Term Paper: Starbucks Situational Analysis Environment Important

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[. . .] " In furtherance of this end, Starbucks has created and applied for nearly 100 federal trademark registrations and also has several patent applications pending. Starbuck's patent in the United States for its coffee on tap system has positioned Starbucks as one of the dominant players in the coffee industry.

In measuring the appropriateness of its decisions, Starbucks relies on six guiding principles. First, Starbucks provides a great work environment and treats its consumers, employees, and vendors with dignity and respect. Next, Starbucks embraces diversity as an essential component in the way it does business. Third, Starbucks applies the highest standards of excellence to the purchasing, roasting, and fresh delivery of its coffee. Fourth, Starbucks aims to develop enthusiastically satisfied customers all of the time. Fifth, Starbucks contributes positively to its communities and its environment. Lastly, Starbucks recognizes that profitability is essential to its future success.

Starbucks has a plethora of financial and non-financial advantages working for it. First, there is the sheer market power that Starbucks has, i.e., its presence in a majority of states, Asia, and Canada. By opening new coffeehouses at a rapid and unparalleled pace, Starbucks has created numerous employment opportunities for tens of thousands of individuals. In addition, Starbucks has never experienced a strike or work stoppage, most likely due to the fact that Starbucks provides each and every single employee with health, dental, and medical benefits, a profit sharing and stock ownership program, and wages that exceed the minimum wage.

Likewise, Starbucks is one of the few large corporations that actually live up to its promise of being socially conscious and socially responsible, both on a local and international level. Starbucks has made and continues making significant contributions to local charities that focus on AIDS research and support, children, the environment, and the homeless. Likewise, Starbucks has agreed to purchase a percentage of its coffee from Fair Trade Certified coffee growers in an attempt to ensure that those individuals who are the primary source for Starbucks coffee beans are fairly and reasonably compensated.

In terms of constraints and weaknesses, there are very few obstacles which have stood or which presently impinge Starbucks' ability to accomplish its stated mission of becoming (and maintaining) the leading gourmet and specialty coffee retailer in North American and beyond. One constraint or weakness facing Starbucks is the law of supply and demand, a factor that all companies must anticipate and deal with. For example, there are only so many individuals in North America and beyond who consume gourmet and specialty coffee on a regular basis, and of this percentage, there are only so many individuals who are willing to pay upwards of $3-4+ for a single cup of coffee. As the economy tightens, individuals who may not have given a second thought to spending $3-4+ previously for a mocha latte may think twice in order to conserve their limited financial resources.

Another constraint or weakness that Starbucks has experienced and/or continues to experience is the fact that not ever individual feels comfortable with ordering goods or products via the internet. There have been numerous horror stories of individuals having their credit card number stolen while using the internet. In addition, not every individual, particular individuals who reside in countries outside of North America, is even connected to the internet. Thus, Starbucks may find that its market share of gourmet and specialty coffee orders placed online is limited. However, as the internet becomes more widely accepted as a viable means of transacting business, this situation will most likely improve.

In terms of actual and potential sources of dysfunctional conflict within the structure of Starbucks, it does not appear that such conflict exists. However, as is the case with all corporations, there is the potential that certain individuals within the corporation will have differing and perhaps conflicting viewpoints regarding how the company should expand, what markets the company should enter, how the company should market its products, what products the company should introduce, etc. In addition, there is also the potential for office politics to inhibit Starbucks from remaining focused on its core mission, i.e., selling the highest quality, freshest gourmet and specialty coffees. While these issues may cause temporary problems, Starbucks, like every other company, has been and will be able to resolve any existing tensions by ensuring that the lines of communication remain honest and open and by stressing the importance and value of teamwork.

The marketing department of Starbucks is organized in a peculiarly interesting manner. For numerous years, Starbucks has relied primarily on word of mouth as its best and most utilized form of advertising. In the past, Starbucks has done little national advertising, including a campaign for its Anniversary Blend of coffee in the New York Times. Additionally, Starbucks has occasionally run ads in papers such as the Los Angeles Times that offer consumers a discount on either a new product or one of their best-selling products such as the Frappuchino. Though several companies have built successful images through non-traditional marketing instead of advertising, Starbucks is among the biggest to buck the notion that you have to advertise in order to expand and maintain leadership in the marketplace.

D. MARKETING STRATEGY

Starbucks has developed an implemented a fairly comprehensive and successful MARKETING STRATEGY. The primary objective of Starbucks marketing strategy is to sell only the finest whole bean coffees and coffee beverages. Additionally, Starbucks aims to establish and maintain itself as the most recognized and respected brand of coffee in the world. In pursuit of this marketing strategy, Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with a variety of coffee beverages, pastries, confections, and coffee-related accessories and equipment. To ensure compliance with its rigorous standards Starbucks controls its coffee sourcing, roasting, and distribution through its retail stress, specialty sales group, and national mail order operation.

In furtherance of its marketing strategy, Starbucks has aligned itself with such prominent companies as Barnes & Noble, Chapters, Delta Shuttle, ITT Sheraton Hotels, Pepsi, and United Airlines in order to broaden its reach and to increase its profitability. The decision by Starbucks to align itself with airlines, bookstores, hotels, and other retail outlets outside of its own coffeehouses was extremely wise as it has enabled Starbucks to increase its visibility, nearly ensuring that wherever an individual may be at any given moment, he or she will be able to purchase Starbucks coffee. Likewise, Starbucks has managed to create and implement a marketing strategy that appeals to nearly every segment of the population, whether it be college students looking for caffeine while studying for midterms, senior citizens looking for a place to congregate and talk, teenagers seeking a place to socialize, or working individuals who need a cup of coffee to jumpstart their morning.

The marketing strategy utilized by Starbucks offers numerous competitive advantages. By aligning itself with airlines, bookstores, hotels, and other retail outlets beyond its own coffeehouses, Starbucks is able to reap the rewards of heavy foot traffic, i.e., customers who may not ordinarily visit a Starbucks may decide to try the product if it is easily accessible, i.e., in an area they had already planned to be in. Likewise, Starbucks product line has an expansive consistency, depth, and width. Although Starbucks originally began as a gourmet and specialty coffee retailer, it has broadened its reach to include Frappuchinos, iced coffees, juices, pastries, teas and a multitude of other products. In addition, Starbucks offers consumers the opportunity to purchase clothing, coffee mugs, specialty coffees, tea pots, and other products. It is the company's uncanny ability to recognize and adapt to the changing tastes of consumers and its unwavering willingness to experiment with products and marketing techniques that has allowed Starbucks to experience unparalleled growth and profitability.

II. PROBLEMS

When trying to determine what primary and secondary problems Starbucks has and/or will experience, it is quite difficult, perhaps because Starbucks has achieved and maintained such an unparalleled level of profitability and success. One of the main problems Starbucks faced and continues to face is how to expand its market share and profitability in light of ever-changing economic situations, both in the United States and in foreign countries. However, as is the case with other companies, there is no simple or proven answer for how Starbucks could and/or should deal with changing economic environments, as by their very definition, economic change is not an event that may be anticipated and/or dealt with in an efficient manner.

Another problem Starbucks has faced and will face in the future is expanding its reach into foreign countries. Expanding into foreign countries has been and may continue to be problematic for Starbucks for the same reason that Starbucks' expansion in the United States has been and continues to be; i.e., there are only so many individuals who drink coffee and the market is presently saturated with an abundance of local and regional coffee shops. However, one way for Starbucks to… [END OF PREVIEW]

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