Starbucks-Strategic Analysis Project: Industry Perspective & Business Description

Starbucks-Strategic Analysis
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Starbucks-Strategic Analysis
Industry Perspective
Starbucks Corporation is a multinational chain comprising coffeehouses and roastery stores with its headquarters in Seattle, Washington, in the U.S. The company primarily operates in the coffee and snack shops industry which comprises operators who prepare or serve non-alcoholic beverages and snacks; with options for customers to consume the food items on-site, take them to go, or have them delivered. Statitstics show that the industry’s market size is worth US$49billion and is made up of 75,067 businesses (IBISWorld, 2020). In the last five years (2015-2020), the industry has faced volatile market conditions due to changes in the local and world economic environments (IBISWorld, 2020). However, the domestic market has generally been characterized by increased consumer spending thus the average industry growth in the period is 1.8% (IBISWorld, 2020). Moreover, revenue in the coffee segment, realized in the last five years is approximately US$ 438,195‬million (Statista, 2020). Just like many other businesses, the industry is currently dealing with the negative economic impacts of the COVID-19 pandemic; a situation that has caused a market decline of -9% in the U.S (IBISWorld, 2020).
Major participants in the industry within the U.S. include Starbucks Dunkin’, As well as JAB; who own 78% of all coffee shops in the country (Brown, 2019). Starbucks holds a market share of 39% with Dunkin’ coming second at 22% then other players account for the remaining 39% (Wolf, 2018). Therefore, the competitive environment is characterized by the rivalry between large chains as well as smaller players. Additionally, the current trend in the food service sector is such that demand for coffe and snack stores is highest; thus industry players such as Starbucks and Dunkin’ are working on expanding their menus to increase their sales (IBISWorld, 2017).
Business Description
Starbucks has exemplified a sustained competitive advantage over rivals based on the strategies of cost leadership, differentiation, and focus. The corporation’s major strategy is differentiation, which it has achieved by offering high quality coffee and an excellent customer experience (Khan et al., 2018). Accordingly, the company has invested in wonderful designs for its stores, welcoming ambiance as well as trained staff to offer the “Starb...