Starbucks: Driving Growth Through New Dining Occasions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Starbucks: Driving Growth Through New Dining Occasions
In 2008, Starbucks was in crisis as a result of undisciplined growth and loss of focus, and its stock declined almost 70%. In August of that year, Howard Schultz, the founder of Starbucks, came out of retirement to take over as the CEO. The company regained its footing by refocusing on its core and driving strong organic growth. By 2014, the stock price had reached $40, an all-time high. To prevent history from repeating itself, Schultz wanted to ensure that Starbucks' growth strategies not only addressed market opportunities, but also were aligned with the company's brand image, assets, and capabilities. Starbucks announced a five-year growth plan in December 2014 with ambitious goals that included nearly doubling its revenues from $16 billion to $30 billion, doubling operating income, and expanding its footprint to more than 30,000 stores globally by 2019. The growth plan consisted of seven specific growth strategies, one of which was the New Occasions strategy. The objective of New Occasions was to drive growth by diversifying Starbucks' revenues beyond breakfast to the lunch, afternoon, and evening dayparts. Starbucks created specific offerings for each daypart, called the Lunch, Sunset, and Evenings programs. The case focuses on evaluating these three occasions-based growth opportunities and identifying the best path forward.
Swot Analysis of "Starbucks: Driving Growth Through New Dining Occasions" written by Mohanbir Sawhney includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Starbucks Occasions facing as an external strategic factors. Some of the topics covered in Starbucks: Driving Growth Through New Dining Occasions case study are - Strategic Management Strategies, Growth strategy, Market research, Product development, Strategic planning and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Starbucks: Driving Growth Through New Dining Occasions casestudy better are - – increasing household debt because of falling income levels, there is backlash against globalization, increasing commodity prices, increasing energy prices, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation,
technology disruption, wage bills are increasing, etc
Introduction to SWOT Analysis of Starbucks: Driving Growth Through New Dining Occasions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Starbucks: Driving Growth Through New Dining Occasions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Starbucks Occasions, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Starbucks Occasions 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 Starbucks: Driving Growth Through New Dining Occasions can be done for the following purposes –
1. Strategic planning using facts provided in Starbucks: Driving Growth Through New Dining Occasions case study
2. Improving business portfolio management of Starbucks Occasions
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Starbucks Occasions
Strengths Starbucks: Driving Growth Through New Dining Occasions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Starbucks Occasions in Starbucks: Driving Growth Through New Dining Occasions Harvard Business Review case study are -
Organizational Resilience of Starbucks Occasions
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Starbucks Occasions does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Starbucks Occasions 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 Starbucks: Driving Growth Through New Dining Occasions HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Starbucks Occasions has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Starbucks: Driving Growth Through New Dining Occasions 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.
High switching costs
– The high switching costs that Starbucks Occasions 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.
Innovation driven organization
– Starbucks Occasions is one of the most innovative firm in sector. Manager in Starbucks: Driving Growth Through New Dining Occasions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Starbucks Occasions has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Starbucks Occasions 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.
Analytics focus
– Starbucks Occasions is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Mohanbir Sawhney can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Starbucks Occasions in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Starbucks Occasions is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Starbucks: Driving Growth Through New Dining Occasions Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Sustainable margins compare to other players in Sales & Marketing industry
– Starbucks: Driving Growth Through New Dining Occasions firm has clearly differentiated products in the market place. This has enabled Starbucks Occasions to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Starbucks Occasions to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Starbucks Occasions in the sector have low bargaining power. Starbucks: Driving Growth Through New Dining Occasions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Starbucks Occasions to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Starbucks: Driving Growth Through New Dining Occasions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Starbucks: Driving Growth Through New Dining Occasions are -
Need for greater diversity
– Starbucks Occasions 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Starbucks Occasions is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Starbucks: Driving Growth Through New Dining Occasions 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 cash cycle compare to competitors
Starbucks Occasions 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.
Products dominated business model
– Even though Starbucks Occasions has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Starbucks: Driving Growth Through New Dining Occasions should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Starbucks: Driving Growth Through New Dining Occasions HBR case study mentions - Starbucks Occasions 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.
Interest costs
– Compare to the competition, Starbucks Occasions has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Starbucks Occasions needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Starbucks Occasions 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Starbucks: Driving Growth Through New Dining Occasions, in the dynamic environment Starbucks Occasions has struggled to respond to the nimble upstart competition. Starbucks Occasions has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Starbucks: Driving Growth Through New Dining Occasions 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 Occasions has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Starbucks Occasions, firm in the HBR case study Starbucks: Driving Growth Through New Dining Occasions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Starbucks: Driving Growth Through New Dining Occasions | 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 Starbucks: Driving Growth Through New Dining Occasions are -
Developing new processes and practices
– Starbucks Occasions can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Better consumer reach
– The expansion of the 5G network will help Starbucks Occasions to increase its market reach. Starbucks Occasions will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Starbucks Occasions can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Starbucks Occasions can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Starbucks Occasions 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 Occasions to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Starbucks Occasions 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.
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 Occasions in the consumer business. Now Starbucks Occasions 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 Sales & Marketing industry, but it has also influenced the consumer preferences. Starbucks Occasions can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Starbucks Occasions can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Starbucks Occasions to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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 Occasions can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Starbucks Occasions 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.
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 Occasions can use these opportunities to build new business models that can help the communities that Starbucks Occasions operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Starbucks Occasions is facing challenges because of the dominance of functional experts in the organization. Starbucks: Driving Growth Through New Dining Occasions case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Starbucks: Driving Growth Through New Dining Occasions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Starbucks: Driving Growth Through New Dining Occasions are -
Consumer confidence and its impact on Starbucks Occasions 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Starbucks: Driving Growth Through New Dining Occasions, Starbucks Occasions may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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 Occasions business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Starbucks Occasions 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.
High dependence on third party suppliers
– Starbucks Occasions 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.
Technology acceleration in Forth Industrial Revolution
– Starbucks Occasions has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Starbucks Occasions needs to keep up with the evolution of technology in the Sales & Marketing 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
Regulatory challenges
– Starbucks Occasions needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Starbucks Occasions with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Starbucks Occasions will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Shortening product life cycle
– it is one of the major threat that Starbucks Occasions is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Occasions needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Starbucks: Driving Growth Through New Dining Occasions 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 Starbucks: Driving Growth Through New Dining Occasions 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 Starbucks: Driving Growth Through New Dining Occasions 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 Starbucks: Driving Growth Through New Dining Occasions 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 Starbucks: Driving Growth Through New Dining Occasions 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 Occasions needs to make to build a sustainable competitive advantage.