Internal and external Constraints affecting Starbucks
Even though the Starbucks is one of the largest coffee house chains in USA as well as in the several other countries, there are some factors that are affecting its business performance in the market and hence losing the market share as well as profit from the business (news.starbucks.com). Even though there are business opportunities to the Starbucks to exploit niche markets external factors like political, social and environmental factors are reducing the performance.
Political Constraint: In the different countries in which the Starbucks is doing its business, the pressure to strengthen and maintain the environmental regulations, minimum wages related laws are affecting the business of Starbucks (Bruhn-Hansen, 2012).
Social constraint: The income distribution in a specific region of a country also affects the business of the Starbucks, as Starbucks sells premium priced products, therefore if there is un-equal distribution of income then the people with lower income are not able to afford the products which leads to reduction in the sell (Epstein & Buhovac, 2014).
Environmental factors: As the climate is changing day by day due to the pollution, the supply chain of the coffee beans from the different parts of the worlds is also affected which leads to the unavailability of the coffee beans to the company.
Economical constraint: The rise in the labor costs in the different Starbucks outlets acts as the internal factor that is affecting the business (news.starbucks.com). The reason behind this is, this rise in the labor costs and ingredient costs consequently increases the amount of expense in the business while reducing the amount of profit.
Technological constraint: Even though Starbucks is using the technology in different segments like the supply chain, marketing and finance departments of the company, but the company need to use the technological advancements like the use of data analytics to get the purchasing patterns of the customers in a certain region.
Using this data analytics the company can introduce new offers to improve the business in that certain region.
Legal Constraints: Consistency with the local laws is a vital necessity for the organization (Starbucks). Be that as it may, the circumstance is more mind boggling for the ones working in the worldwide condition (Bruhn-Hansen, 2012). Thus Starbucks are confronted with various laws in various countries. From the duty rates to the work laws and different sorts of laws, every one of them vary crosswise over countries.
Measure to improve the business performance
As Starbucks need to attract the new customers to its coffeehouses then it can try introduction of loyalty programs for its customers in the countries having unequal distribution of income (Epstein & Buhovac, 2014). Additionally, the organization also need to have compliance with the local labor laws so that its reputation is not affected due to non-compliance with these laws. In addition to that, the company also needs to focus on non-discrimination policies and equal treatment of all the employees. This will help the company to reduce the chances of legal disturbances and also helps the business operate fairly and create a better reputation in the market.
Bruhn-Hansen, S. (2012). Corporate Social Responsibility–A case study of Starbucks’ CSR: communication through its corporate website. Unpublished master’s thesis, Illinois State University. Retrieved from https://pure. au. dk/portal/files/45282206/ba_thesis. pdf.
Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.
Featured News. (2017). Starbucks Newsroom. Retrieved 10 March 2017, from https://news.starbucks.com/