Essay Sample on Challenges for the Starbucks

Introduction

One major issue Starbucks is facing is a reduction in the share market, especially in lower and middle-income areas. Starbuck sells high-quality coffee at relatively high prices to allow profit maximization. However, only those people in the high social class can afford higher-priced products. As a result, most middle-class populations tend to buy substitute products from the rivals who offer the products at cost-friendly prices (Lombardo n.p). Such a factor only reduces Starbucks ' market share as it is only limited to the rich population. Though Starbucks ' market might be growing, it is quite slow compared to those with similar products at relatively low prices. Therefore, Starbucks fails to achieve maximum profits in some developing nations due to limited market share.

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Generalized Product

Another major challenge concerns Starbuck’s generalized product. Although the chain provides a standard generalization of its product that can be purchased at any Starbucks location, the generalization limits Starbuck’s products to match with the culture or environment of each store location. Due to this challenge, Starbucks losses the ability to target more markets and offer customer preferences that match their cultural standards (Business Strategy Hub n.p). Starbucks can only accommodate the market interested in its generalized products. Although Starbucks might have created a loyal customer base for its products, its market is quite low since it cannot offer customized products that suit the customers' individual needs. Failure by Starbucks to meet individual preferences makes it lose potential customers who might need customized meals and other products.

Starbucks also experiences stiff competition from its rival restaurants and coffeehouse, who constantly imitate the Starbucks environment, atmosphere, look, and taste for its products. As a result, Starbucks risks losing a lot of potential customers who might consider its services and products to be similar to those of the imitating competitors. Also, Starbucks experiences a major challenge in obtaining support from communities of local restaurants and coffeehouses. Local establishments in oversees nations consider Starbucks a threat due to being a multi-national (Business Strategy Hub n.p). As a result, the local businesses in the same field push for campaigns against Starbucks and by making it look deceitful. Therefore, Starbucks invests a lot of resources in marketing and branding to overcome such competitive challenges.

Recommendations Based on the SWOT Analysis

In protecting itself against imitation from competitors, Starbucks needs to innovate aggressively, especially in its product development area. A high level of innovation will help in creating products that are hard for others to imitate (Lombardo n.p). Therefore, Starbucks will need to invest heavily in technology to create unique products that stand out from the competitors and are recognizable by the Starbuck's customers.

Starbucks also needs to consider and revise its pricing strategies to attract more customers, including the middle-income earners, who are the majority. Starbucks needs to offer their products at relatively lower prices to have a wide market share, an aspect that maximizes its profits (Trefis Team n.p). By revising its pricing strategies, Starbucks will be better positioned to address the competitive threat from low-cost coffee sellers. Lower prices for high-quality products will create a big customer base translating to low competition and big profit margins.

Another recommendation would be for Starbucks to develop creative branding and marketing strategies to build the company's commercial image as a supporter of community development. Such as move will go a long way in reducing sociocultural opposition against the coffeehouse from competitors, especially in new markets. Creating a good branding image will also be key to attracting new customers and fitting in within new communities.

Starbucks needs to make a rapid expansion in global markets, especially in developing countries with great potential. The company has coffee stores, mainly in the United States. Therefore, it needs to draw attention away from this dominant market, where it generates most of its revenues (Lombardo n.p). Starbucks needs to venture into global expansion in countries with great potential such as China, India, and some African regions. Venturing into such environments promises great opportunities for the company.

Customized Products

Another recommendation for Starbucks concerns developing a wide range of products and beverages. Besides concentrating on generalized products, Starbucks needs to change its strategy and focus on offering customized products that meet individual tastes and preferences, and cultural standards. By focusing on customized products, customers can order their favorite and cultural meals or beverages other than coffee only (Trefis Team n.p). Customers in India can get Indian beverages/meals as well as those in South America and other parts of the world. Customers can then embrace the company as their own. The company could also offer instant coffee, which could be available at the local stores or delivered to the customers' homes other than having to visit the Starbucks outlets.

Conclusion

Other than opening more dine-in outlets, Starbucks should concentrate on drive-thrus in the outskirts of metropolitan areas. Additionally, the company could open-up express outlets that could operate as walk-thrus. The approach will play a crucial role in boosting the coffeehouse store penetration (Business Strategy Hub n.p). Finally, Starbuck needs to establish strong alliances and partnerships with other firms, including suppliers and farmers, who offer the best quality at the best prices for the coffee beans. The above recommendations will be key to minimizing the negative impacts of the SWOT analysis.

Works Cited

Business Strategy Hub. "Starbucks SWOT 2020 | SWOT Analysis of Starbucks." Business Strategy Hub, 3 Feb. 2020, https://bstrategyhub.com/swot-analysis-of-starbucks-starbucks-swot/

Lombardo, Jessica. "Starbucks Coffee Company SWOT Analysis & Recommendations." Panmore Institute, 14 Feb. 2019, http://panmore.com/starbucks-coffee-swot-analysis

Trefis Team. "Let's Look At Starbucks' Growth Strategy." Forbes, 19 Sept. 2016, http://www.forbes.com/sites/greatspeculations/2016/09/19/lets-look-at-starbucks-growth-strategy/#2410f7303d71.