PESTEL Analysis For Starbucks Coffee Company

Starbucks is a global organization that was founded in the year 1971 and is the most significant coffee house company internationally. The firm operates in its characterized global economic recession, which has consequently dented to the purchasing power of consumers in the market. The company leads in the hotel industry in maintainable business operations and innovations (Wei, 2016). The success of the firm is measured by the ability of the entity to address its external PESTEL factors. The model indicates essential influences on the company regarding remote micro and macro-environment issues.

Political Factors Affect Starbucks Coffee Company

The analysis in the model identifies some political impacts on the business, mainly from the government. For instance, the firm faces regional integration which is a current trend and an opportunity for the company, along with the improvement of infrastructure around the world executed by the global governments (Wei, 2016). However, bureaucratic issues envisaged in developing nations has become a threat to the firm because an expansion of business has been thwarted for the company. In that regard, PESTEL approach presents significant opportunities for the firm mainly in developed counties (Florenthal & Chao, 2015). Therefore, political issues such as stability need to be considered as they play critical roles for the firm when venturing into a given location for business.

Economic Factors to Starbucks Coffee

Under this case, economic conditions and changes are significant to an organization such as Starbucks. In that view, the company faces some external economic factors such as the high economic growth of third world nations along with the declining rate of unemployment, which enables the company to gain more income from a spectrum of markets internationally. Besides, the increasing emplyment costs in third world nations is a threat to Starbucks, due to an increase in the firm’s spending on ingredients (Reinhard, 2015). For instance, the organization source a lot of its sources such as coffee beans from third world nations, thus the model is significant for the company analysis of its external factors, and in this case, it presents valuable opportunities for the firm.

Social Factors Influencing Starbucks Coffee Company

The model indicates some social conditions and trends that impact consumers in which the business need to address. For example, the firm has an opportunity of the growing culture of coffee in the market, which increases revenue base due to increase in demand for coffee among the ever-increasing middle class of people in the world (Florenthal & Chao, 2015). Besides, Starbucks has chances to expand its collection of more healthful commodities to fascinate more customers to the firm (Reinhard, 2015), thereby generating more profits. In that regard, such an external factor in the PESTEL model presents a significant opportunity for the firm.

Technological Factors for Starbucks Coffee Business

Johnson (2017) states that PSTEL approach identifies some of the technical and related external trends that the company experiences while executing their operations. For instance, the rising application and use of mobile purchases through the use of apps presents an outstanding opportunity for the entity to make more revenue in the market. The business has improved mobile apps along with linked services that have enabled the firm to realize more profits through mobile electronic purchases (Reinhard, 2015). Conversely, the firm has enhanced its supply chain due to advancement in technology that their coffee formers use. However, accessibility of coffee machines in homesteads is a threat to the company because a consumer may prefer to shift to alternatives than those of Starbucks. In that regard, the analysis presents positive opportunities for the company.

Starbucks Environmental Factors

A study carried out by Florenthal & Chao (2015), shows that the aspect of environmental factors identifies the effects of environmental conditions along with other changes in the business. In that regard, the firm faces some external forces in its micro along with macro-setting such as commercial sustainability trends which focuses various business processes on ensuring minimal environmental impacts. Further, the enterprise has a chance to promote its performance and business activities in corporate social responsibility in the supply chain (Florenthal & Chao, 2015). Also, the firm has responsible sourcing policies along with a chance to provide more of its foodstuffs in the form of biodegradable packaging, hence the model present excellent opportunities for Starbucks Coffee.

Legal Issues for the Company

Legal matters are the laws along with regulations that control operations of various businesses. Lack of policies could make firms to operate in unwanted grounds. Therefore, the company addresses such external factors such as product safety regulations, which presents an opportunity for the firm to enhance its performance through sufficient product safety policies on elements from GMOs commodities (Florenthal & Chao, 2015). Consequently, increasing employment regulations, particularly in third world nations, act as a challenging force to the ability of the firm to access the labor market. The issue is also a significant impact on the entity through an increase in human resource expenditure (Wei, 2016). In that regard, Starbucks is performing well in these aspects as the model presents opportunities for the firm in the market.

Conclusively, the analysis presented in the study proves that Starbucks is operating in a stable external environment because it runs in a food and beverage industry. Despite the recession, consumers of their products reduce consumption to certain levels and not entirely. Hence, the company needs to lower the costs and also get to increase the value and quality of their products, to enable the firm to retain its customer base along with attracting more customer loyalty to their products and services.

References

Florenthal, B., & Chao, M. C. H. (2015). Corporate Communicative Engagement in Micro-Blogging: Cross-Cultural Analysis of. Maximizing Commerce and Marketing Strategies through Micro-Blogging, 40.

Johnson, G., Whittington, R. Scholes, K., Angwin, D. and Régner, P. (2017) Exploring Strategies: Text and Cases, 11th edition, Harlow, Pearson

Reinhard, K. (2015). Differentiation as the key to success. A marketing plan for Starbucks.

Wei, C. (2016). MARKETING STRATEGY FOR SETTING UP AN OWN COFFEE SHOP IN CHINA: Using Starbucks as a case study.