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Starbucks is one of the world's most popular coffeehouses, operating through both company-owned and licenced locations. The establishment was founded in 1971 by three partners: Gordon Bowker, Jerry Baldwin, and Zev Siegl and in the United States of America. As director of retail operations, marketing, and sales, Howard Schultz joined Starbucks in 1982. As soon as he joined the Starbucks company, he began working with all the high-end restaurants and espresso shops to supply them with a variety of coffee flavours. Due to a decrease in consumer demand, the closure of physical stores, and a lack of effective global supply chain management, Starbucks's income was impacted by the recent Covid-19 outbreak. Since majority of Starbucks's profits originate from the United States, the corporation had a difficult time pursuing seamless business operations. For the sake of its patrons' well-being, Starbucks must put in place measures to protect them from harm, such as stricter security measures. Large-scale tourism and catering business shutdowns and job losses have resulted from a global outbreak of covid-19. As a result of these factors, Starbucks' economy and business practises are in decline.
As the number of Starbucks customers decreased, so did Starbucks's revenue. One of the company’s biggest losses was $1.82 million in the latest financial year due to the Covid-19 crisis's Movement Control Orders (MCO), according to a report by Arnold (2020). Starbucks is doomed to a loss, given that the vast majority of its earnings come from the United States, the country with the highest number of epidemics. COVID-19 has had a negative impact on Starbucks' economy, stock prices, and cash flow. As customers' expectations decline, Starbucks will have to tighten up security measures to maintain a safe environment for its patrons.
Starbucks' financial and sustainable business ventures have certainly been affected by a pandemic crisis. The worldwide food and beverage business has been rocked by the Covid-19 crisis to kick off the new year on the right foot. This suggests that the pandemic has influenced Starbucks' efforts to be environmentally friendly. From a 2020 baseline, the corporation has pledged to reduce its yearly greenhouse gas, water, and waste footprints by half by 2030 (Walton, 2020). As a result, the organisation changed the baseline year for all three reduction targets to FY2023, and the target carbon emission reductions have been confirmed as scientifically sound by the Science Based Targets Initiative (SBTI).
Starbucks has established five primary initiatives based on science, centred around its Mission and Values, and led by rigorous market research and experiments in order to meet its 2030 targets. This includes expanding plant-based menu options, shifting away from single-use packaging and toward reusable containers, actively investing in regenerative agriculture, reforestation, forest conservation, and water replenishment in the coffee supply chain, improved waste management, and innovation to develop more sustainable stores. Considering the epidemic, Starbucks has established a Global Environmental Council, which is made up of senior executives from around the firm who are compensated depending on how successfully they meet the company's sustainability targets (AFP, 2020).
With regards to water conservation, carbon emissions reduction, and waste management, the organisation was able to achieve a 4 percent in water usage, 11% reduction in carbon emission and 12% reduction waste from FY19 to FY20 (Starbucks, 2020) As a result of COVID-19's impact on business activity in FY20, this degree of annual reduction was not expected at this point in the journey toward the 2030 targets and is unlikely to be typical going forward. Data availability and quality have also improved as a result of the company's decision to strengthen its environmental impact monitoring process. By growing its plant-based menu around the world, Starbucks is working toward its carbon reduction goal. Clients have a wide range of alternatives to choose from a range of new plant-based menu items that were added to every Starbucks location globally during fiscal year 2020 (WARC, 2020). Because of pandemic safety procedures, firm management had to put a halt on its plans to enable customers and partners to bring their own reusable cup into the stores during the market study. There were 1.3 percent of beverages served in reusable cups in Canada, Japan, and the U.S. in FY20, either in a customer's personal cup or in a store operated by the company (Portal, 2021). Single-use cup fees have also been tested in the UK and Germany. It also launched the Circular Cup, created from six single-use paper cups in the UK.
Starbucks, unlike many of its retail competitors, has always been conducting extensive tests to gain a competitive advantage over its primary competitors like Costa, McDonald’s, KFC, Mobile apps, in-app purchase, electronic payments, third-party delivery network and pick-up-only stores are some of the strategic innovations that became part of its omnichannel functionality long before the counterpart companies implemented them successfully. With COVID-19, these experiments are beginning to bear fruit and will finally free Starbucks from the debts of architecture, store-renovation, supply chain management, legacy operations and consumer expectations that can be a major challenge for less skilled businesses (Kelso,2020). The leadership of Starbucks stressed the importance caring for associates (employees) as a cornerstone of the company's strategy, as well as a continuing focus on upgrading customer experiences and playing a positive role in communities and neighbourhoods throughout the world Starbucks executives emphasised the business's quick response to the COVID-19 pandemic, boosting the brand's resiliency while simultaneously setting the company for long-term growth, from the standpoint of this commitment. In reaction to the present pandemic disruption, several substantial changes in consumer behaviour have occurred., which have been swiftly implemented by Starbucks. It was Johnson's insight into changing consumer behaviour and how the company will continue to meet its customers wherever and however the brand wants to engage with them that was most valuable. For example, he explained how Starbucks is enhancing customer experiences, creating new beverage platforms, and enhancing digital customer interactions to take advantage of five shifts in consumer behaviour: It has long been one of the greatest ventures for coffee-producing enterprises to create an omnichannel retail experience like Starbucks. It has opened a whole new universe of possibilities for Starbucks customers to preload digital cash into their mobile app. Starbucks made it clear that only "to-go orders" would be available in the event of a viral epidemic. This declaration was critical for two reasons: first, for the sake of Starbucks' employees and customers, and second, to allow the corporation to test out a new business model. As revealed by Kevin Johnson, CEO of Starbucks, during the third quarter of 2021, During the third quarter, Starbucks saw a 17 percent increase in customers downloading the Starbucks App and signing up for Starbucks Rewards. The Starbucks Rewards loyalty programme and smartphone ordering have seen an uptick in customer interest and demand in the most recent quarter, he noted. They form the core of the company's efforts to stand out from the competition. This resulted in a four-percent growth in tenders, compared to its Q3 scenario (46 percent), which is higher than the trend before COVID (World Coffee Portal, 2021). This demonstrates the company's competitiveness in attracting new customers and re-engaging the current consumer base.
