Environmental scanning is the first portion to an organization’s strategic management and is very important to the corporation. Environmental scanning is gathering information for the external and the internal of the company. A SWOTT is the best way to gather the information. A SWOTT is determining the strengths, the weaknesses, the opportunities, the threats, and the trends of the organization. Starbucks is a coffee shop that sets out to be different from the competitors. The company does not just focus on coffee but “bring a feeling of connection” to the people.
Starbucks mission is “to inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time” (Starbucks, 2010, Para. 1 & 3). Starbucks is a multi-billion dollar corporation and is the go to place if someone is looking for a great cup of coffee. By using an environmental scan and determining the strategies the company uses to have competitive advantages will help explain why the company is so successful.
Determining the values and what measurement guidelines Starbucks uses will promote how the corporation stands out for the rest of the competitors in the market.
Environmental Scan Paper Environmental scanning can be described as the process of collecting, examining, and assigning information for strategic purposes. “The environmental process entails both factual and subjective information on the business environments in which a company is operating” (Ask Kids, 2011, Para 1). The best way to perform environmental scanning is by creating a SWOTT analysis. A SWOTT analysis is how a corporation can outline the company’s strengths, weaknesses, opportunities, threats, and trends that are important to the organization.
In this paper the internal and external environments of Starbucks will be described using an environmental scan. The competitive advantage and what strategies being used for Starbucks will be determined, but answering the following questions. How does Starbucks create value and sustain competitive advantage through business strategy? What measurement guidelines is each company using to verify its strategic effectiveness? And how effective are the measurement guidelines that Starbucks is using? Internal and External Environments of Starbucks.
The strengths and weaknesses that are within Starbucks are the variables that make up the corporation’s internal environment. The opportunities, threats, and trends that are outside Starbucks are the variables that make up the organization’s external environment. Starbucks strengths include profitability, popularity, respected employer, and have ethical values. Starbucks is a very profitable, earning over 800 million dollars in 2009. The revenue of Starbucks in 2010 excessed 7000 million dollars. Starbucks is a global coffee brand that can be purchased all over the world.
As of 2011, the organization has over 8000 cafes throughout the United States. In 2005, Starbucks was one of the “Fortune Top 100 companies to Work For. ” Starbucks thrives on having an ethical mission statement and values within the company. (Marketing Teacher. com, 2011, Para 3). There are only a few weaknesses that Starbucks has, nevertheless, crucial to the corporation. Starbucks products can be purchased all over the world. However, over three quarters of the cafes are located in the United States.
The reputation Starbucks upholds with the public on new and creative products is incredible, but over time the public may get bored with coffee or find an alternative way to consume caffeine, such as energy drinks. Starbucks has opened up to new ideas as pastries and a small lunch menu, but most of the revenue is the retail of coffee. Starbucks depends on having a competitive advantage over the competitor, but only having a small menu forces the customer to look elsewhere, such as McDonalds. Starbucks price are much higher than the competitors.
The price for a regular cup of coffee at Starbucks is about four dollars, which is expensive with the economy being in a runt. Opportunities are endless with any corporation if there are the right people in the innovation department. Some of Starbucks opportunities include new markets, new products, and partnering with other manufacturers. Starbucks should expand the cafes globally to be able to saturate the products nationwide. Starbucks has always done limited time only for the holiday’s coffee, such as “Peppermint Swirl during Christmas or Citrus Green Tea Splash during spring”.
However, Peru and El Salvador are some of the main suppliers of coffee to Starbucks, serving Fair Trade products are a way for Starbucks to stand out from many competitors. Partnering up with Keurig is an outstanding opportunity; Keurig is a company that specializes in brewers that brew singe serving cups of coffee (Starbucks Menu, 2010, Para. 7). Some of Starbucks threats would include health concerns, inflation with products, and competitors within the caffeine market.
The government is beginning to place tougher rules on the caffeine content on coffee products and the consumers are starting to look for alternative methods to consume caffeine in healthier way. The inflation on product is all over the world, the cost of dairy products and coffee has almost doubled in the past two years. If the price for dairy products and coffee continues to increase, Starbucks will have to increase the prices on the drinks. Starbucks has hundreds of competitor in the coffee market, such as McDonalds, Dunkin Donuts, 7-11, and Einstein Bagels.
