Starbucks

Coffee Company

Macro- environmenta

l Analysis

10th October 2011

Team

P. Nguyen,Li R., Ziqun L., M. SteinA. Le,

Contents

I. Overview Starbucks -Milestones

II. PESTLE-Analysis

• General Information• P – Political Issues• E – Economical Issues• S – Social Issues• T – Technological Issues • E – Environmental Issues• L – Legal Issues

III. Conclusion

I. Company overview – Milestone (1)

• Founded 1971 in Seattle‘s Pike Place Market

• 1982: Howard Schultz becomes Director of Retail

Ops;

– Starbucks provides coffee to fine restaurants

and espresso bars

• 1984: First Starbucks Coffeehouse in Downtown

Seattle

• 1988: Full Health Benefits to employees

• 1995: over 500 US-stores

Company Overview – Milestones (2)

• 1998: starbucks.com

• 2000: licencing agreement with TransFair USA to

sell Fairtrade coffee in USA and Canada

• 2009: East Africa Farmer Support Centre in

Kigali /Rwanda; Social Engagement to save lives

in Africa

• 2010: Asia Farmer Support Centre in Yunnan,

China

• Total Stores: approximetely 17,000

II. PESTEL ANALYSIS

Use: Measuring the organization’s goals against influences and demands of environment

Political

Environmental

Technological

Economical

Social

Legal

- Issues: Stability of political environment, law, taxes, policies on economy, trading agreements, government’s view on culture and religion, terrorism

Example: Hong Kong, Thailand

1. Political issues

2. Economical issues

The level of inflation.

Interest rates.

Income per capita.

Long-term perspectives for the economy. Stabilization Unemployment rate

3. Social issues

Goals:- Continious Improvement

of Quality External Stakeholder (Customer) Satisfaction

- „Business Endurance and thrive“

- Ethical SourcingRaising living standards in Production Areas

Our Mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

Social issues (2)

Goals:- Promotion of Diversity and Respect

Internal Stakeholder Satisfaction

- Integrating into the community (environment-orientated goals)

- Responsibility „to be good neighbours“- Connection between value chain (suppliers,

partners, customers) and community- Everyday contribution through positive action

- Success in Business (organization-orientated goals)

Social issues (3) - Critizism

Genetically modified ingrdients

Implications:FinancialMoralLegalLoss of reputation

Defense- Fair Trade support• LESS THAN

10% OF TOTAL PURCHASES!!!

- Only traditional brewing- Blaming on US legislation

“A reputation is a lot easier

to lose than it is to gain“[3]

Labelling of such contents

now obligatory in Europe –

but still

not in the USA

4. Technological issues• Technology has been played a vital role in Starbucks

Example:

Starbucks card

Starbucks Pay-By-Phone

http://www.techhog.com/featured/app-review-my-coffee-card-vs-starbucks-for-android/

5. Environmental issues

Recycling: Recycling in Stores, Reusable cups, Greener Cups. Composting of coffee ground.

Energy:Reduce energy consumption by 25% by 2010. Purchase renewable energy equivalent to 50% of the electricity used by 2010

Water: continue to include water-saving technology in our equipment specifications and going to reduce water consumption by 25% by 2015

Environmental issues (2) Green Building:create a system to

certify retail stores and store prototypes.Beginning in December 2010, build all new, company-owned stores to achieve LEED® certification

Climate Change: implementing a climate change strategy since 2004, focusing on renewable energy, energy conservation, and collaboration and advocacy. ensure a long-term supply of high-quality coffee through responsible coffee purchasing practices and by investing in farmers and their communities.

Source: Starbucks USA Homepage

Employment law: working time, age, minimum wage rate, etc.

- Ex: Starbucks CEO’s announcement that he’s cutting his own salary from $1,2 million to $ 10.000 per year (Shawvalenza.blog, 2009)

Health and safety regulations - Ex: Starbucks spend more on health insurance — $250

million — surmount its coffee bill(Chief executive Howard Schultz, 22/03/2011)

Consumer protection: - Ex: Starbucks pay $225.000 to settle Consumer

Protection case for gift card violations. (Santa Rosa, CA , 2009)

- Ex: Stored-valued card: this is a prepaid card offer by Starbucks.

6. Legal issues

III. CONCLUSION Politics: Starbucks concerns about political issues in different

countries Economics: constantly growing; raising market capital since 2009

(28bn USD, share value: 40,86 USD). Sales decline due to econ. crisis Society: Non-conformance with aims, loss of image and credibility Technology: state of the art tech. equipment integration in business

processes Environment: focus on producing green products, conducting

environmental campaign, climate change Law: favourable employee conditions, reasonable proportion of

wages, consumer protection

Adequate marketing activities essential for future development, focus on CSR and company image among the customers

References Oscar. V. (2010) 'Starbucks growing in the Spanish market', Oscarvadillo, [Online]. Available at: http://www.google.com.vn/url?sa=t&source=web&cd=1&ved=0CBkQFjAA&url=http%3A%2F%2Fwww.oscarvadillo.info%2Fuploads%2F6%2F5%2F2%2F6%2F6526599%2Fstarbucks_growing_in_the_spanish_market.pdf&rct=j&q=Oscar%20Vadillo%20(2010)STARBUCKS%20Growing%20in%20the%20Spanish%20Market%20%09&ei=hVKTTsSnLsap8QPuouBB&usg=AFQjCNF37GL3TKwwHj0Qp5r5E1XSIyvT7g&cad=rja (Accessed: 09 October 2011).

Oxford University Press (2010) 'PESTEL analysis of the macro-environment', Oxford University Press, [Online]. Available at: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm (Accessed: 10 October 2011).

Politico (2011) ‘Starbucks CEO rethinks health law position', Politico, [Online]. Available at: <http://www.politico.com/news/stories/0311/51727.html#ixzz1aOXYdpe9> (Accessed: 09 October 2011).

Starbucks (2009) ‘Annual report', Starbucks, [Online]. Available at: <http://media.corporate-ir.net/media_files/irol/99/99518/SBUX_AR.pdf> (Accessed: 10 October 2011).

Starbucks (2011) ‘Facts about Starbucks in Middle East', Starbucks, [Online]. Available at: < http://news.starbucks.com/article_display.cfm?article_id=200> (Accessed: 09 October 2011).

Starbucks (2011) ‘Mission Statement', Starbucks, [Online]. Available at: < http://www.starbucks.com/about-us/company-information/mission-statement> (Accessed: 09 October 2011).

Starbucks (2011) 'Responsibility', Starbucks, [Online]. Available at: < http://www.starbucks.com/responsibility/environment> (Accessed: 09 October 2011).

Technorati (2011) ‘Starbucks pay-by-phone', Technorati, [Online]. Available at: <http://technorati.com/technology/article/new-starbucks-pay-by-phone-will/> (Accessed: 09 October 2011).

Many thanks for your attention

Q&A

P E S T LE