Companies in the quest to succeed in the market need to identify their strengths, weaknesses, opportunities and threats. It is always necessary for the companies to keep an update of these factors which are necessary for success due to the dynamic markets and changing technology. Additionally, there are always new entrants to the market that dictate the competition. Staying ahead of competitors is important in ensuring that competitive advantage is gained. Starbucks is one of the companies that utilize continuous updates on its SWOT analysis to ensure that it stays ahead in the market. The paper looks at Starbucks 2016 SWOT analysis.
Starbucks is an American multinational coffee company that operates in over 23,000 locations in the world. The company was founded in 1971 in Seattle, Washington by three entrepreneurs who were inspired to sell high quality coffee beans by Alfred Peet who taught them a new way of roasting coffee beans. The company deals with four key products which are coffee beverages, smoothies, tea, sandwiches, and baked goods. The company then grew to become a worldwide company operating in 72 countries in the world (Starbucks.com, 2016).
• The company is highly profitable with revenues in 2014 only standing at US $16.447 billion.
• The company operates in numerous locations in the world which provides its opportunity for increased revenues yearly.
• The brand has a global reputation for fine and high quality products which help the company retain its customers (Leigh & Pershing, 2006).
• The company is known for its new product development. The creativity in development of new products might fade away over time as the innovations get exhausted.
• The company has a large presence in the United States which makes it vulnerable to risk. It is important of the risk is spread to other countries in a similar manner.
• The company has not invested in marketing and advertising which is a risk as competitors look to advertise to increase their publicity (Grant, 2016).
• The company has the opportunity to expand on the international operations.
• Increased product innovation helps in diversity
• Large revenues help in expansion in new markets across the world.
• The company can achieve quick acquisition of customers which a good entry strategy set forward.
• There is increasing demand for differentiation of products which present an opportunity for new markets (Lussier, 2008).
• Ability to retail new products and services at the cafes.
• The company has the opportunity to co-brand with other manufacturers of food products and drinks.
• The company has not invested in advertising. The opportunity to invest in advertising will present the company with the ability to grow its market share further and reduce the threat of competition (Ferrell & Hartline, 2014).
• The market for coffee might not stay for long since the rise of a substitute to coffee will lead to reduced revenues.
• The brand is exposed to the risk of rising prices of dairy products and coffee.
• The success of the company led to the entry of numerous competitors looking to grab some market share. As a result, the competitors use similar strategies as Starbucks which pose threats to their uniqueness of products.
• The domestic market is now saturated with numerous brands which weaken the authenticity of Starbucks (Lussier, 2008).
Starbucks is thus a brand that has grown in the market and managed to acquire a larger market share compared to its competitors. However, the threats show that the brand might be at risk of losing its larger consumer base. The changing market needs diversification and continuous marketing and advertising. The SWOT analysis shows that the company has managed to gain trust from its consumers both in the United States and in the international markets.
- Ferrell, O. C., & Hartline, M. D. (2014). Marketing strategy: Text and cases. Mason, OH: South-Western/Cengage Learning.
- Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
- Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.
- Lussier, R. N. (2008). Management fundamentals: Concepts, applications, skill development. Mason, OH: South-Western/Cengage Learning.
- Starbucks.com (2016). [online] Available at: http://www.starbucks.com/ [Accessed 30 Aug. 2016].