Starbucks Internal Environment Evaluation

STARBUCKS INTERNAL FACTOR EVALUATON MATRIX

KEY INTERNAL FACTORS WEIGHTRATING WEIGHTED SCORE

Internal Strengths

1. Reputation and name .15 3 .45

2. Financial Strength .10 4 .40

3. Employee quality & training .10 3 .30

4. Strong management team & business

strategy .10 3 .30

5. Good relationship with suppliers .05 3 .15

6. Innovative ideas and aggressive

Research and Development .15 4 .60

Internal Weaknesses

1. Lack of presence in coffee producing

Countries & reliance on US market .10 2 .20

2. Operation hurdles in new countries .05 2 .10

3. Union disputes and legal actions .05 2 .10

4. Overcrowding the market .10 2 .20

5. Volatile coffee market causing

selling price fluctuations .05 3 .15

TOTAL 1.00 2.95

As seen in the above Internal Factor Evaluation Matrix Starbucks’ rated score is

well above the average of 2.50. With their reputation and brand name they are able to

expand their business and offer new products with less effort than those companies

who are not as well known. Starbucks financial position is another of its internal

strengths. With a Net income of $550.80M, Revenue of $7.08B, and a Quarterly

revenue growth of 24.2% it is far ahead of its competitors and has ample funds

available for its extensive research and development. Research and development is

where Starbucks has another great advantage. This company is constantly introducing

new products, flavors, and ideas to attract new customer sectors and further its world

wide growth. Along with all of its new product introductions Starbucks is even able

to introduce coffees from all over the world. The relationship this company has with

its suppliers is excellent and allows them to import coffee from several countries to

then export to their shops in other countries sharing these rich coffee beans

worldwide. The management team that Starbucks has along with its well trained and

valued employee team allow for Starbucks to provide knowledgeable and pleasant

customer service and ambience in their shops. With all of these internal strengths

Starbucks is stiff competition for any business trying to succeed in the coffee

business.

The internal weaknesses for Starbucks, while there are some that need to be

addressed should have little impact on the success of the company. The two main

weaknesses both involve their over reliance on the US market and lack of business in

other countries. This is an issue that is being improved and they are expanding into

several countries, however they still have a lack of stores in the countries that are

actually producing the coffee they sell. Having all such a reliance on the US market

has also led to a saturation of the market and there are now situations where there are

Starbucks right across the street from each other. As the company does expand and

take their business into other countries they have to face the issues in the political,

business, and social issues in those countries to know what it will take to be

successful. There are also issues within the US that the company must face such as

recent union and legal issues. It is quite possible that Starbucks will be the next to

face lawsuits based on the fact that their products can contribute to obesity such as Mc

Donald’s has faced in the past. Also there have been strikes within the past couple of

weeks for employees requesting more pay and more hours. These should be of little

significance to the company as long as they are handled quickly and correctly as

similar events have been handled in the past. The final weakness I see with this

company is the price changes it must deal with for the coffee it sells. Coffee is a very

volatile market and price fluctuations have to be passed on to the consumers. With

the loyalty of the companies consumers and the value of the product it sells this will

be a small problem for them and should have little effect as long as the market doesn’t

fluctuate to such a great extent that the prices need to be dramatically increased. With

these weaknesses Starbucks is still leading the pact in this business and will continue

to do so. It will continue to expand into other venues and joint ventures and will

continue to grow to be a world wide company.

Starbucks http://www.starbucks.com/aboutus/default.asp

Associated Press Release: Starbucks, going global comes with headaches

http://www.espressotec.com/icar4.html

HR Spectrum (Sept/Oct 03) Starbucks Company Profile

http://www.ilr.cornell.edu/depts/cahrs/downloads/PDFs/hrSpectrum/HRSpec03-

10.pdf

Yahoo direct competitor comparison http://finance.yahoo.com/q/co?s=SBUX

Starbucks Corporation Competing in a Global Market

http://bschool.washington.edu/gbc/2003%20Presentations/ITESM%20Mexico.pdf

Starbucks Key Factors http://homepages.wmich.edu/~l2tripp/projectVpart2.htm

Starbucks Corp, by Prof. Clifton Brown, Department of Accountancy, University of

Illinois at Urbana-Champaign. All

rights reserved, 2004

http://www.business.uiuc.edu/ce-brown/accy503msa/Downloads/STARBUCKS

%20CORP.pdf

Datamonitor – Starbucks Corporation Company Profile

http://www.investor.reuters.com/data/files/Company%20Profile%20Sample%20for

%20Reuters.pdf

Starbucks Union http://www.starbucksunion.org/

Starbucks: Selling the American Bean How the coffee giant is turning around its

image overseas By John Pastier, brand channel.com

http://www.businessweek.com/innovate/content/dec2005/id20051201_506349.htm