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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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  • Number of pages: 2

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olitical environment plays a very important role in success of an establishment and Starbucks has been growing its network all over the world with more than 24,000 Stores across 75 different markets (Starbucks Coffee Company, 2018). Thus, it is clear that Starbucks adepts to the changing political environment with regards to different countries. Maintaining the most stable environment is UK, where the Government has helped Starbucks launching diverse turns of pro-business legislation and politics, reducing corporate taxes and red-tapes. On the other hand, the political environment in USA is affected to an extent as there are two lawsuits pending on Starbucks in California for employees being denied overtime, whereby Starbucks denying all the liabilities is settling the case for $18 million (ORANGE COUNTY REGISTER, 2006). Furthermore, UK government has maintained a strict environment not allowing any unlawful activities to take place whereas, this is not the scenario in USA, where Starbucks had to struggle with customers entering the stores with loaded guns which was insecure for the employees as well as the other customers.

Even after a lot factors affecting the company's statistics, Starbucks reflects an optimistic growth in both the countries and stating an overall revenue of $21.3 Billion in 2016 highlighting an increment of 5% in 2017 to $22.4 Billion (Statista, 2018). All the Major factors that affect the economy of business has affected drastically to the company in some or the other year such as inflation, logistical laws, currency exchange rates and interest born by the company but still Starbucks has show's an increment every year. Even since 2008 crises across the globe, UK Starbucks reflected an increment of 2% every year. Whereas, in USA Howard Schulz executive Chairman of Starbucks went across stores in different cities interacting with customers to know the feedback which would help Starbucks improve their quality and services. He has also launched a plan to employ more than 100,000 unemployed people aged 16 to 24 to work with Starbucks by the end of 2018 (Rupert Neate, 2010). Similarly, the rising economy in the UK since 2008 has created higher job Opportunities and lowered unemployment rate benefiting the employees with higher spending power (Neilson and Pritchard, 2009). In contrast to this UK Starbucks has faced bigger challenges biggest one being, The Brexit which has reduced pound value by more than 10% against US dollar affecting the procurement of coffee beans already expensive in both the countries as dollar is the 1st currency to be accepted worldwide and for USA as it had to purchase coffee across the world even in its crises at a higher price. Additionally, the challenges related to inflation rate were also faced in UK which hyped to 3% as claimed by the bank of England which remarkably affected the living cost of an individual and reducing their spending power. The Growing Population across both countries have been benefiting the coffee business of Starbucks. Speaking about Technology, it is needed all sectors of the management for innovation, operations as well as, overall control of the business in terms of monitoring. In both the countries Starbucks has been using the technology very effectively in terms of their billing machines to being cash less and accepting all types to cards worldwide. Additionally, Starbucks has also been very effective in terms maintaining health of the customers as well as their works. They have a keen eye on the quality of raw materials by their quality control department and also the cleanness of their stores for their employees.

As the coffee market in the USA and UK (Hooker 2017) is already quite saturated, the competition has become rather regional or even city concentrated with a significant amount of independent cafe chains like Intelligentsia or Blue Bottle Coffee appearing to compete with established brands.

Focus on its international segment, especially on the emerging markets with growing middle class population.

In order to achieve success, Starbucks needs to adapt locally to new markets to satisfy the needs of customers, adapt to their lifestyle and tastes, exactly as in the case of entering the Chinese market, where by a thorough market research and establishing long-term relationships with the  community Starbucks has become “less a foreign brand transplanted to China and more a seed from a Western tree that has been carefully planted and patiently nurtured within”(Zakkour 2017)

Further development of technology that facilitates payment, which will attract more customers, increase efficiency and reduce service time.

Even more amazing is that Starbucks generates this impressive growth of the products offered, practically without marketing, spending only 1% of its annual revenue on advertising, where other sellers usually spend 10% (Allison 2006).

Wall Street critics believe that the American market will soon be saturated, while Howard Schultz emphasises that "Those who talk about saturation, of course, do not understand our business strategy” (Ignatius 2010)

The company has already demonstrated its ability to connect to culture and neighbourhood and will continue to do so. Expansion in the worst case, will slow down, forcing the company to adapt, and the company knows how to do it. (Thompson, Arsel 2004)

The most important thing that Starbucks must remember is that no brand develops in a vacuum. Each brand is rooted in popular culture. This is the difference between an ad and branding.

“Advertising grabs their minds; branding grabs their hearts. “ says Rob Frankel, brand consultant (Frankel 2000)

Starbucks has in the past demonstrated its strength and ability to sustain growth even during recessions. Starbucks is a People Store and it is indeed a growing market. As Howard Schultz said: "We are not in the coffee business, we serve people. We are in the business of people, we serve coffee” ( Gallo 2011).

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