Identifying and Mitigating Potential Risks for Starbucks

Different risk factors are identified in an organization based on operational, strategic, managerial, reputation, financial, project, delays, and budget overruns. In addition, these risk factors can impact uncertainty in organizational operations where most of the company focuses on identifying risks and potential mitigating losses for enhancing future business decisions.

This study sheds light on an organization identifying potential risk factors and strategies to conduct the risk assessment. Starbucks is one of the multinational organizations and leading chain of coffeehouses operating in 80 countries (Gupta, Nagpal & Malik, 2018). However, the chosen organization's risk factors impact lower productivity, employee absenteeism, increased turnovers, and the supply chain.

• Operational risk: Starbucks has mainly risk factors related to managing their operations in global changing dynamics in the retail markets. Along with it, international competition impacts the operations by varying the product prices and changes in the target markets and product qualities.
• Financial risk: According to Cao and Qiu (2021), the vulnerable effects of globalization impact the changes in commodity prices in the global marketplaces that influence operations of Starbucks while spending ample amounts of money on raw coffee beans, supply of milk, and sugar which can lead to disappointing financial results in the future.
• Strategic risk: Starbucks faces strategic threats introducing their franchises around the world. The high pricing products have limited targeted audiences, leading them to limit their strategies to be implemented while executing the business expansions.
• Competition: in the global marketplaces, Starbucks faces high competition from coffee chain giants and independent coffee houses that significantly impact higher switching costs by consumers. As opined by Hess (2017), leading brands such as Costa Coffee, McDonald's, Dunkin Donuts, KFC increase the demand for raw coffee beans and coffee-making machines in the international marketplaces.

The giants in coffee chains and growing mini-independent coffee houses can impact pricing and customer buying behaviors. Product differentiation strategy can be based on different factors related to maintaining favorable pricing, quality, and customer satisfaction to deal with the competition in the global marketplace.

Labor cost, higher wages, and inflation According to Elshandidy and Neri (2018), the single market concept can have increased labor costs and higher wages per hour to deal with occupancy expenses.

Starbucks must comply with regulatory frameworks such as fair trade, human rights, and employee protections to limit the demand for laborers. This, in turn, increases the growth rate over the inflation rates.

Increased demand of suppliers and price hike of raw materials Increased demand and the price hike of natural resources can impact product price range that the company may not be able to target lower- or middle-income demographics.

Starbucks' pricing strategy must comprise high value at the moderated costs by getting good deals and targeting a broader range of international consumers.

While expanding in international marketplaces, Starbucks faces economic changes and ups and downs due to globalization while growing.   Low Moderate Starbucks is trying to increase their cash flow and profits over time that can value their global shareholders and reward them with significant share repurchase (Dalton & Thatcher, 2019).

• Governmental: there are different employee relations acts, labor acts, and fair wages to remove the chances of governmental risks; however, these risks can influence lower productivity, introduce potential losses and conduct workplace hazards in Starbucks.
• Financial: the risk factors in Starbucks impact on financial functions that the company manages fixed coverage ratio for 2020 was 1.58 in 2020 (Khushman, 2019). However, evaluating the globalization factors, the company increased its financial performance in the year 2020 by 24%.
• Commercial: the impact of commodity price rise influences high prices factors that the company stated differentiate their products and the quality to manage differences and lower switching costs.
• Industrial: following the impact of globalization, economic crisis, and changing consumer behavior, the chosen organization can face major changes in the coffee house chain. Starbucks must implement strategies to overcome high potential operational risks globally.
• Shipping & logistics: Introducing the strategic risks, Starbucks may face challenges in distributing their products; suppliers may go bankrupt, control workers' well-being, and suffer from decreased quality.