 0.10 4 0.40
Supply chain management 0.05 3 0.15
Customer service 0.10 3 0.30
Product quality 0.10 4 0.40
Online presence 0.05 2 0.10
Accessibility 0.05 4 0.20
Financial position 0.10 4 0.40
Weaknesses
High prices 0.15 4 0.60
Environmental concerns of waste water 0.10 2 0.20
Large product diversification leads to brand 0.05 2 0.10
confusion
TOTAL 1.00 3.45

The IFE Matrix has resulted in a final score of 3.45, which scores above then average score
meaning that with its current strategic orientation Starbucks is Good and able to respond to
internal factors.
External Analysis

The external analysis will unravel potential opportunities and threats that exist in the
environment to which Starbucks is exposed. It provides an insight into the global coffee market
and will give an impression on how competitive the industry is. The analysis culminates in an
External Factor Evaluation Matrix (EFE Matrix) which summarizes and evaluates distinct
opportunities and threats according to their importance to Starbucks’ overall business strategy

Key External Factors Weight Rating (1-4) Weighed

Score
Opportunities
Expansion to emerging Markets i.e., China, 0.15 3 0.45
Pakistan etc.
High growth potential in new markets 0.15 4 0.60
High growth potential of flavored coffee in US 0.05 3 0.15
market
Threats
High bargaining power of coffee bean suppliers 0.15 4 0.60
Trademark Infringement in new markets 0.15 4 0.60
Increased local competition 0.10 2 0.20
Price sensitive customers 0.15 3 0.45
Saturated markets in developed countries 0.10 1 0.10
TOTAL 1.00 3.15

The EFE Matrix has resulted in a final score of 3.15, which scores above then average score of
2.5 meaning that with its current strategic orientation Starbucks is marginally able to respond
to external factors.