COFFEE INDUSTRY

Starbucks Coffee

Background
Starbucks is an American company that is considered as the largest coffeehouse
chain in the world. Its headquarters are in Seattle, Washington. It was founded by Jerry
Baldwin, Gordon Bowker, and Zev Siegl, opening its first store in 1971 near the historic
Pike Place Market in Seattle. The three Starbucks founders had two things in common;
they were all coming from academia, and they all loved coffee and tea. They invested
and borrowed some money to open the first store in Seattle and named it “Starbucks”
after the first mate in Herman Melville’s classic novel Moby Dick. Starbucks Coffee’s
company mission is to inspire and nurture the human spirit – one person, one cup and
one neighborhood at a time.
As of early 2020, the company operates over 30,000 locations worldwide in more
than 70 countries. Starbucks locations serves a range of exceptional products that
customers enjoy in our stores, at home, and on the go. This includes coffee with more
than 30 blends and single-origin premium coffees, handcrafted beverages such as
fresh-brewed coffee, hot and iced espresso beverages, Iced Coffee, and merchandises
including coffee- and tea-brewing equipment, mugs and accessories, packaged goods,
books and gifts. They also offer fresh foods like baked pastries, cold and hot
sandwiches, salads, salad and grain bowls, oatmeal, yogurt parfaits and fruit cups.
Lastly, Starbucks Coffee also extend their specialties through a ready-to-drink (RTD)
products such as Starbucks bottled Frappuccino coffee drinks, Starbucks Iced Latte,
Single Serve Cold Brew, etc. and consumer products available that can be sold in
grocery stores including coffee and tea Starbucks espresso capsules available,
Starbucks Coffee K-Cup pods, Starbucks and Teavana Verismo pods.
Strengths, Weaknesses, Opportunities, and Threats(SWOT) Analysis 

STRENGTHS WEAKNESSES
 Strong international brand image  Offers high prices to products
 High quality coffee and pastry  Dependent on consumer’s taste or
products love of coffee
 Unique and high-level services  Lack of local culture adaptation
 Well located shops in a specific area  The imitability of products where
 Great customer experiences items can also be found and sold in
feedback other coffee shops and food chains
 Attractive store design and
ambiance
 Extensive international supply chain
 Strong franchise relationships
 Free Wi-Fi for customers
 Updated Facebook page
and Website

OPPORTUNITIES THREATHS

 Develops variety of new  Competition in other

and original coffee products coffee shops that offers
 Generates engaging social media low-cost products
posts interaction
 Competition in other big outlets or
 Improves overall customer
multinational companies such as
experiences
Dunkin Donuts
 Availability in delivery services
 Rising prices of raw coffee beans
 Adapting on society’s health and
especially during this pandemic
environmental concerns
 Changes in consumer spending
 Expansion of the brand by
pattern
establishing stores in different
 Economic crisis
countries
 Creates strategic partnership in
different countries
Risks in Economic, Natural, Technological, Regulatory, Social and Internal
Factors

1. Economic Factors
 Business costs will rise for Starbucks because of inflation of the price of
coffee.
 The demand for coffees and other beverages changes over a period of
time.
 The buying power of consumers are not the same.
 Rising of labor cost in suppliers that increases the spending cost on
coffees and other ingredients.
2. Natural Factors
 Customers preference changes based on trends from time to time.
 Natural phenomena (COVID-19) that shutdowns the business industries
made them lose a lot in sales.
 Usage of paper cups and paper bags as packaging has a big effect on the
environmental activist as it was reported that it cannot be recycled which
means it is hazardous to the environment causes to more trees would be
affected as we have a limited supply at this time.
 Roasting operations leads to carbon emissions that result in greenhouse
effects.
3. Technological Factors

4. Regulatory Factors
 With Starbucks Coffee's Shops located in the Philippines, the Company
should follow regulations in the Philippines. Such as the increase of
minimum wages in the Cities and Region every year Starbucks may come
up having a smaller number of employees.
 The current changes in the tax policies in the Philippines for corporate
businesses including Foreign corporations such as Starbucks can affect the
income of Starbucks.
 When establishing Branches in Cities and Provinces other than the
national laws, Cities and Provinces also implement laws to regulate
business. When Starbucks establishes in Provinces it should follow the
laws that the Local Government implements that will possibly bring Local
Starbucks stores to increase their expenses and have lower income.
5. Social Factors
 One of the major disadvantage of Starbuck Coffee is their product pricing.
Coffee industries are growing especially here in the Philippines that are
established locally and offers quality products with a modest prices. The
company has a stiff pricing which is not that affordable for the mid-
income tiers or the millennial. Starbucks has a lot of competitors in the
country that have lower prices than they offer and that has almost the
same quality level as them which made Filipinos switched from their
products to other budget-friendly coffee shops considering the fact that
Filipinos are wise and thrifty persons which will greatly cause a huge
impact on their profit.
 Most of the Filipinos prefer “kapeng barako” than Starbucks’ famous iced
coffee, latte, and different flavors of frappuccino. In other words, Filipinos
are more likely a fan of pure coffee or a dark coffee drinker. With this,
mostly will decide on buying ground coffee from grocery stores and
choose to prepare it on their own which in this way, they will not just save
up to a hundred pesos but they can also make a lot of glasses of coffee
they prefer.
 Starbucks Coffee are popular only in cities. People coming from provinces
and outside the cities that will visit a city will choose to go to coffee shops
that are locally established, common, and affordable to them.