Growing Big While Staying Small: Starbucks Harvests International Growth SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
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Case Study SWOT Analysis Solution
Case Study Description of Growing Big While Staying Small: Starbucks Harvests International Growth
By early 2009 Starbucks had nearly 17,000 stores worldwide, with about a third of these outside the United States. Despite multibillion-dollar annual revenues, the giant coffee retailer's yearly growth had declined by half, quarterly earnings had dropped as much as 97 percent, same-store sales were negative, and its stock price was languishing. Factors such as a global economic downturn and increasing competition in the specialty coffee market from large players such as McDonald's and Dunkin' Donuts had driven this decline, resulting in the closings of hundreds of domestic stores already, with many more planned. Founder Howard Schultz, who had recently returned as CEO, and his executive team were convinced that Starbucks's growth opportunities lay overseas, where the firm already had a strong foothold in markets like Japan and the United Kingdom and was preparing to open hundreds of new stores in a variety of locations. But recent international challenges, including the closing of most Australian stores due to sluggish sales, made clear that Starbucks had more to learn about bringing its value proposition-a combination of premium coffee, superior service, and a "coffeehouse experience"-to foreign soil. The key question was not whether Starbucks could transport its value proposition overseas, but how the value proposition's three elements would play in recently entered and new markets. And the stakes of making the right international moves rose with each U.S. store closure. Schultz and his team also faced a broader question, one that applied to both their U.S. and foreign stores: Could they "grow big and stay small," remaining a huge retailer that delivered both high-quality products and a consistently intimate and enjoyable experience to consumers worldwide? This case presents this challenge in the context of Starbucks's history, well-established value proposition, and domestic and international growth and vision.
Swot Analysis of "Growing Big While Staying Small: Starbucks Harvests International Growth" written by Richard Honack, Sachin Waikar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Starbucks Starbucks's facing as an external strategic factors. Some of the topics covered in Growing Big While Staying Small: Starbucks Harvests International Growth case study are - Strategic Management Strategies, Entrepreneurship and Organizational Development.
Some of the macro environment factors that can be used to understand the Growing Big While Staying Small: Starbucks Harvests International Growth casestudy better are - – increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, wage bills are increasing, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion,
challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Growing Big While Staying Small: Starbucks Harvests International Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Growing Big While Staying Small: Starbucks Harvests International Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Starbucks Starbucks's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Starbucks Starbucks's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Growing Big While Staying Small: Starbucks Harvests International Growth can be done for the following purposes –
1. Strategic planning using facts provided in Growing Big While Staying Small: Starbucks Harvests International Growth case study
2. Improving business portfolio management of Starbucks Starbucks's
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Starbucks Starbucks's
Strengths Growing Big While Staying Small: Starbucks Harvests International Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Starbucks Starbucks's in Growing Big While Staying Small: Starbucks Harvests International Growth Harvard Business Review case study are -
Training and development
– Starbucks Starbucks's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Growing Big While Staying Small: Starbucks Harvests International Growth Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Starbucks Starbucks's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Starbucks Starbucks's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Starbucks Starbucks's in the sector have low bargaining power. Growing Big While Staying Small: Starbucks Harvests International Growth has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Starbucks Starbucks's to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Starbucks Starbucks's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Organizational Development field
– Starbucks Starbucks's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Starbucks Starbucks's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Starbucks Starbucks's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Starbucks Starbucks's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Growing Big While Staying Small: Starbucks Harvests International Growth - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Starbucks Starbucks's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Growing Big While Staying Small: Starbucks Harvests International Growth HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Starbucks Starbucks's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Starbucks Starbucks's is one of the most innovative firm in sector. Manager in Growing Big While Staying Small: Starbucks Harvests International Growth Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Starbucks Starbucks's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Starbucks Starbucks's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Starbucks Starbucks's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Starbucks Starbucks's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Growing Big While Staying Small: Starbucks Harvests International Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Growing Big While Staying Small: Starbucks Harvests International Growth are -
High bargaining power of channel partners
– Because of the regulatory requirements, Richard Honack, Sachin Waikar suggests that, Starbucks Starbucks's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High cash cycle compare to competitors
Starbucks Starbucks's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Starbucks Starbucks's products
– To increase the profitability and margins on the products, Starbucks Starbucks's needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Growing Big While Staying Small: Starbucks Harvests International Growth HBR case study mentions - Starbucks Starbucks's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Starbucks Starbucks's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Starbucks Starbucks's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Growing Big While Staying Small: Starbucks Harvests International Growth can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Growing Big While Staying Small: Starbucks Harvests International Growth has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Starbucks Starbucks's 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Starbucks Starbucks's, firm in the HBR case study Growing Big While Staying Small: Starbucks Harvests International Growth needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Growing Big While Staying Small: Starbucks Harvests International Growth HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Starbucks Starbucks's has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Growing Big While Staying Small: Starbucks Harvests International Growth, in the dynamic environment Starbucks Starbucks's has struggled to respond to the nimble upstart competition. Starbucks Starbucks's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Starbucks Starbucks's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Growing Big While Staying Small: Starbucks Harvests International Growth | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Growing Big While Staying Small: Starbucks Harvests International Growth are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Starbucks Starbucks's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Starbucks Starbucks's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Starbucks Starbucks's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Starbucks Starbucks's to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Starbucks Starbucks's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Growing Big While Staying Small: Starbucks Harvests International Growth suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Loyalty marketing
– Starbucks Starbucks's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Starbucks Starbucks's in the consumer business. Now Starbucks Starbucks's can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Starbucks Starbucks's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Starbucks Starbucks's can use these opportunities to build new business models that can help the communities that Starbucks Starbucks's operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Leveraging digital technologies
– Starbucks Starbucks's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Starbucks Starbucks's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Growing Big While Staying Small: Starbucks Harvests International Growth, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Starbucks Starbucks's can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Starbucks Starbucks's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Starbucks Starbucks's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Growing Big While Staying Small: Starbucks Harvests International Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Growing Big While Staying Small: Starbucks Harvests International Growth are -
Environmental challenges
– Starbucks Starbucks's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Starbucks Starbucks's can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Starbucks Starbucks's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Starbucks Starbucks's.
Consumer confidence and its impact on Starbucks Starbucks's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Starbucks Starbucks's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Starbucks Starbucks's business can come under increasing regulations regarding data privacy, data security, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Starbucks Starbucks's needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Starbucks Starbucks's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Starbucks Starbucks's is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Starbucks Starbucks's in the Organizational Development sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Starbucks Starbucks's has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Starbucks Starbucks's needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Starbucks Starbucks's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Starbucks Starbucks's in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Growing Big While Staying Small: Starbucks Harvests International Growth Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Growing Big While Staying Small: Starbucks Harvests International Growth needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Growing Big While Staying Small: Starbucks Harvests International Growth is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Growing Big While Staying Small: Starbucks Harvests International Growth is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Growing Big While Staying Small: Starbucks Harvests International Growth is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Starbucks Starbucks's needs to make to build a sustainable competitive advantage.
