Starbucks Competitive Analysis - SWOT and PESTLE analysis of Starbucks, a popular coffee house chain based in the United States. The analysis covers Starbucks's business strategy and its internal and external environmental factors.

1. Starbucks: Issues faced due to competition both at home and abroad.
Founded in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker, Starbucks Corporation is
an American coffeehouse or café chain which began its journey in Seattle Washington. As of
today, Starbucks owns and operates 28,218 cafés all over the world with 14,000 outlets in the
home country itself. Since its beginning, Starbucks has dominated the “third place” concept
which is also an important reason for their huge success along with the wide variety of hot
and cold beverages they serve along with breakfast items, snacks and desserts. However,
Starbucks is facing the heat for several reasons which all point towards the fact that Starbucks
has lost its competitive advantage and perhaps lost their place in this market. There are many
reasons for this occurring which we shall look into.
Firstly and expectedly, as the Starbucks SWOT and PESTLE Analysis points out within the
last decade, this Starbucks-style model has been adopted, adapted and replicated both in the
US and countries all over the world creating problems for Starbucks both at home and
abroad. These competitors have been coming up with a more advanced model better suited to
local taste and culture and often at cheaper prices. Chains such as Mikel Coffee Company,
Luckin Coffee, Costa Coffee, Barista, Caffè Nero and Cafe Coffee Day to name a few have
launched hundreds of stores each in their home countries and abroad which have substantially
affected Starbucks’ business.
Also, each of these have replicated the “third place” model and offer wider, locally-preferred
options in both beverages and food items which have soon replaced Starbucks as the go-to
cafe. In this age of cafe hopping culture, starting cafés is a highly lucrative market which has
been substantially tapped into. For example, Mikel Coffee Company has itself opened 185
stores in 10 years since its founding in 2008 in Greece, Middle East and the UK.
Aside from competition from outside, Starbucks is facing an intrinsic problem whereby it is
already facing market saturation which has led to store cannibalism. This refers to the fact
that Starbucks has opened stores in all potential locations, especially within the US, which
has led to Starbucks outlets to compete with each other which are located, sometimes, on the
same street. As a result, Starbucks has announced they will be closing 150 stores in the US in
2019 alone.
If we look at statistics, within the first half of 2018, Starbucks’ stock was down to 11.38%
while the overall market was up by 4.10%. Similarly, in the third quarter of 2018 Starbucks
was expecting only a 1.0% growth in their stores which has been recorded as their worst
performance in 9 years.
In order to maintain their position in the race, Starbucks need to up their game fast. The
collective group of small coffee chains have together become a huge problem for Starbucks.
To make a comeback in the market, they plan on moving into suburban areas with fewer
coffee shops to compete with. Also, Starbucks SWOT and PESTLE Analysis stands true in
their suggestion that global presence and international expansion has always been Starbucks’
forte. They plan to open 12,000 new stores in Asia by 2021 with particular focus on China.