Starbucks greatest organization strengths include, the brand image and position in the market. The brand is globally recognized because customers find superior value in the quality of products and services Starbucks offers. These customers expect high quality and the company has done a great job at meeting those expectations. They have also created has a sense of culture that customers seek to be apart of. With an extensive global supply chain, operating in more than 60 countries, Starbucks is the largest coffeehouse company in the world, with 24,395 retail locations (Konema). Another important strength is the sense of community and culture Howard Schultz, the founder of Starbucks instilled from the beginning. One of Starbucks values is, “Creating a culture of warmth and belonging, where everyone is welcomed” (Starbucks). This open and warm environment creates a unique culture of coffee lovers and is one of the important values this company lives by. In doing so, customers become loyal, provide positive word of mouth about the company, and desire to be apart of the rich environment that is unique to Starbucks.
Starbucks has weaknesses that can limit their expansion into the Italian market. The first weakness that will hinder this process is their issue with product recall. In March 2016, one of their suppliers recalled a product for a potential undeclared tree nut allergen (cashew.) The company also had to recall breakfast items such as sausage, eggs, and cheddar. In April 2015, the company was forced to recall some limited edition mugs for a dangerous amount of lead. These dilemmas are concerning for the company’s expansion to Italy because these are products that would be sold in Italy. Not only is it dangerous for consumers upon their arrival, but also the news of this occurring hurts the brand image and lead to a decrease in demand.
Another weakness is their involvement in legal proceedings. Starbucks discontinued arrangements with Kraft Foods from distributing product due to material breach that was set in the agreement between the companies. This is highly important because the product was being distributed in not only the U.S but around Europe as well. This case resulted in Starbucks paying Kraft Foods $2,227.5 million in damages as well as attorney fees and prejudice interest. This negatively affects the brand image as well, which can cause long-term consequences.
Starbucks is mainly located in the U.S. but because of their booming success over recent years they have exciting new opportunities when It comes to global expansion. Currently Starbucks has the opportunity to expand their growth in Italy. They have a chance to expose the untapped market of Italians and change the stigma they attach on how Starbucks and Americans consume coffee. Ways they can do this is by inorganic growth or partnering with local Italian coffee shops and expand product mix and offerings (tea, fresh juice products, consumer packaged goods, etc.). Since most Italians consumer their coffee at home another exciting opportunity to explore would be Starbucks delivery which is already being implemented at certain U.S. locations.
The external threats Starbucks faces in the American market are much different than what they are facing by entering the Italian market. In fact, the main threat is the existing way Italians consume coffee compared to Americans. In Italy, Coffee is simpler without artificial pumpkin spice flavors. It is also much smaller and cheaper than when served in the US. Out of home consumption is also falling in Italy to less than 25% which doesn’t leave much of a target market. In Italy, the baristas are even supposed to be knowledgeable on what they are serving with an average age of 48 (Sola, 2016). A visit to an Italian coffee shop influenced Starbucks CEO Howard Schultz from the beginning in 1983. He wanted replicate much of the Italian features, but in a way that worked for Americans. By making the decision to ultimately come full circle and bring Starbucks to Italy, Schultz faces huge threats. These include privately owned coffee shops and primarily the stigma on how coffee should be consumed by the locals which is opposite to everything he has created in the US and throughout the rest of the world.
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“Number of Starbucks Stores Globally, 1992-2016 – Knoema.com.” Knoema. N.p., 4 Aug. 2016. Web. 24 Oct. 2016. <https://knoema.com/infographics/kchdsge/number-of-starbucks-stores-globally-1992-2016>.
“Mission Statement.” Starbucks Coffee Company. N.p., n.d. Web. 24 Oct. 2016. <http://www.starbucks.com/about-us/company-information/mission-statement>.