Strategic management Essay Example | Topics and Well Written Essays - 3000 words - 2

Strategic management - Essay Example It is currently the largest coffee house globally with its current size satisfying a customer base of more than 40 million weekly. It operates 16,635 stores in 50 countries whereby 11,068 are located in the United States. The company operated 9,031 stores and 4,776 licensed stores as of 2011 fiscal year. The company has three operational segments namely the Global Consumer Products Group (CPG), United States (US) and International (Quelch, 2006). Its product lines include beverages such as coffee, soda, juices and Tazo tea, pastries, whole coffee beans and merchandise such as CDs and mugs. Its three largest overseas markets are Japan (more than 180 stores), England (more than 370 stores) and 120 stores in both China and Taiwan. Starbucks is currently the fastest growing food chain. It is planning to boost earnings by 20% to 25% in the preceding five years and increase its global storefronts to 40,000. The company attained a 14% increase in revenue to $13.3 billion in the fiscal year 2012. The company is optimistic that the revenues will further grow in the fiscal year 2013 at a range of 10% to 13% following the growth in store sales, new store openings and advancement in channel development business. The US segment includes both company-oriented and licensed stores. The US segment sells coffee and other beverages, whole bean coffee, complementary food and other selected merchandise through stores. Its financial management goals are conservative in that the existing stores pay for the new store installations. To ensure customer satisfaction, Starbucks focuses on value chain development, market development and penetration, horizontal integration and concentric and conglomerate diversification. This paper is a strategic analysis of Starbucks Coffee Company with focus on its United States business segment. Market Environment Analysis for Starbucks Coffee Company PESTEL Analysis The PESTEL analysis contains five factors (political, Economic, Social, Technological, E nvironmental and Legal) that affect the external business environment of the company (Appendix 2). The three most crucial factors affecting the US business segment of the company are political, economic and technological. Political/legal The political/legal environment of Starbucks is of high significance because the company imports all their coffee beans; international laws must apply. The high taxation rates in coffee producing countries makes the company hike the prices of their commodities. This implies that any fluctuations in the taxation rules will be passed to the consumer. Increased prices affect the consumption rates of customers. Trade issues will predominantly affect Starbucks when importing or exporting goods. According to Dlabay, Burrow and Kleindl, (2011), imposition of tariffs leads to losses as well as large income transfers that can become inconsistent with equity. The local elections may also have negative effects on the business due to the change in administratio n that may alter the business laws. Economic Increase in the international or local interest rates tampers