STRENGTHS

1. Starbucks has a strong brand presence, which is leading as a global

organization with more than 16,000 retail stores in 48 countries
across the entire world.
2. Best known for its high quality and services.
3. Strong brand loyalty.
4. It provides an atmosphere of sophistication, calmness and style that
represents its own functional and emotional benefits to consumers.
5. Starbucks has the competitive advantage of providing innovative
products more quickly in the all of the same retail stores.

WEAKNESSES
1. Starbucks generates 85% of revenues from US, its domestic
market. Being known as an international brand, the
organization needs to obtain some revenues from outside the
US market.
2. Starbucks relies more greatly on creating innovation in
beverages, at the time of economy slowdown it will be risky
for the company as to how long they will be able to sustain.
3. Starbucks faces some difficulties internationally, as one of its
market expansion failed miserably like Japan so this affects
the international growth of the company.

OPPORTUNITIES
1. Starbucks has a strong market share of about 40%, this is
beneficial for the company to expand ahead globally specifically as
a coffee market.
2. Currently, Starbucks is operating 15,000 international and expects
to expand further in countries like Russia, China which will further
increase its revenue growth.
 3. Technological advancement can help Starbucks improve its
services.

Threats

1. The political, economic and weather conditions in some

countries outside the domestic market like India can
adversely affect the business.
2. The rise in dairy prices can be a threat to Starbucks as milk
and dairy products usually get 3% or 5% of sales and its
consistently increase in prices could affect the company’s
operations.
3. Starbucks must be careful of the emerging competition
especially in the domestic market, any major competitor can
hit the market, therefore Starbucks must be competitive on all
levels to retain its position as the world’s leading coffee
retailer.

SO STRATEGIES (STRENGTHS/OPPORTUNITIES )
1. The major strength of Starbucks is its global presence and its
strong customer loyalty which helps to increase its market
share and growth in the coffee market. (S1,O1) (S3,O1)
2. By constantly introducing new innovative products in each
store, Starbucks can continue to increase its revenue by
expanding in other countries as well. (S5,O3)
3. Starbucks is well known for its quality and fast services
throughout the world, in order to upgrade its services
according to customer’s requirement is to come up with more
technological advancements. (S2,O4)
ST STRATEGIES (STRENGTHS/THREATS)
1. One of the major threats that Starbucks could face is against
its competitors. For this purpose, Starbucks should innovate
or diversify its products more often to retain its position in
the market. (S8,T3)
2. Due to economic/political instability in some countries that
affect the business operations. However with its strong global
image, Starbucks can shift its operation elsewhere where it
seems to have more potential growth. Another way is to
change their market strategy by reducing their prices to
penetrate in the foreign market. (S3, T1).

WO STRATEGIES (WEAKNESSES/OPPORTUNITIES)
1. As Starbucks has large market share of about 85% in the US
market, they must take advantage of their market expansion
to increase its market share outside its domestic market.
(W1,O1)
2. If Starbucks face difficulties to operate internationally, they
must take advantage of their products and adapt them
according to the consumer’s demand and environment
through product diversification or market extension strategy.
(W3,O2)

WT STRATEGIES WEAKNESSES/THREATS
1. Starbucks when faced with political/economic instability
outside the domestic market (US) needs to extend its product
line in beverages. (W1,T1) (W2, T1).
 2. To avoid this threat such as rise in the cost of dairy products
is to diversify its products that do not include any dairy
items. (W2,T2)

Opportunities
1. Expansion into Emerging Markets – The self-cannibalization of the
US market, indicates how important it is for Starbucks to expand the
brand, internationally. Starbucks had already started the process (the
latest country that joined the list was, India) and they have great growth
potential in the emerging and developing markets.

2. Expanding Product Mix and Offerings – Lately, Starbucks started to

expand its mix by adding Tea and fresh juice products. Though, they
still have a lot of room left.

3. Technological Advances – Starbucks has leveraged the use of mobile

applications. The “Starbucks App” provides reward programs and
creates a friendly, comfortable environment for the customers. Today,
10% of transactions in the US are being made through mobile apps
and Starbucks App will surely be effective.

4. New Way of Distribution – Starbucks introduced a new delivery

system called “Mobile Pour”. This is a great opportunity to improve
their distribution system and drive more revenue.

5. Expansion in Asia, the Middle East, and Africa – Starbucks just

opened its 1,600th store in China. It’s essential to use this popularity
and expand in the Middle East and Africa, where the company currently
has minimal presence.
Starbucks has the opportunity to expand in the Middle East and Africa, where the firm currently
has minimal presence. The company also has the opportunity to expand in Asia, where
economic growth rates are high. In addition, even though Starbucks already has a considerably
diverse product mix, further diversification can help improve its competitive advantage.
Partnerships and alliances can also strengthen Starbucks Coffee’s competitive position. This
part of the SWOT analysis shows that Starbucks has major opportunities for global growth.

Starbucks has a significant opportunity before it in the form of the large and
untapped emerging markets. Markets like India and China can prove important
sources of customers and revenue. However, Starbucks should also try to align its
products as per the cultural standards of these markets. Diversifying its product line
can also help the brand grow and improve its brand value. Currently, the brand is
mainly known for its premium quality coffee. It can add other products including
beverages and snacks to its product line to provide its customers with variety.  Its
assortment of products is limited.

Another major area of opportunity for the Starbucks brand exists in the form of cobranding or
partnership. The brand can partner with snack brands or regional stores to sell its own products.
Imagine someone having a big fat burger with coffee. Coffee tastes better with snacks. Such
partnerships can help Starbucks improve its brand presence and get closer to its customers. It
will find a huge source of revenue by tapping into the customer base of the partner brands in
this way. Apart from that it could sell its coffee through local stores or the big retailers as well.
Such strategic partnerships will not only increase its customer baser but also improve its brand
awareness.

Threats
1. Increased Competition – This is by far the biggest threat for
Starbucks. Dunkin’ Donuts and McDonald’s are the companies, trying
the minimize Starbucks’ market share and they have already shrink it by
26%.

2. The Price of Coffee Beans – Lately, there have been talks that the
price of quality coffee beans might increase. And if this happens, the
overpriced Starbucks coffee will get even more pricey.

3. Economy of the Developed Country – If a crisis like 2008 somehow

repeats, it will severely damage Starbucks revenue. Moreover, the
company will lose a significant amount of customers because they’ll
shift to cheaper brands.

4. Change of Lifestyle and Preferences – The shift of customers toward

healthier products and the risk of coffee culture vanishing, represents a
future threat for Starbucks.

5. Brand Imitation – If big brands like McDonald’s and Dunkin’ Donuts

decide to imitate the brand strategy of Starbucks and introduce the same
product they have, with lower prices, will definitely harm the company.

The Starbucks brand is facing heavy competition from its rivals.

Particularly, it is the smaller competitors whose products are available at
much lower prices that pose a major threat. The lower end consumers
are attracted towards the rivals for the lower costs of their products. The
changing consumer trends have also affected its business to a small
extent. The people are looking for healthier products. The sales of juices
and other healthy drinks has gone up. While Coffee is not considered an
unhealthy drink, still its sales are slightly affected. Another major threat
comes from the imitation of the products. Starbucks sells premium
quality products. However, they are not inimitable. The rival brands
make the same products available at lower costs. It increases the
competitive threat for Starbucks.