Key External Factors

Opportunities Weight Rating Weighted Score

1 Globalization 0.08 3 0.24
2 Demand for coffee 0.05 2 0.1
3 Social Media as marketing strategy 0.07 3 0.21
4 Demand for non-chemical products 0.05 2 0.1
5 Demand for express foods 0.04 2 0.08
6 Emerging online transactions 0.05 4 0.2
7 Business Diversification 0.05 3 0.15
8 Continuous Coffee trends 0.02 2 0.04
9 People are looking for relaxed place to go 0.04 3 0.12
10 Customer's desire for free internet connection 0.03 3 0.09
Threats
1 Competition with Major Companies 0.08 4 0.32
2 Claims of Water Waste 0.04 2 0.08
3 Rising Cost of main ingredients 0.07 2 0.14
4 Imitations 0.04 2 0.08
5 Sociocultural Movements 0.05 2 0.10
6 Competition with low-priced coffee chains 0.05 3 0.15
7 Ended licensing agreements 0.02 1 0.02
8 Recession 0.08 3 0.24
9 Increased in supply chain cost 0.04 2 0.08
10 Legal Constraints 0.05 2 0.10
  Total EFE Score 1.00   2.64
ANALYSIS:

In accordance with the result of EFE Matrix, it indicates that Globalization is a big opportunity
for the international and global expansion of Starbucks. It happens that the greater the globalization
across different countries, it will help the Starbucks from entering a new and diverse market around the
globe. In addition, the social media has a big impact on the marketing strategy of Starbucks, it can be
easily seen and spread through the internet about the company’s products and promos. Through
marketing, it will boost the revenue and the publicity of Starbucks. It can also lessen the cost for
strategic marketing than the usual way of promoting the products. On the other hand, there is also a
high weight opportunity on the business diversification in which it will diversify its corporate activities
even further to boost total sales growth prospects. Developing brands based on the tastes of customers
in a particular target market is often a lucrative prospect.

The biggest threat on the growth of Starbucks is the competition with the major companies,
specifically Dunkin’ Brands and McDonalds. These companies show a big threat due to its growing
number of franchised stores in different areas and places. In addition, they are offered a low-cost coffee
and other products which affects the net revenue of Starbucks in 2007. There is also an effect on the
sales of Starbucks due to recession wherein the population tends to buy more low-priced products and
cut back their spending on expensive coffee. Experts are predicting the ongoing recession would be
worse than previous economic downturns. Starbucks’ revenue has already dropped. Besides the fact on
expensive coffee of Starbucks, there is also a increasing price of main ingredients which is the Arabica
beans, the world’s most produced coffee, and the dairy products. As a result, Starbucks' profitability is
harmed for any additional dollar spent on raw coffee beans at a higher price.

Total EFE score of Starbucks shows that the company can handle the economic changes that
may affect the sustainability and profitability of the company. The company’s strategies are well-
designed to cope up with the external factors to meet the opportunities and to defend the threats.