Company overview
1. Analyze the internal and external environment as per Starbucks’ Annual Report and other
supporting evidence you have gathered on the company for 2022 onwards.
Starbucks is an American coffeehouse headquarters situated in Seattle Washington. Starbucks is the
largest coffeehouse chain in the world founded in 1971 by Jerry Baldwin, Gordon Bowker, and Zev Siegl.
By the early 1980 Starbucks had opened four stores in Seattle and later scattered among different
geographic areas around the world. Today Starbucks operates 17,133 company operated and 16,700
licensed stores worldwide. Kevin Johnson being the current CEO of Starbucks, the stores has become
more than just a coffeehouse, a third place between work and home. The specialty coffee brand
operating in 83 markets selling handcrafted coffee, tea and other beverages and a variety of high quality
food items through stores. The company is also popular in selling coffee and tea products under their
trademark. In addition to their flagship coffee brand the company sells goods and services under the
following brands: Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve and Princi.
SWOT Analysis
Strengths
The company is a strong a brand in the beverage industry, the current size, volume and the number of
growing customers will lead to further growth overtime, the total number of Licensed stores
internationally for the year ended September 2020 accounts to 16,023 which (Starbucks Corporation -
Financial Data - Annual Reports, no date) can be expected to grow further from 2022 onwards due to
the brand value and popularity. Starbucks expansion of 55,000 stores in over 100 markets by 2030
(Starbucks for 2030, 2022) (Starbucks Innovation, 2022).The company has a strong financial performance
with a revenue of $29 billion and a profit of $4.2 billion in the fiscal year 2021 (Starbucks Corporation -
Financial Data - Annual Reports, no date) this can be expected to grow further due to Starbucks
extensive global supply chain and acquisition of 6 companies which has proven to be quite successful.
(Waltman, 2021). Expects ongoing non-GAAP EPS growth of 10% to 12% in 2023 and 2024. (Starbucks
Vision for the Future, 2020). The brand and revenue is also expected to grow due to Starbucks innovative
merchandises and food items for an example ice cubes made of coffee which attracts consumers.
(Waltman, 2021). Reinvestment strategies and well planned strategic decisions can be a advantage to
the company in the future.(Business Strategy Hub, no date). “The company’s global store portfolio
expected to grow by approximately 6% annually starting in FY22, fueled by impressive new-unit
investment returns, At the enterprise level, on annual basis starting in 2023, Starbucks expects revenue
growth of 8% to 10% ”.(Starbucks Vision for the Future, 2020)
Starbucks confirms to expand 55,000 stores over 100 markets by 2030, and with over $25B return in the
last four years, Starbucks recommits to return another $20B by 2025. (Starbucks, no date). Starbucks
driven to elevate customer experience by beverage innovation and expanding digital customer
relationships.(Starbucks, no date). Starbucks has been listed on the Fortune’s top 100 best workplaces
to work the employees get healthcare, discounts, and other benefits, this is done under the philosophy
that If employees are treated well then customers get better services in the future, the company also
provides loyalty programs such as earning star points to its customers to which helps to grow sales.
(Waltman, 2021)
Weaknesses
Starbucks relies heavily on brand loyalty as the coffee costs are higher than competitors, due to the
arabica unroasted coffee prices statistics for 2030 higher prices, if the world has to face an economic
crisis in the future this will greatly influence customers buying decisions. Company is mainly fueled by
the US markets and is falling behind to international expansion of Dunkin Donuts and McDonald’s which
is expected to growth in the future. The lack of international expansion and saturation of stores in US
can be a major weakness in the future. (Manela, no date). Starbucks diminished attention on Australian
and European Market. Further, Starbucks has invested large capital into market penetration, product
development and distribution channels that could eventually cause fragility in the market and cause
slow growth in the future. (Starbucks PESTLE and SWOT Analysis, no date). Starbucks got accused of
failing to pay taxes in Europe, such negative accusations could damage the Brand’s goodwill. Also the
company failed to follow the coffee and farmer equity practices and the company has also faced
allegations in mistreatment of employees which could damage brand image in long-term.(Waltman,
2021). Unethical procurement practices and contamination and allergens.(Business Strategy Hub, no
date)
Opportunities
the company’s strong branding has made it an excellent candidate for expansion as the brand is popular
around the world they have great opportunity to expand after 2022. The success of the brewing and
espresso machines will create opportunities in the future. (Manela, no date). The delivery service for
coffee through Uber Eats, Grubhub, and Postmates this will be a good capitalizing point for Starbucks as
the growing customer demand for coffee around the worlds.(‘Starbucks SWOT Analysis 2022 |
SEOAves’, 2021). Growing demand for specialty coffee, cold brew and nitro coffee expected to grow by
25.1% for the next 6 years and US$1.63 billion by 2025 according to research by Grand View Research.
(Jurevicius, 2021)
The RTD coffee segment is anticipated to expand at the fastest CAGR of 6.4% from 2022 to 2030..
(Ready to Drink Tea And Coffee Market Report, 2030, no date)
threats
the price of unroasted Arabica coffee beans has hiked dramatically over the years and the pattern may
continue after 2022 onwards as well dur to extreme weather conditions which could adversely affect the
company.(‘Starbucks SWOT Analysis 2022 | SEOAves’, 2021) (Jurevicius, 2021). The social trend over
eating healthier food and avoiding caffeine could pose a potential threat in the future. (Jurevicius, 2021).
Executives may retire sooner due to their age and this could weaken the company’s management
capabilities. This already happened when Howard Schultz left Starbucks in 2000. (Jurevicius, 2021)
(Financial Times, 2021)
“The increase in temperatures will mean that coffee could no longer be grown in some areas. This map
shows the changes projected for 2050 in the viability of the Coffea arabica crop due to climate change”
(Ovalle-Rivera et al., 2015). Globally a 50% decline is predicted over the same period. The most likely
outcome would be a drop in quantity and a rise in prices. (Billy Clarke, 2016)
PESTLE
Political
Starbucks faces regulatory pressures within its home market in the United States because of greater
scrutiny of the business processes that multinationals based in the US are now subject to. (Prachi Juneja,
2015)
Economical
Labors demanding higher wages and coffee beans become more costly. This is contributing to the
inflation pressure of the global economy. The arabica coffee and the other sellers, jumped 76% in 2021.
This is a consequence of extreme weather conditions in top producer countries, which is expected to
continue due to global warming in the coming years. The arabica coffee beans has risen 40% since 2020.
To cover this inflation Starbucks continue to raise prices. (Hunter, 2022)
The price crisis of the coffee industry might continue for the next few decades. The price of coffee
changes every three minutes. High volatility of coffee pricing is due to weather conditions, currency
fluctuations, basic dynamics of supply and demand, rising cost of fertilizers. Lower employment of
farmers as lower prices are being paid to these families which is insufficient for survival this is reducing
coffee production. (Peter Kettler, 2019)
Social
Virginia Tenpenny the board member said that “ company was committed to enhancing the wellbeing of
1 billion people connected with the company by 2030, committed $30 million by 2030 for communities
where Starbucks operates and 1 million women and girls by 2030.” (Starbucks for 2030, 2022)
Technological
Introducing coffee brewing machines and the new Matrena espresso. Installation of MerryChef ovens
and handheld ordering devices. Launching App to control shifts virtually are few examples of future
technology deployment at Starbucks stores. (Starbucks for 2030, 2022) (Starbucks Innovation, 2022)
Legal
The HR related laws that affect Starbucks are Fair Labor Standards Act of 1938 (as Starbucks have
employees that are paid hourly and must pay mandated minimum wage rate) and the Americans with
Disabilities Act of 1990 (because it is a company that prides itself on employing a diverse people,
including disabled) (Kelly, Marce & McGowen, Jim, 2012). Starbucks should comply to Child labor laws,
discrimination, working conditions, health and safety, human rights and fair trade laws are all few legal
requirements to certify responsibly produced coffee in supply chain of the company. (Sally Ho, 2020). In
addition, company should comply with legislations on food safety (contamination, preservatives and
packaging), food hygiene and consumer protections acts especially those in the operating countries. (정,
2013)
Environmental
Commits to providing reusable cups by 2025, “We have a bold long-term sustainability vision and
ambitious goals for 2030,” said Starbucks president and CEO, Kevin Johnson in the 30 th annual meeting
at company’s 2030 planet positive goals, He also added “To help reach the company’s goal of reducing
waste by 50% by 2030, Starbucks is shifting away from single-use plastic. The company is also launching
a new Starbucks Partner Waste and Recycling App, Volvo-branded electric vehicle (EV) chargers,
powered by ChargePoint, will be available at up to 15 Starbucks stores. By 2030, Starbucks aspires to
lead the retail industry in decarbonization solutions, including Electric Vehicle charging and onsite solar
availability at stores and in adjacent locations. Starbucks plans to continue expanding its solar pilot
locations to 55 new stores this year.” (Commitment to a Planet Positive Future, 2022) . Reforestation,
water replenishment, plant based menu, waste management, and responsible operations Are plans for
2030 by the company. (Sustainable Future, no date)
(Isabelle Taylor, 2021)
Mckinsey 7s Framework Of Starbucks
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[Link]
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[Link]
through-innovation-and-learnings-from-store-partners/ (Accessed: 16 August 2022).
Financial Times (2021) ‘Jump in coffee bean prices’, 7 July.
Hunter, A. (2022) ‘Coffee shops are raising prices as beans become more costly, workers demand higher
wages’, Financial Post, 3 February. Available at: [Link]
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analysis/ (Accessed: 16 August 2022).
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2022).
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2022).
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Peter Kettler (2019) Fairtrade International. Available at: [Link]
coffee-are-we-willing-to-pay-the-price (Accessed: 17 August 2022).
Prachi Juneja (2015). Available at: [Link]
[Link] (Accessed: 17 August 2022).
Ready to Drink Tea And Coffee Market Report, 2030 (no date). Available at:
[Link]
market (Accessed: 16 August 2022).
‘Sally Ho’ (2020) Green Queen, 4 March. Available at: [Link]
starbucks-coffee-beans-supplied-by-child-labour-farms-investigation/ (Accessed: 17 August 2022).
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showcases-innovation-for-growth-and-a-more-connected-and-sustainable-future-at-2022-annual-
meeting/ (Accessed: 16 August 2022).
Starbucks Corporation - Financial Data - Annual Reports (no date). Available at:
[Link] (Accessed: 16 August 2022).
Starbucks for 2030 (2022) [Link]. Available at:
[Link] (Accessed: 17 August
2022).
Starbucks Innovation (2022) Starbucks Stories. Available at:
[Link]
connected-and-sustainable-future-at-2022-annual-meeting/ (Accessed: 17 August 2022).
Starbucks PESTLE and SWOT Analysis (no date). Available at:
[Link] (Accessed: 16
August 2022).
‘Starbucks SWOT Analysis 2022 | SEOAves’ (2021), 24 August. Available at:
[Link] (Accessed: 16 August 2022).
Starbucks Vision for the Future (2020) Starbucks Stories. Available at:
[Link]
strategy-for-continued-growth-at-scale/ (Accessed: 17 August 2022).
Sustainable Future (no date). Available at: [Link] (Accessed:
17 August 2022).
Waltman, C. (2021) ‘Starbucks SWOT Analysis (2021)’, Business Level Strategy, 6 July. Available at:
[Link] (Accessed: 16 August 2022).
정연주 (2013) ‘Starbucks Corporation’. Available at:
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