Essay about Economic Conditions And Trends Of Starbucks

Essay about Economic Conditions And Trends Of Starbucks

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A. Environment
A.1 Economic conditions and trends
Although Starbucks company is a very successful company, in 2008, Starbucks Company took the hit during the economic slowdown and customers opted for cheaper coffee options for their everyday coffee. Additionally, their stock price fell from $36 to $18 per share that year and was forced to shut 600 shops that were not making any profit.
A.2 Cultural and social values and trends
There is a study that there are over 166 million coffee drinkers in the United States. Additionally, most people aged 25-29 increased their out-of-home coffee consumption raised from 42-66 percent while aged 30-59 from 33 to 46 percent. It sure enough that out-of-home segment was the biggest increase and Starbucks has made coffee drinking a social phenomenon. However, because of the economic shutdown as well as specialty coffee is not considered as a necessity, people decided that it no longer fits in their budget and look for different options for their coffee.
A.3 Political and legal issues
Although there isn’t a lot of information about the political and legal issues in the book, the Starbucks Company was still considered as the world’s largest coffee retailer and has continued it success in 2008. With that said, I will consider outsourcing raw materials as one of the major political factors. Starbucks need to consider the country’s political awareness, social and environmental norms to focus in giving fair trade practice. Additionally, it is important that Starbucks ensure that it does not violate any laws especially when it comes to licensing agreements and regulations in the home market, as well as the countries where they buy raw materials.
A.4 Summary of environmental opportunities and threats
In ...


... middle of paper ...


..., Starbucks will have a hard time to maintain its price as well as the quality of its coffee. Second biggest threat is having big companies like McDonalds and Dunkin Donuts continually competing for business. Third will be the buyers, were they can choose if they want to buy expensive, cheap coffee or other beverages. Least threat will be the substitutes, because having avid coffee consumers will not be torn away by a substitute product such as tea or energy drink.
B.8 Implications for strategy development
Starbucks refocused their strategy to compete with the new entrants. They added variety of products as well as faster service to consumers. They even added a card that is very successful in the first quarter of 2008 alone. Nonetheless, Starbucks leverages its customer loyalty, premium quality coffee, and the homey atmosphere of its stores to fend off competition.

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