London School of Commerce In association with the

University of Suffolk

Context of Business

Sustainability and Business Environment – Case Study

Student: Dumitru Esanu
ID:

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Contents
1. Introduction………………………………………………………………………………………………………………..3
2. SWOT and PESTEL analysis for Starbucks…………………………………………………………………….3
3. How the popularity of CSR has influenced the business………………………………………………6
4. Compare and contrast the different styles of leadership (Starbucks, H&M, Ikea)……..…6
5. Comment on the importance of organisational culture om the processes at Starbucks using
evidence from your research………………… ……………………………………………………………………7
6. Reflection report on experience in writing this report…………………………………………………8
7. References…………………………………………………………………………………………………………………..9

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 1. Introduction
When we say Starbucks, we think at a tasty roast and a high-quality coffee but behind the
till it is a good team, a lot of work combined with passion, commitments, goals and
responsibility.
Starbucks was founded in 1971 in Seattle, USA. In 1972, Howard Schultz became director of
retail and marketing. From then Starbucks begin its extension arriving at successful level.
From the latest statistics (Feb 2nd, 2020) we can clearly see that Starbucks company have
346.000 number of employees, 31,256 stores all over the world, $ 26.51 billion annual
revenue and a net profit of $3.60 billion.
Starbucks is increasing sustainability by placing pressure on the coffee market by integrating
them as a business model on the market.
Among the products that Starbucks Corporation seems to market, the most famous appetizers
are hot and cold bean coffee, beverage, snacks, pastries and so forth. It is to be mentioned
here that most of the products and dishes that is being served by Starbucks Corporation are
seasonal and local. The company seems to offer different Chinese and Japanese foods and
dishes while trading in these countries, but all of these dishes are not available in America or
European stores (Kobayashi, 2009).

2. SWOT and PESTEL analysis for Starbucks

SWOT Analysis
Starbucks Strengths
- Quality – a great taste a delicious coffee, variety of products, an excellent quality
offered to clients.
- Growth in store – increasing and extending the business from 1,886 stores in year
1998 now they arrived to 31,256.
- A very strong brand image – Starbucks brand value arriving at $11.7 billion.
- Strong financial position - $ 26.51 billion annual revenue and a net profit of $3.60
billion.
- Efficient and strategic plan of reinvestment – the company reinvest its profits in
creating new store in strategical positions and this is a great advantage to the
company.
- As a great company they get involved in community services, also the company is an
active participant of Create Jobs for USA, Starbucks Foundation and Ethos Water
Found.
- The stores offer free Wi-Fi, comfortable space where customers can enjoy their time
working, relaxing, or having fun with friends.
- Starbucks is a company that is making concerns with conserving energy, water
recycling, they adopt an Eco-friendly practice.

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 - Starbucks offers to the customers cards rewards and recognitions.

Starbucks Weaknesses
- Starbucks does not have their unique products on the market, and this can conduct to
imitability. Some coffee shops as McDonalds, offers to the customers quite the same
products as Starbucks.
- The company adopts the higher price on the market, and this can reduce affordability
for the consumers.
- Sometimes the stores are very crowded, so they need more space.
- As a big company they do not have a Drive services, this can improve their activity.
- Starbucks do not align with the cultural standards of the country where they operate,
most of the products are not on the preferred list of the consumers
- Most of the products have not a warning label that can highlighted the presence of
allergens such as almonds, nuts. For this reason, the company suffered a loss and
some of the costumers became sceptical for Starbucks products.
- Some locations are scarce in suburban area.
- They are receiving criticism because they are not using free trade products.
Starbucks Opportunities
- Introducing new products such new flavours (Peppermint Mocha, Gingerbread Loaf)
that is a great opportunity to attract customer.
- New partnerships with other companies make for Starbucks an opportunity to develop
more strategies.
- Diversification of the products making count of customers taste, preferences, religion
and culture. Starbucks is developing new products and have a target goal on the
market.
- Global expansion is a great opportunity for the company. Starbucks is now present
even in India, China and a few territories in Africa.
Starbucks Threats
- Independent and international stores.
- Must comply with international governments for production and distribution.
- Starbucks has become a luxury brand that is consumed day by day.
- They are competitive on the market.
- Coronavirus has affected Starbucks as well as the entire world business. The company
temporarily closed 2000 stores in China and half in the other part of the globe due to
outbreak of coronavirus. This situation has a negative impact on Starbucks income in
2020.