Each competitor has different prices and offer different items, but all are considered a potential threat. Analyzing trends is a new area that organizations are beginning to consider when doing the SWOTT analysis. Starbucks treads is the music and art displayed in the cafes are from up and coming artist, and specialized group including upper class, students, and business men or women are drinking the products. Starbucks Strategy Starbucks uses the corporate, the business, and the functional strategy simultaneously. Starbuck’s corporate strategy describes the “overall direction of the company and management. Starbuck’s business strategy covers “the competitive and cooperative strategies. ” The functional strategy is the path taken by a particular area to meet the corporate and business strategies “by maximizing resource productivity. ” Starbucks has all the strategies located within one other so that each strategy can balance and back up each other, which is called a hierarchy of strategy (Wheelen, 2008, pg. 15). Starbucks Values The corporate culture is how Starbucks created the values for the company. Starbucks values are experience, customer intimacy, and ambience.
The corporation wanted to develop an experience for the consumer. Starbucks wanted to step out of the box and a new mean to customer intimacy, by making the consumer feel like a friend instead of just another coffee drinker. The organization wanted to build an ambience so people all over the community could come together. Starbucks Sustain Competitive Advantage A unique service or product that an organization offers that no other competitor can duplicate or copy is called a Sustainable Competitive Advantage (SCA). Some of the services or products can include product design, product features, the brand, and the method of delivery.
Starbucks is considered as the market pioneer of coffee because of the extensive initiative the organization has done to sustain the brand advantage. Starbucks try to stand out from the competitors by doing things differently. The lines at Starbucks are always long, instead of consumers leaving to pick up a cup of coffee elsewhere, the customer will wait because Starbucks has made the coffee buying experience almost a lifestyle. Starbucks Measurement Guidelines The nature of any organizations is to be successful and to be the number one in what they sell or do, Starbuck is no different.
There are a variety of strategies that Starbucks focuses on to be about to have competitive edge over the competition and to be able to continuously reinvent Starbucks approaches. The three main guidelines to measure strategies of Starbucks are to expand and enhance the brand name, the value placed on customer satisfaction, and value placed on the employees. Starbucks is constantly reviewing data pulled from the existing stores and the newly opened stores, so the company can expand the profitability for both stores while preserving a continuous growth rate.
Starbucks believes the customer happiness is just as important as the employee. Starbucks is determine to hire responsible and attentive people so they can lessen the time in line and still have the connection with each customer. Starbucks has a thorough training session twenty hours before each employee is considered full time. Starbucks offer the part-time employees an insurance package, which most place to not. Starbucks believe if the employee is happy the work environment will be more family-oriented. Everyone knows a happy employee makes a happy customer. Effectiveness of Starbucks Measurement Guidelines
Starbucks is the leading seller of coffee nationwide, totaling 17,009 stores as of January 2011. This says a lot considering forty years ago the coffee was being sold in a small cart. The main reason why Starbucks stands out from the competitors is because the company cares not only about making a dollar, but of the community and the people in the community. The process is almost too easy to explain: 1. Treat the employees great 2. The employees will treat the customers great 3. The customers cannot get enough of the company 4. The company will lead to future growth and success. Conclusion
In conclusion, for any company to be profitable the company needs to perform an environmental scan, determine what competitive advantages the company has, and what strategies the company uses. Starbucks environmental scan showed the internal and external environments with a SWOTT analysis, which determined strengths, weaknesses, opportunities, threats, and trends. The paper determined that Starbucks uses the corporate, the business, and the functional strategy simultaneously, which is called a hierarchy of strategy. Starbucks values are experience, customer intimacy, and ambience.
The three main guidelines to measure strategies of Starbucks are to expand and enhance the brand name, the value placed on customer satisfaction, and value placed on the employees. The paper finally concludes the effectiveness of the guidelines to be as simple as treating your employees well, the customers will treat the consumer well, and the store will grow and be profitable. Starbucks has always strived to have a connection with the employees and customers from the beginning. Everyplace that Starbucks is, the corporation tries to make the place a little better than they found it.
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