INTRODUCTION

OVERVIEW

Starbucks is a global coffee company and coffeehouse chain based in Seattle,

Washington. Starbucks is the largest coffeehouse company in the world, with 20,891

stores in 62 countries, including 13,279 in the United States, 1,324 in Canada, 989 in

Japan, 851 in China, 806 in the United Kingdom, 556 in South Korea, 377 in Mexico,

291 in Taiwan, 206 in the Philippines, 171 in Thailand, and 167 in Germany.

FOUNDING

The first Starbucks opened in Seattle, Washington, on March 30, 1971, by three

people that met at the University of San Francisco: English teacher Jerry Baldwin, Zev

Siegl, and Gordon Bowker. They were inspired to sell high-quality coffee beans and

equipment by a coffee roaster, Alfred Peet, after he taught them his style of roasting

beans. Originally the company was to be called Pequod, after a ship from Moby-Dick,

but the company was named after the chief mate on the Pequod, Starbuck. From 1971–

1976, the first Starbucks was at 2000 Western Avenue. It then moved to 1912 Pike

Place Market; it then was never relocated. The company only sold roasted coffee and

did not yet brew coffee to sell. During their first year of operation, they purchased green

coffee beans from Peet's, then began buying from growers.

LOGO

In 2006, Valerie O'Neil, a Starbucks spokeswoman, said that the logo is an

image of a "twin-tailed mermaid, or siren as she's known in Greek mythology". The logo

has been significantly streamlined over the years. In the first version, the Starbucks
 siren was topless and had a fully visible double fish tail. In the second version, which

was used from 1987–92, her breasts were covered by her flowing hair, but her

bellybutton was still visible. The fish tail was cropped, and the color went from brown to

green. In the third version, used between 1992 and 2011, her bellybutton and breasts

are not visible, and only little remain of the fish tails. The original logo was moved to the

Starbucks' Headquarters in Seattle.

In September 2006 and then again in early 2008, Starbucks temporarily

reintroduced its original logo on hot-drink cups. Starbucks stated that this was to show

the company's heritage from the Pacific Northwest and to celebrate 35 years of

business. The vintage logo sparked some controversy due in part to the siren's bare

chest, but the temporary switch had little attention from the media. In January 2011,

Starbucks made small changes to the company's logo, removing the Starbucks word-

mark around the siren, enlarging the siren image, and making it green.

ANALYSIS OF EXTERNAL ENVIRONMENT

Political Factors

Tariffs and International Trade regulations:

Countries belong to trading blocks such as APEC, G20 and most importantly CAIRNS

GROUP for agriculture (news.bbc.co.uk), where the main aim is to reduce the effects of tariffs.

However Global companies such as Starbucks are still affected because it operates across borders

and is in over 50 countries therefore high tariffs might mean that Starbucks reputation and ability for

sourcing the best coffee beans; which involves importing from different countries could be

compromised, subsequently affecting its global sales and competitiveness.

Government stability:

Political stability of countries is an important issue that firms need to consider because

other indicators may point to a country as being investor friendly, however that could rapidly change

when there is elections or political instability (e.g. Egypt). This could lead to massive disruption in a

firm’s operations and strategy or in a worst case scenario where Starbucks was forced to completely

pull out of Israel because of such issues thus negatively affecting its strategy for expansion.

Political influence is unfavorable in this case and presents a threat to Starbucks.

Economic Factors

Exchange Rates:

The falling dollar rates compared to other currencies (Bloomberg.com) which was caused

partly by weaker monetary policy will affect imports. Most of Starbucks’ vital supplies such as coffee

beans, sugar and milk will be affected because they are imported, thus incurring higher cost due to

weak dollar. This raises a question as to whether the company will pass the extra cost to consumer

and risk making its coffee even more expensive.

Income Distribution:

After the economic crises of 2007 that led to job losses, unemployment figures rose (to 2.5 million in

Britain 2010 – Office for National Statistics). This affected income disparity which became unequal.

Hence people that were previously able to afford Starbucks’ expensive specialty coffee now saw it

as a luxury thus leading to low sales in some locations. This in effect affects the company’s

expansion plan. In this case Economic Influences has an unfavorable impact.

Social Factors

Changing Tastes:

The changing taste in America indicates that people are consuming more specialty coffee

which amounted to about $1.3 billion in imports (Restaurant Hospitality). This influences Starbucks

because it provides an opportunity to exploit this market and gain higher market share in the coffee

market.

In India and China however, tea is still mainly preferred, so Starbucks might have to alter

its strategy there. This will not be too difficult taking into account the trend of ‘Americanisation’ and

its success across developing countries so far.

Health consciousness:

Government’s push toward healthy eating in western countries due to concerns regarding

obesity might influence companies such as Starbucks to update its menu in terms of introducing new

lines and healthy alternatives to be sold together with coffee.

This in other words means that Social Influences is favorable and can provide an opportunity for

Starbucks.

Technological Factors

Wave of Technological trends:

Technological advancements have never been so fast, hence firms need to consistently

follow the trends and exploit any opportunities that may result and implement any change required.

For example, Starbucks have embraced the new phone payments system that was introduced

recently which helps cut long queues at peak times.

 Social network memberships are growing by the millions e.g. facebook has over 500

million users and users have an average of 130 friends, additionally, time spent on the site is over

700 billion minutes a month (facebook.com). Exploiting this trend offers companies such as

Starbucks a platform to relate and share ideas with customers. It has already used social networking

sites such as facebook (with over 19 million “friends”) and a forum which it runs, to communicate and

engage with customers and communities (Economist.com). Technology has a favorable impact for

Starbucks.

Environmental Factors

Environmental pressure groups:

Non-Governmental Organizations and pressure groups possess incredible ability to

coerce businesses into changing their practices. They could influence businesses through lobbying

and boycotts. Such measures usually impact the intangible assets of a firm which usually involves

tarnishing a company’s brand name. Starbucks however works with the “Fair-Trade movement”

(Economist.com) and the accreditation that comes with such alliance massively improved Starbucks’

image, hence Environmental influences is favorable for Starbucks.

Legal Factors

Not all countries welcome big firms because they like to protect their indigenous firms

from unfair competition and takeover. Legal issues such as Monopoly and national protectionist laws

will affect Starbucks because of its size and its plan of expansion. E.g. countries like India guard

against such practices with a legislation that bars external companies from owning more than 51% in

a merger. The more this happens in other countries, the more Starbucks expansion plan is restricted.

Thus legal influences are unfavorable for Starbucks.

References:

Hanalei (2018). The History of Starbucks. Retrieved on May 21, 2018. Retrieved from

https://infogram.com/the-history-of-starbucks-1gzxop4qo53w2wy.

Deuches (2011). Analysis of Starbucks and its International Strategy. Retrieved on May

21, 2018. Retrieved from https://www.scribd.com/doc/50040066/Analysis-of-

Starbucks-and-its-International-Strategy-2011.