PESTLE Analysis
Political

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 When we try to talk about political factors, we talk about government lows and
policies. In some countries Starbucks was blamed for the violation of low regarding wage
payments on hour. (California – the employees are not paid properly for the extra hours)(Los
Angeles Times). For the above reason the Starbucks company is still paying millions for the
settling of the lawsuit case.
Economic
One of the important economic factors that could affect Starbucks financially is
inflation rate. Additional to this are exchange rates and import lows and taxes. The Demand
curve for consumption of coffee shows that with the increase of the demand of coffee the
price of coffee increases and vice versa. In this case Starbucks has to be careful with the
price. The increase of the demand of coffee increase also the substitute price and on the other
side is the decreasing of the substitute as on the market it is a decreasing in the income of the
consumers.
Socio – Cultural
Starbucks belief is a positive social impact on the communities that they serve, to
create a global social impact and a positive change, also, to be innovators, leaders and to
contribute to a healthy environment. “As a company, we are committed to using our scale to
positively impact the communities we serve around the world,” said John Kelly, senior vice
president of Global Social Impact and Public Policy. “These goals represent our aspiration to
create impact on the issues that matter.”
Technological
Starbucks is using high technologies and make improvements every year. Their
technologies is used in order to reduce labour cost, save the time and offer high services to
customers. Also, to attract the costumers Starbucks introduced loyalty cards and the result of
this is increasing the sales. Starbucks is concern about low consume of energy and recycling,
so They are using full equipment for reducing the emission of gas, also they are using
biodegradable materials for recycling. Starbucks is also doing online delivery of their
products at the higher standard using new technologies of taking and processing the orders.
Environmental
Starbucks preoccupation about the environment determined to make partnership with
conservation international and environmental defence. In their shops are used biodegradable
materials instead of plastic, trying to save energy as much as possible. Starbucks was the first
company that give to the customers 10 % discount for bringing their own reusable cups. “As
a company, we are committed to using our scale to positively impact the communities we
serve around the world,” said John Kelly, senior vice president of Global Social Impact
and Public Policy. “These goals represent our aspiration to create impact on the issues that
matter.”
Legal
Starbucks is acting legal by taking in consideration consumer law, recycling policy,
international policy regarding human rights, employment laws, health and safety laws, license
and other laws that are different from one country to another. Starbucks is currently using

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Coffee and Farmers Equity Practice that are suitable for people and environment. Starbucks
imports coffee from 24 countries, including six in Africa - Burundi, Ethiopia, Kenya,
Rwanda, Tanzania and Zambia and they are following with severity the laws in order to
maintain a good relationship with the countries.
Recommendation
From my point of view Starbucks needs to make some improvements in order to keep
its position on the market. First step will be to reduce the price of day to day products and this
fact will increase the customers affordability. Another step could be to implement creativity
on the market by introducing more promotional activities and continuing to make
diversification of the products, this will help strengthen their position on the market.
Markets of Asia, Africa and Latin America is a huge market that is waiting for Starbucks.
Having little of no competition Starbucks can grow their business rapidly.
Planning to continue the expansion of its retail locations, grow its specialty operations, and
to selectively pursue other opportunities to leverage the brand through the introduction of
new products and the development of new channels of distribution.
3. How the popularity of CSR has influenced the business.
Sustainable values-based service businesses have a strong commitment to corporate social
responsibility (CSR), leads to quality of a systems, appropriate performance indicators,
thinking and involvement with control, assessments and improvement efforts. A sense of
social and environmental responsibility stimulates lean production, lean consumption, energy
and conservation. Social and environmental responsibility contributes to profitability in a
long-term perspective. CSR is important for rethinking the role of any company in any
industry. By using CSR in a proactive way, companies think ‘laterally’ in searching for
“smart” solutions. The logic of values thus drives the logic of value creation.
4. Compare and contrast the different styles of leadership (Starbucks, H&M, Ikea).
From different articles we can easily make a comparation between those three big brands
as a model in entrepreneurial business. All were lead by energetic entrepreneurs with a
innovating minds that leads the company to success and finally to became a model on the
business market. Their way to success was based on direct rules and lines that includes
professional acting and thinking, attractive offers to the customers, making strong suppliers
chain, social and environmental responsibility. In addition to this they growth strategies based
on investments and sustainable resources. A good example for this: Ikea that is doing energy
conservation and is managing very good environmental responsibility, Starbucks that is
recycling and have strong commitments in community development and H&M that has
environmentally friendly products. All the above companies have a strong corporate value,
they are focusing on the customers to offer the best services and also to achieve their target
on the market. Driving the employees, it is a fundamental knowledge and have a great impact
on the company success. At Ikea the employees are “co- workers”, at Starbucks they are
“partners” and at H&M they are called “colleagues”. Leadership performance means
operational skills, cooperation with the team, sharing values and meanings. All companies are
focusing on investing in leadership performance, the development of individual leaders and
employees. They are seeking leaders from diverse backgrounds in order to create a

