- Economic Trends
Inflation refers to the increase of product prices and the converse fall of purchasing power of money. Starbucks has been affected by this phenomenon. There has been an increased inflation rate in commodity prices such as coffee. Consequently, the company has been forced to raise its prices, since maintaining the same margins has been difficult. Similarly, inflation of living costs has made some customers reduce their consumption of Starbucks’ products, as they are considered luxury commodities. Since the global crisis of 2008-09, many key markets have experienced recession. Similarly, companies have reduced their costs by trimming down their staff numbers. Consequently, the unemployment rates have grown in several markets. This has seen consumption of Starbucks products fall. Starbucks Corp. is a net importer of raw materials in countries such as the UK, Canada and Japan. Dynamic money market conditions have often affected the company’s bottom line, resulting to losses. The high fuel prices, consumer debt levels and the slow housing market may also make consumers reduce their spending on Starbucks’ products.
- Technological Trends
Technology offers companies an opportunity to reduce their operational costs, as well as improve their products and services. Starbucks has implemented various technologies in its manufacturing. For instance, it reduces waste through efficient processes adapted from the biofuels industry. Similarly, it has developed the Starbucks Digital Network, which provides a better experience to consumers of its products. The technologies implemented may be considered mature, as they have been available and proven for a while now. The company may also consider new technologies in coffee making, such as the ‘brew-in-a-bag’ concept.
- Political and Legal Issues
Starbucks imports its coffee beans from various regions around the world. Political stability in such countries is, therefore, important to the company. