[TYPE THE COMPANY NAME]

Starbucks Corporation
External and Internal Environment Analysis
Name
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This paper explains the tenets of strategic management process and what role it plays in organization’s performance.
While the process has multiple steps, this paper discusses in detail the first two steps which are the external
environment and the internal environment. The chosen company for the purpose of this exercise is Starbucks
Corporations (Starbucks). Starbucks, started in 1971 in Seattle WA, a premier roaster, marketer and retailer of
specialty coffee across geography, operates world’s largest chain of specialty coffee shops with 24,395stores (as of
June 26, 2016) in 74 countries worldwide. (Quarter 3 Results, 2016). Besides coffee, Starbucks also retails specialty
teas, whole and grounded coffee beans, food items, enhanced beverages and merchandise. Brand ‘Starbucks’ is
flagship brand of the company accompanied by several other marquee brands including Teavana (tea stores), Tazo
Tea, Evolution Fresh, Starbucks VIA (instant coffee), Frappuccino, La Boulange (specialty bakery) and others. The
company also markets its products through grocery stores, licensed stores, national foodservice accounts, and
through alliance partners using latter distribution muscle.

1
Contents
Overview .......................................................................................................................................................................3
Strategic Management Process ......................................................................................................................................3
External Environment  General Environment .......................................................... Error! Bookmark not defined.
External Environment: Industry Fast Food and Beverage ....................................... Error! Bookmark not defined.
a. Impact of General Environment on Coffee and Snacks Shop Industry .......... Error! Bookmark not defined.
b. Porters Five Forces Analysis of Coffee and Snacks Shops Industry .............. Error! Bookmark not defined.
1. Competitors Strength and Weakness .................................................................. Error! Bookmark not defined.
2. Internal Environment: Starbucks  Tangible and Intangible Resources ........... Error! Bookmark not defined.
3. Internal Environment: Sustainable Competitive Advantage  VRIO Analysis. Error! Bookmark not defined.
4. Summary ............................................................................................................. Error! Bookmark not defined.
References .....................................................................................................................................................................3

2
Overview
Starbucks Corporation, started in 1971 in Seattle WA, a premier roaster, marketer and retailer of specialty coffee

across geography, operates world’s largest chain of specialty coffee shops with 21,878 (as of December 2014) stores

in 66 countries1. Besides coffee, Starbucks also retails specialty teas, whole and grounded coffee beans, food items,

enhanced beverages and merchandise. Brand Starbucks is the flagship brand of the company accompanied by

several other brands including Teavana (tea stores), Tazo Tea, Evolution Fresh, Starbucks VIA (instant coffee),

Frappuccino, La Boulange (specialty bakery) and others. The company also markets its products through grocery

stores, licensed stores, national foodservice accounts, and through alliance partners using latter distribution muscle.

The company sales in 2014 were USD 16.5 bn and had registered a 3-yr CAGR of 12% during the time when global

market is still in recovery phase from Great Recession of 2008. Net Profit during the same period has increased by

~18% to USD 2.1 bn and return on assets grew to 19% in 2014 from 17% in 2011.

Strategic Management Process

Strategy Management Process is a step by step process by which the organization evaluates external and

internal environment to build their vision, mission, goals and objective which becomes the stepping stone to

formulate its game plan / strategy to growth and way for implementation and finally the step to evaluate

performance against the goal setting.

It is a process broken into five steps: Assessment of External Environment, Assessment of Internal

Environment, Strategy Formulation / Development, Strategy Implementation and finally assessment of Strategic

Competitiveness Above-Average Returns. (MSG)

References
1. Quarter 3 Results, 2016, Starbucks Corporation

http://investor.starbucks.com/phoenix.zhtml?c=99518&p=quarterlyearnings

2. Strategic Management Process – Meaning, Steps and Components, MSG

http://www.managementstudyguide.com/strategic-management-process.htm

3. Strategic Management, Chapter 1, Hitt, Ireland & Hoskisson, 11e

4. Evolving Consumer Demographics, CRM Trends, 2016

1 http://globalassets.starbucks.com/assets/4286be0614af48b6bf2e17ffcede5ab7.pdf

3
5. US economic growth of 1.2% misses estimates, FT.Com, July 2016

https://www.ft.com/content/9559f716-557f-11e6-9664-e0bdc13c3bef

6. China Growth Steadies on Consumer, Dimming Stimulus Expectations, Bloomberg.Com, July 2016

http://www.bloomberg.com/news/articles/2016-07-15/china-s-economic-growth-stabilizes-on-support-
from-policy-easing

7. Soda Consumption Falls to 30-Year Low In The U.S., Fortune.Com, March 2016.

http://fortune.com/2016/03/29/soda-sales-drop-11th-year/

8. Coffee & Snack Shops Market Research, IBIS World, May 2016

http://www.ibisworld.com/industry/default.aspx?indid=1973

9. Starbucks Financial, Morning Star

http://financials.morningstar.com/ratios/r.html?t=SBUX&region=usa&culture=en-US

10. Moody’ assigns A2 to Starbucks proposed USD 750 million note offering, Moodys.Com

https://www.moodys.com/research/Moodys-assigns-A2-to-Starbucks-proposed-750-million-note-offering--
PR_348677

11. 100 best companies to work for, Fortune.Com, 2013

http://archive.fortune.com/magazines/fortune/best-companies/2013/snapshots/94.html

12. Starbucks Coffee Company’s Organizational Structure, Panmore.Com, 2015

http://panmore.com/starbucks-coffee-company-organizational-structure

13. Starbucks, where innovation is always brewing, Fortune.Com, 2014

http://fortune.com/2014/10/30/starbucks-innovation-cafe-to-classroom/

14. Statistics and facts on the coffeehouse industry, Statista.Com, 2016

https://www.statista.com/topics/1670/coffeehouse-chain-market/