Starbucks Growth Prospects and its Current Challenges

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Starbucks is the biggest coffee outlet in the world. The company was founded by Gordon Bowker, Zev Siegel, and Jerry Baldwin. Later on, Howard Schultz joined the company, and he took charge of the companys marketing department. Under his leadership, Starbucks became the largest coffee retail outlet globally. Since 1987, the company has gained a significant global presence, and it has experienced high growth since it has high-quality coffee products, well-paid and motivated employees, and satisfied customers. Starbucks is a strong company in the United States and other world regions. The company is yet to expand its branches to most countries globally, which is something they need to work on. This paper will discuss how Starbucks is trying to grow in the future and highlight the biggest challenges the company faces.

Despite its position in the global market, Starbucks is still making an effort to grow larger. One way of doing so is by transitioning to a green company that respects the planets positive goals. The company has begun providing customers with reusable to-go cups in its café branches (Chang, 2020). Starbucks also recently launched an app for recycling waste to support the sustainability efforts of its partners. Another way that the company is trying to grow in the future is by expanding its branches throughout the world (Chang, 2020). Recently, China adopted the coffee-drinking culture, which motivated Starbucks to extend its market to the country. In China, the demand for coffee is high, and coffee shops have become an essential feature. In 2020, Starbucks partnered with Alibaba by introducing the Alipay mode of payment in its outlets (Chang, 2020). This move is promising for Starbucks future because its market will grow rapidly.

Another way that Starbucks is using to grow in the future by increasing its technology to drive engagement and deliver a good customer experience. Starbucks has already begun distributing connected Internet of Things (IoT) devices to its branches (Chang, 2020). The company is also improving on its reinforcement learning technology, which allows them to interact with its customers on its mobile app. lastly, the company has ethical sourcing of its coffee, and it has made arrangements to ensure that this trend continues in the future (Chang, 2020). This move will help the company maintain its authenticity, which will grow its market in the future.

Starbucks has several challenges, and one of them is competition. By using Porters Five Forces framework, it is possible to analyze the competition challenges of the company. The first framework is competition in the industry. One major competitor is Dunkin Donuts, a company in England that is increasing its market globally. There is also a potential for new entrants into the industry because the coffee market is growing globally, attracting new investors. The power of supplies is also a challenge for Starbucks because it only sources the best coffee in the market. This way, the suppliers have great power and can drive up the coffee prices anytime, affecting the companys growth. The power of customers is a challenge for Starbucks because clients have the power to lower the coffee prices. Lastly, the company faces a threat of substitutes because customers might decide to have other types of drinks besides coffee.

Reference

Chang, W. J. (2020). Experiential marketing, brand image, and brand loyalty: a case study of Starbucks. British Food Journal. Web.

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