Opportunities and Threats for Starbucks
Economic Forces
Economic factors are an important aspects that concern the nature and direction of the economy in which a firm operates. Since the relative affluence of various market segments will affect the consumption patterns, companies must take this into consideration when planning its strategy. In periods of normal price variation, the demand for coffee is price inelastic. However, when coffee prices show big increases, consumers tend to reduce their consumption commensurately.
The Company 's net revenues increased from $1.3 billion in fiscal 1998 to $1.7 billion in fiscal 1999, due primarily to the Company 's store expansion program and comparable store sales increases. As part of its expansion strategy of clustering stores in existing markets, Starbucks has experienced a certain level of cannibalization of existing stores by new stores as store concentration has increased. However, management believes such cannibalization has been justified by the incremental sales and return on new store investments. This cannibalization, as well as increased competition and other factors, may continue to put downward pressure on the Company 's comparable store sales growth in future periods. (starbucks.com)
Sociological Forces
As a result of Starbucks closely following their objectives, the company has installed a list of principles that further outline the company 's willingness to make sure that its affect on the environment is as positive as possible. These principles are stated as (starbucks.com):
Understanding of environmental issues and sharing information with our partners.
Developing innovative and flexible solutions to bring about change.
Striving to buy, sell and use environmentally friendly products.
Recognizing that fiscal responsibility is essential to our environmental future.
Instilling environmental responsibility as a corporate value.
Measuring and monitoring our progress for each project.
Encouraging all partners to share in our
Economic factors are an important aspects that concern the nature and direction of the economy in which a firm operates. Since the relative affluence of various market segments will affect the consumption patterns, companies must take this into consideration when planning its strategy. In periods of normal price variation, the demand for coffee is price inelastic. However, when coffee prices show big increases, consumers tend to reduce their consumption commensurately.
The Company 's net revenues increased from $1.3 billion in fiscal 1998 to $1.7 billion in fiscal 1999, due primarily to the Company 's store expansion program and comparable store sales increases. As part of its expansion strategy of clustering stores in existing markets, Starbucks has experienced a certain level of cannibalization of existing stores by new stores as store concentration has increased. However, management believes such cannibalization has been justified by the incremental sales and return on new store investments. This cannibalization, as well as increased competition and other factors, may continue to put downward pressure on the Company 's comparable store sales growth in future periods. (starbucks.com)
Sociological Forces
As a result of Starbucks closely following their objectives, the company has installed a list of principles that further outline the company 's willingness to make sure that its affect on the environment is as positive as possible. These principles are stated as (starbucks.com):
Understanding of environmental issues and sharing information with our partners.
Developing innovative and flexible solutions to bring about change.
Striving to buy, sell and use environmentally friendly products.
Recognizing that fiscal responsibility is essential to our environmental future.
Instilling environmental responsibility as a corporate value.
Measuring and monitoring our progress for each project.
Encouraging all partners to share in our