STRENGTHS (S)
1. Uniqueness and being the first
SWOT MATRIX
OPPORTUNITIES (O)
1. Expansion into emerging
markets
2. Expanding product mix and
offerings
3. Technological advances
4. New distribution channels
THREATHS (T)
1. Increased competition
2. The price of coffee beans
3. Economy of developed
country
4. Change of lifestyle and
preferences
5. Brand imitation
WEAKNESSES (W)
1. Product expensiveness
2. Starbucks’ values 2. Cannibalization
3. Innovation 3. Clash of the coffee cultures
4. Strong market position and 4. US market dependence
global brand recognition
5. High quality products
6. HR management
7. Starbucks product mix
8. Advertising
(SO) (WO)
1. Market the brand heavily 1. Release medium priced
in the less penetrated areas. products to attract middle
Use the global brand image class customers in larger
to extend presence in numbers and increase
emerging economies. (S4, sales in the Asian
O1) countries. (W1, O2)
2. Extend the product mix
while maintaining the focus
on product quality. (S5, O1)
3. Partner the other well-
known brands in the Asian
markets to penetrate the
market faster. Mutual benefit
for both from each other’s
capabilities. (S8, O1)
(ST) (WT)
1. Focus on marketing and 1. Release a range of low
advertising to attract and cost products to minimize
retain more and more the cost challenge from the
customers and reduce competing brands. (W1, T1)
competitive pressure. (S4&8, 2. Marketing the quality of
T1) its premium and exclusive
2. Marketing to the millennial products to minimize the
generation to capitalize on threat arising from imitation
changing demographic by the other brands that sell
trends. (S3&8, T4) it cheaper. (W3, T5)
3. Advertising the quality of
products to differentiate from
competing brands and
reduce the challenge due to
imitation. (S5, T1&5)
4. Marketing the ethical
image of the business to
reduce competitive pressure.
(S6, T1)
Strengths:

1. Uniqueness and being the first- Almost 30 years ago, Starbucks became the first company in
America to provide comprehensive health insurance to every single employee.

2. Starbucks’ values- The executive team asked Starbucks partners to review and comment on the
drafting of the mission statement. Based on the feedback, the final statement put “people first and profits
last”. In fact, the number of guiding principle in Starbucks’ mission statements was to “provide a great
work environment and treat each other with respect and dignity”.

3. Innovation- Today, we have to understand that innovation is less about technology and is lot more
about giving consumers novel and valued experiences. Starbucks gets this part perfectly. Starbucks is a
place, where innovation is always brewing.

4. Strong market position and global brand recognition- it can situate retail stores in select rural and
off-highway locations to serve a broader array of customers and further expand brand awareness.
Starbucks has operations in more than 60 countries and is the most recognized coffeehouse brand. Plus,
Starbucks is the #52 most valuable brands in the world.

5. High quality products- One of the things that Starbucks cares the most, is the quality of their
products.

6. HR management- Schultz maintains that it is better for a company to take some short-term losses than
to lose sight of its core values in the long term. Despite cutbacks and store closings, Starbucks has been
praised for not cutting back on employee health care costs.

7. Starbucks product mix- Starbucks continues to introduce new products and steadily captures the
attention of all age groups. For now, Starbucks’ product line includes: Coffee, Tea, Pastries, Frappuccino
beverages, Smoothies. It also began offering value meal called Breakfast Pairings that enabled
customers to order oatmeal or coffee cake and a latte or a breakfast sandwich and a drip of coffee.
Oatmeal has become one of the most popular food offerings at Starbucks.

8. Advertising- Starbucks was one of the first companies to use social media as a way to advertise. Plus,
they were the first company to get 10M likes on Facebook. Besides social media, Starbucks’ commercials
are always fun to watch.

Weaknesses:

1. Product expensiveness- The relatively higher prices of Starbucks products make it less accessible to
the large population of lower-middle class and lower class consumers. Most Starbucks products are also
based on generalized corporate standards that make the products less aligned with cultural demands in
some markets.

2. Cannibalization- In the US, Starbucks is aggressively expanding, leaving no place for future growth
targets. Starbucks operates 8078 stores in the United States and if the company continues to expand this
fast, self-cannibalization is inevitable.

3. Clash of the coffee cultures- Starbucks coffee culture isn’t widely accepted in Europe and Asia. The
company might find it hard to become an international industry leader.

4. US market dependence- A big part of Starbucks’ annual revenue is generated from the US market.
Considering the possibility of cannibalization, Starbucks must act really careful not to harm its revenue.
Opportunities:

1. Expansion into emerging markets- 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. The self-cannibalization of the US market, indicates how
important it is for Starbucks to expand the brand, internationally.

2. Expanding product mix and offerings- Starbucks introduce VIA instant coffee and has become the
official brew aboard selected by JetBlue flights in United Kingdom and Spain. 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.

3. Technological advances- To enhance the European coffee shop experience for whch Starbucks is
known, shops are replacing their old espresso machines with new high-tech ones, and some Starbucks
are switching over the Clover Brand single-cup brewing machines so that customer receives a freshly
brewed cup of coffee made to the customers’ specifications.Starbucks also introduced a Starbucks Card
mobile app that can be used to pay for purchases along with Starbucks Card eGifts that can be sent to
friends through Internet.

4. New distribution channels- Starbucks sells coffee and tea product and licenses its trademark through
other channels like grocery stores and through retailers like Walmart and Target, and some of its partners
such as Courtesy Products to create single-cup Starbucks packets that will be marketed for hotel rooms
and restaurants. To provide a greater degree of access and convenience for non-pedestrian customers,
the company increased development of stores with drive-through lane.

Threats:

1. Increased competition- Low- cost coffee from firms like McDonald’s and Dunkin’ Donuts effectively
compete against the more pricey Starbucks products.

2. The price of coffee beans

3. Economy of developed country- Global recession pulled back Starbucks from expansion, closed
hundreds of stores around the US. People also experiencing recession- spawned trend that cut back on
their expenditures, many began brewing their own coffee rather than purchase more expensive coffee
shop concoctions. (T3, O1)

4. Change of lifestyle and preferences- There is also a growing social movement supporting
independent coffeehouses and opposing large coffeehouse chains like Starbucks.

5. Brand imitation- Starbucks Coffee’s business is imitable in terms ofproducts and café ambiance.
Many competitors have already imitated Starbucks and succeeded, such as Stars and Bucks, a
coffeehouse in the Palestinian Territories.