Challenges of Starbucks as a Coffeeshop

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Over the years, Starbucks has become a global company. Today, Starbucks is the largest coffee-house company with 31,256 stores worldwide in 2020. Starbucks is present in 78 countries with around 27,340 Locations. Starbucks purchases and roasted high quality whole bean coffees and also offer a variety of coffee, teas, fresh food item, fine pastries and other delicious treats. And the music you hear in store is to let customer feel relaxing. Starbucks purchases and roasted high quality whole bean coffees. Besides that, it is convenient because it is easy and speed that we can buy it through drive thru, counter and delivery. The President and CEO of Starbucks is Howard Schultz. On the other hand, Starbucks was founded by three local entrepreneur name Jerry Baldwin, Gordon Bowker, and Zev Siegel in Seattle, Washington in 1971.They are teacher before this. Starbucks started its journey from a single store across the street which located at the historic Pike Place Market in Seattle. During this time, the Starbucks corporation only sold fresh whole roasted bean, gourmet coffee beans and brewing and roasting accessories but did not make coffee to sell. In the year 1981, Howard Schultz a sales representative for Hammarplast a Swedish company which sell Starbucks drip-coffee makers, he join Starbucks as the director of retail operations and marketing. Other than that, in the year 1983 the company sent Howard Schultz to Italy then he’s impressed with the tastes of espresso bars in Milan. After the trip to Milan, Schultz determined to bring Italian coffee bars to the United States, but found his boss was reluctant, and being still more dedicated to retailing coffee. As a result, Schultz left the company and he opened his first coffee bar in 1986 Called Il Giornale. After a spring year in 1987, Howard Schultz bought Starbucks Company and He re-branded his own coffee bars Il Giornale, hence started the journey of the brand “STARBUCKS”.

Firstly, Starbucks sales are affected by political factors, directly and indirectly. The patterns of sourcing the raw materials have evolved into a significant political factor that directly affects the business, which has attracted the attention of the politicians in the countries from where it sources its raw materials. For this reason, Starbucks is keen on adhering to social and environmental norms. It is willing to follow appropriate sourcing strategies and it gives importance to fair trade practices. Another political factors that Starbucks need to follow is the laws and regulations of the countries where there it sources its raw materials from. The activism and increased political awareness in the developing countries have made his essential.

Secondly, the economic factors which affect Starbucks could be exchange rates, and interest rates. Starbucks is affected by exchange rates when dealing with international trade if the currency of the country of a coffee supplier falls this enables Starbucks to paid less when importing the goods to their country. So that the saving can be passed along to the customer by cutting down on their coffee consumption are changing to lower-priced which are an opportunity for Starbucks. Besides that, an increase in interest rates means that the firms may delay or cancel their plans to expand as the cost of borrowing money is high for Starbucks and its suppliers. This means that the cost of borrowing increases thus people will borrow less more incentive to save, so the consumers have less income to spend on luxury products such as coffee. This causes Starbucks with customers spending less on their product so the sales will drop.

Thirdly, social factors examine the social environment of the market like cultural trends, demographics, population analytics. Starbucks would like to locate to an area where has high population which has more customer. However, Starbucks should widen their market this is the most profitable way. Due to the social culture, Starbucks can offer cheaper products with the sacrifice of quality.

Lastly, the developments in the technology such as coffee making machines this will enable their worker to work more quickly and this used to lower the labour cost and save time. Nowadays Starbucks uses social networking to advertise through world-wide to reach to people’s minds easily. Furthermore, Starbucks is also doing online delivery of their produced coffee it is convenience for the customer.

There are many challenges that Starbucks face as a high-end coffee shop. Starbucks only purchase the premium quality coffee beans for their product, is the priced that higher than other competitors and this will be giving the competitors a cost advantage over Starbucks so that the sales of Starbuck decreases follow by decreasing profit. This will cause Starbuck to face financing problem. On the other hand, health concerns are another challenges of the Starbucks consumers are aware of obesity with dairy, sugar and caffeine product this may caused some customers to turn to their health option. Starbuck can offer more choices of beverage. Besides that, ethical issues is another challenges of Starbuck is having too much of locations around the world and it often end up with multiple Starbucks Store in one street this will effect on smaller coffees shop. Starbuck to face with their strategy of expanding their company. Furthermore, the main ethical issues that Starbucks faced was the environmental and consumer issues. This will be resulted in profit lost as customer who support Eco-Friendly product.

Starbuck should have a more reasonable price strategy to face with harsh competition of others like Mc coffee or can come out with discounts and promotions to reduce cost this may increase in sales. Starbuck can offer more choices of beverage this will attract the customer and increase in customer loyalty and customer base. Besides that, Starbuck can list out the nutrition facts for the Starbucks coffee menu so that the consumer can use the calorie filter to find the item that best fits their diet and Starbuck can alternate to healthy ingredients. Lastly, Starbucks should be aware of the location and due to the environmental and consumer issues, Starbuck can come out with Eco-Friendly product which can be replace from plastic straw to alternative material straw.

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