The present scenarios of the market can be accessed through this SWOT analysis of Starbucks.
SWOT Analysis on Starbucks Company
Starbucks re-invests their profits in expanding the business to next level. Their business strategy and good tactics have benefited the company.
Starbucks has flourished internationally because of its superb coffees and premium blends. It provides uniformly standardized, and high-quality items across all its sites.
Starbucks is noted for having a large worldwide supply chain (Lemus et al., 2015). They get their coffee beans from the three major coffee-producing areas- Asia-Pacific, Latin-America, and Africa.
It will have expanded from 1,886 sites to 33,833 by 2021. Starbucks now operates two types of stores: company-owned and franchised. It has 17,133 company-owned shops and 16,700 licensed outlets worldwide. The company's own locations provide around 85 percent of its income.
Starbucks isn’t renowned for providing the most innovative items. It makes product imitability very simple for its competitors.
Starbucks’ products are expensive than other companies for several working-class and middle-class customers. Its excessive pricing makes up it too expensive for consumers.
The company's unethical purchasing tactics infuriated social and environmental groups. They stated that the beans were acquired from impoverished farmers in undeveloped countries. As a result, it has been accused of breaking "Fair Coffee Trade" regulations.
Several companies are swiftly expanding their customers through serving both premium and standard coffee to appeal to distinct social groups. With promoting its pricey ones as premium, Starbucks may target the middle-class by offering standard coffee at low cost (Haskova, 2015).
Co-branding is generally advantageous. Starbucks could form collaborations with big companies. Its influence and profitability would be boosted as a result.
There's still room for Starbucks to improve, even if they're at the forefront of coffee innovation. Using the latest coffee inventions and technologies, you can create everything from the greatest froth to snap chilling, coffee grinding, and RSI-reducing gadgets.
The presence of multiple third-party stakeholders and suppliers complicates Starbucks’ supply network, making it hard to properly handle the whole network.
Many companies provide low-cost items, which might jeopardize the long-term viability of Starbucks, that serves pricey products.
When it comes to implement or adopt a sustainability model, a company needs to evaluate on it’s internal as well as external factors to evaluate and implement an effective plan. For Starbucks, the Purpose Profit cycle can be a potentially beneficial sustainability model since its components addresses some fundamental issues that the company can improve , based on its business process.
When it comes to serving customers without compromising its sustainability practices, Starbucks could be more creative. The ‘Innovative’ factor of the Purpose Profit cycle can be thus addressed by increasing the number of drive-thru and Starbucks Pickup locations, which seems to help the company maintain a sustainable position in the Purpose Profit cycle, without compromising the Customer Loyalty. A drive-thru is now included in 60 percent of Starbucks stores, but that number can rise to 80 percent in the company's future expansion plans. Starbucks cafés can use walk-up windows, which are technically drive-throughs, to keep customers from lingering inside. Expanding its "grab and go" businesses, which are little more than a line and a vending machine, is another option for the corporation (AFP, 2020). Those who reinstate café seats will do it in a more cautious fashion. The SWOT analysis reflects the fact that Starbucks has the potentiality to integrate technological innovations in its business function. To test whether customers can be trusted to maintain a social distance on their own, the corporation can temporarily remove much of the furnishings from cafes and expand it it’s “grab and go” mode. This strategy will not only mitigate the crisis that Starbucks faced during the covid times but also can adopt the ‘Innovation’ factor of the Purpose Profit cycle (Fromm, 2021). In addition, the company can expand its plant-based menu options and find better ways to manage waste by using environmentally friendly cups and lids. Starbucks can also contribute to ensuring a sustainable and profitable future for coffee farmers around the world by increasing its 'Global Farmer Fund,' which represents the already established ethical coffee sourcing and procurement practises that are reflected in the SWOT analysis (Warnick, 2019). The funds will be used to renovate and strengthen coffee growers' farms and farming practises in order to become even more productive and sustainable following the financial crisis brought on by the Pandemic-affected economy and supply chain interruption.
The organisation will be able to find additional savings opportunities in the future thanks to energy management systems that optimise heating and cooling. Optimizing retail equipment and lighting specs can also help the organisation save money on energy costs.
The company's sustainability strategies may also benefit from adopting more technologically advanced methods. Automated order imports from Uber Eats, the drive-thru, and Starbucks' app can be used to streamline the company's order processing system. The SWOT analysis of the company already reflects the fact that the company has opportunities to collaborate with other recognized companies for a better business function. The company may, among other things, invest in subsidising the coffee producers as a way to encourage more environmentally friendly business practises. Coffee producers can benefit from this programme by gaining access to financing that can be used to improve their fields and production practises. A diversified Renewable Energy portfolio should also be established, aiming to offset 50% of the company's roasting and beverage manufacturing locations and energy use. Adopting a better virtual supply chain management via the Virtual Power Purchase Agreement with local solar enterprises can also provide some advantages in sustainable practises.
The above discussion gives out a detailed overview of the sustainably practices of Starbucks and how it has been active in adopting and evolving the traditional ways of marketing and serving customers amidst the pandemic crisis. It is thoroughly noticed in the initiatives like reusable cups, waster, energy and waste management, subsidizing the farmers and turning the supply chain into improved virtual mode. With its capabilities and innovative strategies, Starbucks can readily achieve its crown in the highly competitive beverage and hospitality industry.
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