SWOT Analysis: Starbucks

Starbucks SWOT Analysis
by David Schwartz

What Does SWOT Analysis Mean?
SWOT is a tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, straightforward model that assesses what an organization can and cannot do as well as its potential opportunities and threats.

The method of SWOT analysis is to take the information from an environmental analysis and separate it into internal (strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT analysis determines what may assist the firm in accomplishing its objectives, and what obstacles must be overcome or minimized to achieve desired results.

Starbucks SWOT Analysis
Strengths
High visibility locations to attract customers
Established logo, developed brand, copyrights, trademarks, website and patents
Company operated retail stores, International stores (no franchises)
Valued and motivated employees, good work environment
Good relationships with suppliers
Industry market leader with a globally renowned brand
Customer base loyalty
Product is the last socially accepted addiction
Widespread and consistent
Knowledge based

Weaknesses
Size
Lack of internal focus (too much focus on expansion)
Ever increasing number of competitors in a growing market
Self cannibalization
Cross functional management
Product pricing (expensive)

Opportunities
Expansion into retail operations
Technological advances
New distribution channels (delivery)
New products
Distribution agreements
Brand extension
Emerging international markets
Continued domestic expansion/domination of segment

Threats
Increased competition from coffee shops and others (restaurants, street carts, supermarkets)
US market saturation
Coffee price volatility in developing countries
Negative publicity from poorly treated farmers in supplying countries
Consumer trends toward more healthy ways and away from caffeine
Fragile state of worldwide production of specialty coffees
Alienation of younger, domestic market segments
Corporate behemoth image
Cultural and Political issues in foreign countries

A SWOT analysis is expected when applying for a loan, venture, or angel capital. It is usually a part of a more comprehensive business plan. When using SWOT analysis for your business plan, be realistic about the strengths and weaknesses of your organization. Distinguish between where your organization is today, and where it could be in the future. Also remember to be specific by avoiding gray areas and always analyze in relation to the competition (i.e. are you better or worse than competition?). Finally, keep your SWOT analysis short and simple, and avoid complexity and over-analysis since much of the information is subjective. Thus, use it as a guide and not a prescription.

David Schwartz, CEO and creative director of SOS Business Development Consulting, is a prominent marketing strategist in the specialty coffee and food business. His background includes branding, design, advertising, and strategic marketing for a diversified client base worldwide. He lives in the Los Angeles area and attended UCLA and Art Center College of Design. He can be reached at 760.345.5069, email