Political Factors AND Starbucks Essay Sample
The company is both directly and indirectly affected by a vast array of different political factors (Jobber & Ellis-Chatwick 2013). In particular, the ways the company gets its supplies and merchandises output is directly related to multiple political issues (Kotler et al 2013). In particular, large international companies are nowadays obliged to respect different environmental and social norms, which are enforced by the political agents. Today’s research shows that these norms tend to become stricter and stricter. If a company disrespects such norms, any form of incompliance may result in causing negative political pressure on business, and the state may apply financial and non-financial penalties, which may seriously undermine business operations of a company.
The second important issue in this regard is a friendly climate with the government. For instance, recently the Starbucks Corporation has been accused of tax-compliance in the United Kingdom, which resulted in an in-depth investigation launched by the tax authorities of the United Kingdom.
Economic factors and Starbucks
Secondly, the importance of different economic factors should never be underestimated, because they define customers and suppliers bargaining power. These issues are critical factors, which determine company revenues and profitability. The scholars contend that buying power of the customers serves as an overall reflection of the economic conditions in the country, and is the primary factor, which is relatable to profitability of the company (Kotler 2013). To illustrate, a 2008-2010 economic crisis has seriously derailed the buying power of clients, and as a result, the revenue ratios of the company declined. In particular, in April 2009 average annual revenue of Starbucks decreased on 31%, if compared with the same period during 2008 (Clark 2013; Starbucks Corporation 2014). As a result of that recession, the company was forced to close more than 900 stores worldwide, and to dismiss more than 1,000 employees (ibid).
The second important economic factor, which should be taken into account in this regard, is the currency exchange rate of the United States dollar (Jobber & Ellis-Chatwick 2013). Because the company is registered in the United States, and all profits are convertible to the US dollar if US dollar strengthens against other currencies, the profits of Starbucks (as well as the profits of other globally trading United States companies) decrease progressively (Simon 2009).
Social Factors and Starbucks
The most essential social factor connected with long-term growth of the company is globalization (Clark 2013). In particular, westernized culture and lifestyle to the developing countries is one of critical aspects, which is conducive to long-term growth of the company (Kotler 2013). To be more specific, having lunches or small business meetings in Starbucks is though to be a pure American or European habit (Simon 2009). People from Eastern countries are known for their special predilection to imitate everything Western, and, therefore, the popularity of Starbucks in Asian and East European countries increases.
At the same time, a number of social factors seriously jeopardize long-term corporate growth of Starbucks. For example, health concerns about excessive caffeine consumption and sugar abuse impel many potential customers to opt out visiting coffee houses (Clark 2013). Therefore, the company should carefully analyze various social factors before introducing new offers or coming to the new markets
Technological Factors and Starbucks
Technology is a critical determinant of any corporate success nowadays, and food & beverage industry is especially susceptible to different technological improvements (Hall et al 2010). Timely and apt integration of the technology in management, customer care and logistics give a company an important competitive advantage under today’s fierce market emulation condition.
The management of Starbucks understands the importance of bringing technology to the business processes (Campgemini Consulting 2013). Thus, a special department has been established. It oversees the most advanced solutions, which can streamline the processes of the company and make it more efficient than the competitors make.
In a vast array of various marketing solution available for providing a descriptive evaluation of a company advantages and disadvantages, SWOT analysis occupies a special place, because it allows understanding a complete picture of the company state of affairs without analyzing its reports in full, or conducting other primary research.
4Ps is the elements of marketing mix, which are frequently used to provide basic information about the company products and methods of distribution.
Product – the product of company is different ceramic tools and kitchenware. In particular, the main output of the company includes different ceramic cups, bowls, oven dishes and plates. The materials used in the production are terracotta, porcelain and stone. The company especially highlights the fact that all its products are handmade, which makes it possible to customize them to the individual needs of a client.
Promotion – the company does not utilize advanced promotion technics. In practice, the main tools used for promotion are the company website, which provides informative and comprehensive descriptions of the company products, and ‘word of mouth’ advertising. The majority of the firm’s clients are either returning or referred customers.
Price – in contrast to its competitors, Ave A Go Ceramics offers its products on a comparatively friendly pricing. Thus, a typical English family with a median annual income may afford them. However, if the company decides to open a physical shop, the prices may go up because of the potentially increased overheads.
Place – as mentioned above, currently the company does not operate a physical or online store. It sells its products on various fairs and offers it to workshops and retailers. In the meantime, because of the flourishing e-commerce, the company is likely to go to the web-sector soon.
Despite the fact that nowadays the company shows exemplary performance in its market niche, developing the business is important, otherwise the competitors with more aggressive marketing strategies may subdue it.
Firstly, the company should start investing into advertising. Nowadays, a limited number of loyal customers knows the company. Yet, because it has the product with good competitive characteristics, increasing the number of customers is a sound strategy. In order to promote its products, the firm has to establish a strong and recognizable brand name (Kotler et al 2013). Hiring a professional and experienced marketing director is an essential prerequisite for this task.
Secondly, the growth always requires investment. Nowadays, financial and other affairs of the company are in a huge disarray. The firm should start drafting business and financial plans, develop business objectives and invent methodologies for their accomplishment. Financial accounting and reporting will help the managers to understand whether the firm is profitable, what products are mostly favored by the consumers, and which areas require additional investment.
Lastly, opening a mortar-and-brick shop is necessary for two reasons. Firstly, it may increase profits of the company, because (a) the sales will increase and (b) there will be no need to pay a commission to the retailers. Secondly, it will give the opportunity to deal with wholesalers, who may express interest in purchasing the output for international sales, or distribution across large supermarkets.
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Clark, T. (2013). Starbucked : a double tall tale of caffeine, commerce, and culture. New York: Little, Brown.
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Starbucks Corporation (2014). 2014 Annual Financial Report. Web. Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsannual