Starbucks' strengths, weaknesses, and market opportunities analysis

Strengths

The number and location of stores is a tremendous strength, and the same-stores strategy has worked effectively for years as a means of expanding market share ("Growth strategy," 2002).

Starbucks offers a wide variety of products which are sold in its coffee shops, in grocery stores, in other retail outlets, and through its Website ("Schultz return," 2008).

Loyal customers visit Starbucks stores an average of 18 times per month, illustrating the strong loyalty and affinity experienced by the brand ("Schultz return," 2008).

Starbucks introduced The Third Place to its public -- a place for gathering that is not work and is not home, yet plays a prominent place in customers' lives, or especially in their work lives (Mitchelli, 2010).

The fiscal crisis in 2009 resulted in reduced in-store sales so a less expensive Starbucks coffee product was needed. The home-brewed, thermos toting practices of the newly frugal were eroding market share. Starbucks introduced Via® on February 17, 2009, instant coffee in tubes which has been described as indistinguishable from the drip brew in the Starbucks' stores. In an exceptional stroke of distributive genius, the instant coffee is also sold in retail operations like Office Depot and REI, a Seattle-based recreational equipment outlet. Via® was being sold on supermarket shelves, right along with bags of Starbucks beans ("Schultz return," 2008).

Starbucks makes excellent use of market research and has a number of social media connections with its customers. This emphasis on deep-listening should help the company implement its plans to "shift its emphasis back on customer-facing initiatives" ("Schultz return," 2008).

Starbucks is a strong and active innovator. It introduced a music store to the coffee shops and to the Website. The company made use of technology in its stores, as a means for ordering drinks, and was one of the first businesses to invite local, local customers into stores through check-in applications like Four-Square.

The company has been a leader in the provision of benefits to its employees and in participation in philanthropic contributions and activities.

Starbucks has a strong commitment to ensuring its transactions in global coffee markets are ethical, and actively participates and promotes the growth and distribution of Fair Trade coffee beans.

Weaknesses

The public tends to fall on either side of the fence, really liking the brand or really disliking the brand. Starbucks tends to underestimate the number of people who would just as soon see the company fail (Mitchelli, 2010).

Market saturation, though Starbucks management denies this is a dynamic, Schwartz corrected for it in 2009 when he returned to the company as CEO. Schwartz argued that Starbucks had "invested ahead of the growth curve" ("Schultz return," 2008).

The company has had to jettison several hundred stores in order to help "bring its back-end costs in line with the business model" ("Schultz return," 2008).

Threats

Several competitors with an iconoclastic bent have challenged Starbucks core competencies. The Golden Arches were now overtly competing with artisanal coffees and desserts at its McCafe. Dunkin' Donuts beat Starbucks in a prominent coffee taste test.

Increased product development of coffee types that are distinctly different from Starbucks hand-crafted espresso-based drinks could dilute the brand (Coffee is hot," 2011).

Fluctuations in the price of commodities are a substantive factor in Starbucks operations costs, with coffee beans and dairy products leading the list. Coffee bean deals in developing countries are subject to political, economic, and geographic shocks.