PESTLE ANALYSIS:

The acronym PESTLE stands for 6 factors which affect the business. The
factors are:
Political:
Raw materials can be considered as the main political factor in
terms of sourcing. Therefore the organisations have to follow social
and environmental norm and incorporate sourcing strategies. It
gives importance to fair trade practices. Starbucks also needs to
follow the laws and polices based on countries from whom they are
going to buy their raw materials. Activism and increased political
awareness in developing countries have made this essential. The
organisation must evaluate political stability within the nation.
Other factors include policies linked to tax and employment laws.

Economic:
The marketing activities of any organization get affected by the
economic environment. Organizations must be aware of the credit,
currency risk and debit financing. The marketing activities get
affected by wealth, interest rates, exchange rates, economic growth
etc. These factors affect the buying behavior of a customer.
Exchange rates of the goods affect import and export and interest
rates will affects organizations as there is availability of bank
finance. Another factor to be considered is that if the market price of
a product increases then consumers buying habit would definitely
reduce. People in UAE have high standard of living. The government
is putting in efforts to expand UAE economy in every possible way.
Therefore if the UAE economy is high then the consumers will be
willing to pay for premium products. The economic crises can be
considered as the prime external economic driver for Starbucks.
This factor injured the Starbucks profitability. This has led to change
the focus of the consumers to cheaper alternatives. Starbucks needs

to come up with other alternatives as consumers have not quit

buying coffee. Other economic issue faced by the organisation is the
rising labour and operational costs. Lot of stress is caused due to the
inflationary environment and falling profitability. Others include local
currency exchange rates and Local economic environment in
different markets.
Social:
The socio cultural environment portrays the demand and likings of
customers and this would differ with life style, demography, custom,
culture etc as the likes and dislikes of customers are changing. The
population

of UAE is

highly multicultural with Emiratis and

expatriates and the current population is approximately more than

1.87 million. The population highlights different nationalities with
various cultures. The population of UAE prefers premium and quality
products that force the organisations to implement new strategies
for the targeted population. Starbuck can provide their products at
low price however they may have to sacrifice their quality. This is
the major socio-cultural challenge they face. They will be able to
capture consumers from all income types. There are consumers who
are stuck to the green and ethical label and are worry about the
environmental and social cost of the brands. Therefore the
organisation must be aware of this trend. Other social cultural
factors they may face are the consumers preferences, their working
patterns, lifestyle, educational level, changing values and family
patterns.
Technological:
UAE

government

has

given

much

attention

for

technology

development. The organization is awarded many times for their

innovative technologies. Starbucks have incorporated lot of aspects
in terms of technology. Customers are using cards at Starbucks to
speed up the process of transactions. This card is incorporated with

wireless technology that allows users to wave their cards at the POS
terminal for completing the transaction. Their products can also be
purchased online through their websites. They can enjoy the
benefits of the mobile trends. They have partnership with apple for
introducing app that is based on discount coupons which has
influenced the mobile wave. The organisation provides Wi-Fi
facilities in their cafes. The consumers can access and surf web
while having coffee at Starbucks. This adds value to their brand and
enhances the customers experience. They have also introduced
payments through mobiles but is still in the testing stage and is not
incorporated in all the outlets.

Legal:
The legal factors of UAE have created certain issues for the
Starbucks operations. In UAE the country is governed by the ruling
families. They have adopted sustainable trading policies as well as
follows government restrictions, worldwide adaptability and anticorruption implementation. Its essential that the organisation
ensures that they are not violating any rules and regulations in their
business operations. They must also be careful interms of the
introduction of caffeine and the policies associated with the
consumption from the health authorities. Other legal issues which
the organisation may face interms is stricter customs, trade
regulations and Licensing regulations.
Environmental:
Many of the activists and international advocacy are concerned
regarding the Starbucks business operation practices. Starbucks are
socially responsible organization who reduces waste which they
create during the business process and as well reduces the energy,
carbon and other resources of the business. They also have adopted
techniques for recycling and composting. Consumers too have
expressed concern. Therefore the organisation must consider steps

to consider environmental factors for winning the consumers trust

and

not

polluting

environmental

the

rules

environment.

and

Starbuck

regulations,

must

environmental

consider
issues

concerning nations that produce coffee beans and global warming

and other environmental issues.