Starbucks Coffee

Posted on January 27, 2013

By Yohana Megawati (http://yohanamegawati.wordpress.com/author/yohanamegawati/)
Group Members:
1. Raynard Tantra
2. Shintia Dewi
3. Siti Damayanti
4. Yohana Megawati
5. Zhen Yaduo
6. Zhou Xiaobing

Starbucks is the coffee corporation that well-known in this entire world. As the corporation, of
course they have strengths, weaknesses, opportunities also threats to become the analysis for
the corporation improvement. So, here the SWOT analysis of Starbucks:
Strengths
- Product Diversification
Actually the main product of Starbucks that make this corporation famous and well-known is
the coffee, but nowadays in Starbucks store there are product diversifications such as: dessert,
cake, merchandise, tea, tumbler and others. It strengthens the position of Starbucks so the
customers have another choice beside coffee.
- Good Services
In each of every store of Starbucks, the baristas (the coffee maker of Starbucks is called) are
friendly. They got very well training and there is no script for the conversation between the

baristas and the customers. If the customers are businessman or the formal person they use
formal words to threat them, but if the customers are youth they use daily conversation.
Starbucks also open to critics from the customers and give the good feedback after it.
- Brand Recognition
This is the one of the best strengths of Starbucks. Brand recognition of Starbucks is all around
the world. This corporation creates the Top of Mind brand for the customers. Every one knows
about this brand now.
- Surprise and Delights
Marketing strategy is the one of the strength that Starbucks implemented to maintain the
customers heart. One of the strategies is the surprise and delight. They usually give buy one
get one free coffee or others like fill in the customer voice and get the tall Starbucks all variants.
- Cozy Places
The ambience of the stores make the customers comfortable and like to add Starbucks as their
destination to hangout, chitchat, talk about business and others.
Weaknesses
Pricing
The price of the Starbucks is the weakness of their corporation. It costs too high and the market
of their product is from middle to high class. So, it can be the strength of the other competitors
against Starbucks.
Over Expand
Expansion is the one of the good way to enter the international market, but over expand that
Starbucks did it can be the self cannibalization for this company. Example: in Plaza Indonesia
there is two stores available there, so the competitors of the store A is store B, vice versa,
which is the same brand.
Opportunities
- Product Innovation

New product that Starbucks never create it can be the opportunities for their future. For the
example, Starbucks can make the coffee candy or the innovation of the merchandise so they
can get a new market.
- Embrace New Market (Middle-Low)
The market of Starbucks is for the middle to high class based on the price so Starbucks have the
opportunities to embrace the market from middle to low class, for the example with the
student card discount or the free drinks for one day full.
Threats
Competitors
Competitors are the most visible threats for Starbucks, for the example the existence of The
Coffee Bean Shop, J. Co donuts and coffee, etc.
Global Crisis
The Global Crisis of the world can affect the development of the Starbucks. Global crisis can
make the purchasing power of the customers decrease and it can affect the sales of the stores.
- Lack of Ownership Coffee Farm
Starbucks doesnt have any coffee farm by owned. This corporation still buys from the farmers,
so it can affect the sales for them. If the coffee seeds are scarcity it can make the price more
expensive and also it can lead the price fluctuations.
Major Impediments:
Over expansion
There was a time when Starbucks was facing a big crisis during the period of CEO Jim Donald
(2002-2008) which known to concern more about the profit and ignoring the consequences of
every decision that were taken by him. The problem that caused by his wrong decision making
were over expansion. This was the problem when Starbucks opened too much branches by
almost 5 stores in a day. This led to self cannibalism which means that the branches were
competing to each other because too many Starbucks stores opened in a particular place at a
short distance.
Lost of identity

This was the problem when Starbucks replace all of its traditional machines to automatic ones.
This replacement made the Starbucks lost its original taste which previously done using the skill
of well-trained employees, replaced by the cold touch of the machine.

No more coffee smells: The Starbucks once lost its originality by creating the product
variation which was not using the coffee as its main ingredient and replacing it with
another taste.

We choose this as the major impediments of Starbucks because the problems that Starbucks
had in the reality came from the internal factor which is the over expansion and the lost
identity came from the internal decision. Usually, expansion used by the company as the
strength of them, but too much is not good, so over expansion that Starbucks did just make it
as the boomerang for the company itself. (Based on the Howards book with title Onward:
How Starbucks Fought for Its Life without Losing Its Soul)
Available solutions:
- Replace the CEO
Replace the CEO Jim Donald in order to recover the crisis in Starbucks. By replacing him, there
was high expectation to change the management that was known as profit oriented which
considered as inappropriate to be applied in Starbucks during his period.
- Close some of its branches
Starbucks was closed 400 stores to reduce the over expansion that was happened in the reign
of CEO Jim Donald. It is intended to reduce the self cannibalization.
Clover Machine
Replace the automatic machine with the clover machine which is the semi automatic one to
keep its originality and its quality control by maximizing the skill of the well trained employees
in making the coffee.
Keep its originality
Starbucks keep increasing their product variation, but still keep its originality by using the
coffee as its main ingredients without losing its original taste.
Display the coffee in the queuing line

By displaying the coffee seed in the queuing line, will increase the possibility that the customer
can clearly smell the fragrance of the coffee.
So the best solution to overcome the major problem is to replace the CEO of Starbucks from Jim
Donald to Howard Mark Schultz, because the major problem came from the former CEO who is
Jim Donald. Learn from the experience, to overcome the problem we should find and eradicate
the main cause.

REFERENCES
Adam Berger, J. B., Donald Chase & Suzana Hsu. (2008). Starbucks Th Frappucino. Retrieved
September
19
2012,
from
http://www.google.co.id/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&ved=0CEA
QFjAF&url=http%3A%2F%2Fwww.loudoffice.com%2Fdonald%2Fresume%2Fportfolio%2FStar
bucks.ppt&ei=kL9ZUMS0B8zhrAfzgYHwCA&usg=AFQjCNFIkrrnH2OneozrxYaFJrmJ63XeTQ&sig
2=Y9Dr1972yevX-xqIp-R1lg
Howard Schultz, J. G. (2011). Onward: How Starbucks Fought for Its Life without Losing Its Soul
Rodale Books.
Michelli, J. A. The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary:
McGraw-Hill.
NN.
SWOT
Analysis
Starbucks.
Retrieved
September
http://www.marketingteacher.com/swot/starbucks-swot.html#

19,

2012,

from

rizal.
(2008).
SWOT
analysis.
Retrieved
September
http://www.scribd.com/doc/3972739/Starbucks-Swot-Analysis

2012,

2012,

from