This is the detailed PESTLE analysis of Starbucks which is a multinational coffeehouse chain that was founded in Seattle, Washington in 1971. The company is known for its high-quality coffee and espresso-based beverages, as well as its wide selection of teas, pastries, and other food items. Over the years, Starbucks has expanded its business to include more than 31,000 locations worldwide, making it one of the most successful and recognizable brands in the coffee industry.
Starbucks is operating in the macroeconomic environment and is facing the continuous economic recession. The recent research is carried out in past months to show that people not reduce the use of coffee but they started the lower price coffee instead using higher quality. Now Starbucks can provide the cheaper alternative to its users to maintain its customer base and can have the significant advantage over its rival companies. The brand used the latest apps in the phone to introduce its products to the consumers with revised rates through the use of emerging mobile computing revolution.
The brand also increased its sale by making co-branding and cross selling and Starbucks got tremendous benefits with the introduction of new smart phones and the similar technology. It is also noted that people follow the social and environmental norms while using the products of the brands. Now Starbucks has to face this new emerging challenging in meeting the demands of their clients.
Political Factors
The main political concern is the sourcing of raw materials, which can attract the attention of politicians of western countries and from the countries having sources of raw materials. Starbucks wants to adhere to social and environmental norms and the company needs to follow such strategies, which can help in carrying out ‘Fair Trade’ on which the government and corporations are agreed. The regulatory pressure is another political imperative in the home markets of US to scrutinize the business processes with the multinational companies.
The brand also follows the laws and regulations of the countries, where they get the raw material. It is necessary to create activity and also create the political awareness in the developing countries and these are the basis of the sourcing strategies of the brand. The brand also has to follow the tax policy and the laws for the employments, which are changed from time to time. In the stable political situation, the company can monitor its working easily and also find its better financial position.
Economic Factors
Starbucks is facing the severe global economic recession, which is the important external economic drive. This economic recession has done the damage to the profitability of various companies and brands. Due to this economic recession, people did not leave use of coffee but instead they shifted to its alternatives, which are provided at the lower price, which is great opportunity to the brand and it started providing lower price products to cope with demands of its clients.
There is consistent increase in the operational and labor costs of the company as the macroeconomic environment helps the brand to compete with the lowering profitability, which is becoming reduced. The company has to maintain its economic strength by providing the comparatively cheap products to its clients and maintains its financial position and also deal with its rival companies, which are working in the market.
Socio-Cultural Factors
Starbucks offers the cheaper products to its clients and the brand tried to maintain the quality of the products, which was tough decision for the brand to make. This is the important and basic socio economic cultural challenge, which the company has to face at the time of expanding the consumer base from lower to middle tiers of the income base. There are the ‘green’ and ‘ethical chic’ consumers, who are upset with the social and economical prices, set by the brands and these are the consumers, who are following this trend. In the socio-economic situation, the third party is the baby boomer generation, which spend through their older consumers and they tap off and they can become the integral part of the strategy of Starbucks. The company has to focus on the preferences of the consumers, changes in the lifestyle of the population, change in the work patterns, varied level of education of people in market and change in values can affect the business pattern and meet the demands of the clients.
Technological Factors
The brand is using the technical development in its working and it is ready to get maximum benefits with the emergence of the mobile wave. The emergence of the mobile phone revolutions in shape of apps can best help the brand with app having discount coupons. It can help them in getting the mobile wave conveniently. The introduction of Wi-Fi in the outlets of the company can help them in doing the web surfing and they can carry out their working as and when they required. This is the best use of technological development for the customers and added value for the brand, which can enhance the experience of the consumers. Starbucks can also introduce new technological developments through the mobile payments and this feature has already been test in different pilot locations, which are used in US.
Legal Factors
Starbucks is the legal company and it abides by the laws and regulations in the countries, where it operates and it also follows the rules in the sourcing countries to get the raw material. The company did not get involved in the breach of law or mistrust over its policies and conducts and there is no precedence to violate the rules. So the company does not have to face irregularities or complaints from its clients, which can create serious problems for the company.
Various policies and regulations regarding production and consumptions of caffeine are formulated from time to time and the company has to follow them. There is consistent change in the regulations of custom and trade and also take care of the licensing regulations, which are concerned with this industry.
Environmental Factors
Various concerns have been raised by the activists, international advocacy groups, and from the consumers about the business practices and the company needs to address them at the priority. If the company wants to maintain the trust of the consumers, then it is necessary to hold it. There are also the environmental disasters in all those countries, which produces the coffee beans. The environmental rules and regulations are also great concern for the company to carry out its works. There are some other environmental issues like global warming, which are spreading on the globe.
Conclusion
In conclusion, Starbucks operates in a dynamic external environment that poses challenges to the company in terms of political, economic, socio-cultural, technological, legal, and environmental factors. The company has to follow various regulations and policies in the countries where it operates and ensure adherence to social and environmental norms. The global economic recession has impacted the company’s profitability, and the brand has had to adjust its pricing strategy to cope with demands.
Technological developments have provided opportunities for the brand to enhance the experience of its customers. However, the company needs to address environmental concerns and maintain the trust of its customers to sustain its success. In general, Starbucks needs to navigate the complexities of its external environment to maintain its financial position and stay competitive in the global market.