Wednesday, April 10, 2013

SWOT Analysis for Starbuck’s Internal Organizational Analysis

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The SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats. This analysis breaks down in to two different components, the internal (strengths and weaknesses), and the external (opportunities and threats). Many companies may use this to initiate the discussion of internal analysis
Before a company begins to analyze the internal organizational environment, the company should first understand why this is important. In order to know what our neighbor or competitor is doing the company must know themselves. Any organization must know reflect on themselves if they are to make effective use of resources and make necessary changes within the organization.

What is the internal analysis for and why should a company to this? Internal Analysis helps identify the performance of all of the internal operations of the organization. Areas for consideration include strategic planning, financial management, marketing, fundraising, organizational leadership and staffing, operational structure, evaluations, etc. Anything that can be controlled is included in the internal analysis.
First we must identify the organizational strengths. This question is meant to look at positive internal assets, factors, or situations which are at this very point in time favorable for the organization. Examples could include demand for the services of the organization, or they could be sound financial management.
Likewise, weaknesses also need to be addressed. In order to address these issues, we can ask, “where can we improve?” For the purposes of identification, we can reverse the analysis and deal with the lack of demand for services, poor financial management, lack of skilled volunteers, little experience, or less than desirable public support.

Starbucks of course has a SWOT analysis and below is there example:

High visibility locations to attract customers
Established logo, developed brand, copyrights, trademarks, website and patents
Company operated retail stores, International stores (no franchises)
Valued and motivated employees, good work environment
Good relationships with suppliers
Industry market leader with a globally renowned brand
Customer base loyalty
Product is the last socially accepted addiction
Widespread and consistent
Knowledge based

Lack of internal focus (too much focus on expansion)
Ever increasing number of competitors in a growing market
Self cannibalization
Cross functional management
Product pricing (expensive)

Expansion into retail operations
Technological advances
New distribution channels (delivery)
New products
Distribution agreements
Brand extension
Emerging international markets
Continued domestic expansion/domination of segment

Increased competition from coffee shops and others (restaurants, street carts, supermarkets)
US market saturation
Coffee price volatility in developing countries
Negative publicity from poorly treated farmers in supplying countries
Consumer trends toward more healthy ways and away from caffeine
Fragile state of worldwide production of specialty coffees
Alienation of younger, domestic market segments
Corporate behemoth image
Cultural and Political issues in foreign countries

This SWOT analysis could have been used and not only uploaded to their website to prevent the expansion during an economic crisis in 2008. Like mentioned in Strategy Development lecture on April 2nd, the decrease on demand was seen immediately during the recession. The use an implementation of internal analysis could have prevented an unnecessary expansion. As competition rises and we slowly come out the recession this SWOT will allow them to strategically expand. However, Starbucks knows how much power they have to sustain themselves and expand into different markets and geographies.

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