Starbucks PESTEL Analysis

1. Introduction

The PESTEL analysis of a company is very significant to weigh its chances of growth. Socio-economic factors affect the development and sales of a company. Therefore, a company can use PESTEL analysis to know how different external issues can impact their expansion. They can judge threats and opportunities and based on that. They can make future strategies.

Starbucks is a part of American coffee culture but has penetrated the market of several other countries. PESTEL analysis Starbucks can show the external issues that can impact their growth.

2. Background of Starbucks

It is crucial to have an idea about Starbucks to do a PESTEL analysis of Starbucks. The knowledge about the company's background can help them to have a better idea about the possibilities of their future growth. Starbucks is one of the largest coffee-chain based in the US. They have outlets in more than 31,000 locations and serve coffees to millions of people every day. Starbucks offers varieties of flavored coffees and a wide range of baked products to their customers. Here is an overview of the details of the company.

2.1 Basic Information of Starbucks

3. Starbucks PESTEL Analysis

PESTLE analysis of a company can give an overview of the external factors that can impact the progress and development of a company. Though Google is a multi-millionaire company, it still can get affected by external influences. The PESTLE analysis can show the impact of political, economic, social, technological, ecological, and legal conditions on the company's progress. However, the company can make proper strategies that can help them to prepare for the threats.

Political Factors:

Political factors can affect the expansion of a company in several ways. The political condition of the countries where a company operates may impact its progress. If the political condition is stable, the company may get a good environment for business. Several political conditions can affect the sales of Starbucks:

• The tax policies and employment laws of a company can have a specific impact on its sales. If the tax policies are fair, the company may earn good revenue from the business.
• The government of many counties may have some laws which are ideal for businesses. Starbucks can get a good chance of expansion in those countries.
• The Bureaucratic movements in the developed countries can be a significant threat to the business of the company.

Economic Factors:

Economic conditions of a country are directly linked to the business of a company. If a company desires improved sales, it may look for regions with stable market conditions. Here are some economic issues which can impact the sales of the company:

• Most of the developing countries are having an emerging economy. It can be a good sign for the countries that are willing to expand their business.
• The increasing cost of raw materials and labor charges can be a threat concerning the development of their business.
• There are several alternatives of Starbucks, which are gradually getting hold of the market. The competitive market scenario can be a threat to the business of the company.

Social Factors:

Social conditions are key factors that can affect the sales of any business. PESTEL analysis Starbucks can show how the social conditions of the operating area can impact the sales of the company:

• The changes in the lifestyle of the people and their choice of food can toll upon the company's sale. People are more tending to have a healthy, low-calorie diet, which can decrease the sales of their sugary beverages.
• The food items offered by the company are expensive considering their alternatives. It is the reason they are losing customers from lower and middle-income groups.
• As the coffee culture is getting new meaning worldwide, the cafe chain can utilize it. It will help to expand its business.

Technological Factors:

Though technological conditions may not be a direct threat to the company's growth. In the long run, they may affect the business. The Pestel analysis Starbucks can show how technology can work in hindering or catalyzing the expansion of Starbucks:

• The increasing technological aid can make the journey of coffee from the farm to the mug smoother and faster. The easy transport and high-tech coffee machine both can contribute to this.
• As smartphone purchases have increased, more people can access the delivery service to get their coffee from home.
• The company may see a drop in their sales because of the easy availability of good quality coffee machines in the market.

Ecological Factors:

Ecological factors may not impact the business of a company directly. However, they can influence its progress indirectly. Here are some environmental issues that can affect the business of Starbucks:

• The company's business can get affected if the growth of coffee suffers from insects, diseases, climate, or natural disasters.
• The company can concentrate on following the business sustainability trend, which can make the customers support the company for their policies, and this can earn more environment-conscious customers.
• The company can work on recyclable packaging which can be environment-friendly. They can support social and environment-related campaigns, which can be a fair opportunity to promote their business.

Legal Factors:

Many legal issues can directly or indirectly impact the growth of a company. If a company has some legal cases going on, that can create a negative impression. It may destroy its reputation. PESTEL analysis Starbucks can help to identify those legal factors:

• The company needs to adhere to the employment rules and product safety regulations proposed by the law of the countries they are serving at that moment. Failing to do so may cancel their trade license.
• Licensing regulations and collisions with trade laws can hinder the expansion of the company.
• The company must ensure employee rights and customer safety regulations while expanding its business in a country. Otherwise, their business may suffer.

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4. Key Takeaways

The PESTEL analysis Starbucks helps to point out the key factors that can affect the growth of the business. The company has several threats and opportunities as well. They can improve their product based on the changing scenario and make demands. They can carefully weigh the risk factors and generate strategies for expansion while existing in the competitive market.

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5. References

1. Contributor, P., 2021. 'PESTLE Analysis of Starbucks', PESTLE Analysis, [online]. Available at: https://pestleanalysis.com/pestle-analysis-of-starbucks/ (Accessed 16 June 2021).

2. Edrawsoft. 2021. 'Starbucks SWOT Analysis and an Overall Competitive Report', PESTLE Analysis, [online]. Available at: https://www.edrawmax.com/article/starbucks-swot-analysis.html (Accessed 16 June 2021).

3. Managementstudyguide.com. 2021. 'PESTLE Analysis of Starbucks', PESTLE Analysis, [online]. Available at: https://www.managementstudyguide.com/pestle-analysis-of-starbucks.html (Accessed 16 June 2021).

4. Panmore Institute. 2021. 'Starbucks Coffee PESTEL/PESTLE Analysis & Recommendations - Panmore Institute', PESTLE Analysis, [online]. Available at: http://panmore.com/starbucks-coffee-pestel-pestle-analysis-recommendations (Accessed 16 June 2021).