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multicultural employment environment reflecting the diversity among their present and
potential customers.
Five principle for a sustainable service business are:
- Strong value drive to customer value – values are important in a company relationship
with the staff, partners, suppliers, stakeholders.
- Corporate Social Responsibility (CSR) – having a strong commitment to corporate
social responsibility can lead the company to performance.
- Values of service experience – offering a “test drives” of the services provided enable
customers to experience the services before the purchase, to leave feedback that can
improve the services and after to arrive at the purchase process and also to
consumption.
- Service brand and communication – to communicate efficiently the service/product
can help customers by suggesting trying and to purchase the product and in the
meantime can drive the company to success on the market.
- Service leadership for living values – a company needs a strong leadership. To
become an entrepreneurial business model for future generations of leaders, to
communicate these values it is essential for a company. Leadership is about “walking
the talk” making sense to employees and energise them to focus on serving customers
and creating shareholders value. Leaders communicate through their interactions with
employees, partners, suppliers, and customers. Authentic leaders therefore spend time
with customers and employees and learn from them. Great leaders are directed not
only by the logic of value, but also by the logic of values.

5. Comment on the importance of organisational culture on the processes at

Starbucks using evidence from your research.
At their beginning Starbucks faced e great challenge to maintain their employees and to
ensure their growth on the market. For the above reason Starbucks starts to select the best
people that drove them to success. By the research we can clearly conclude that Starbucks
believe that all the goals can be achieved by the power of a great team leaded by a good
manager. If an organization’s human resource policies are designed properly, the
selection practices will identify competent candidates and accurately match them to the
job and the organization (Robbins and Judge, 2013). Starbucks invested more in training
employees and in this case, they perform their own skills driving the company to
performance. In Starbucks human resources policies are a commitment to employees and
providing high standard services to customers means that the clients needs are more
important in the growth of the business.
Starbucks community involvement had a truly impact on their growth on the coffee
market.
Starbucks have a good management that is build on trust and quality. They have zero
tolerance on victimization of any partner written on the Business Conduct. Also,
Starbucks respect Human Rights Standard, they promote equality and diversity in their
hiring practice. Another important matter in Starbucks management is the environment, a
safety place and secure to work for their employees, free of harassment, bullying and

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 discrimination. In their policies are included Customer protection and strict standards
regarding toxic substances and weapons.
Starbucks is taking care of their employees by respecting hour laws and regulation
regarding wages.
6. Reflection report on experience in writing this report.
Writing this report, in my opinion, it made a great impact over my writing skills, my
academic language has obviously improved, also my research style. This Project it became a
special one for me, gave me the potential to understand the basics of business and the
management, also their problems. Later in the project I realize the importance of research,
focus and determination in obtaining a good grade on my work.
For me this project strengthens my English academical skills, my knowledge in
understanding business and management. The topic of the project motivates me to carry out
the work required to define boundaries, to facilitate my time and my work management.
Using electronica resources such as journals, reports, articles, and internet books made me
more efficient in internet research, more confident in debates, expressing my own opinion. A
lot of time was also consumed as part of this process of putting under some pressure in order
to meet the deadlines. However, I cannot deny the importance of this towards improving my
understanding of the topic and facilitating a very healthy of the project. Furthermore, I have
also learned the importance of project planning.

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References

- Kobayashi, K. (2009). Comprehension of relations among controversial texts: Effects

of external strategy use. Instructional Science, 37(4), pp.311--324.
- "MBA Tutorials » Starbucks SWOT Analysis." MBA Tutorials » MBA Tutorials –
Accounting, Economics, Finance, Management, Marketing, Strategic Management,
human Resource Management, branding. MBA Tutorials. Web. 16 Feb. 2012.
- Annie Pilon. (2016, July 12). Starbucks Demonstrates Importance of Happy
Employees. Retrieved from https://smallbiztrends.com/2016/07/happy-
employeesstarbucks.html Bello, S. M. (2012)
- Los Angeles Times, Starbucks Settles Suit on Overtime, April 20, 2002, Lisa Girion,
https://www.latimes.com/archives/la-xpm-2002-apr-20.
- PEST Analysis of Starbucks | Business Teacher. Retrieved from
https://businessteacher.org/pestel/starbucks-pestel.php
- https://www.starbucks.com/responsibility
- Starbucks – Global Social Impact Report, 2019, https://stories.starbucks.com
- Robbins, SP & Judge, TA. (2013). Organizational behavior.15th ed. Prentice Hall,
USA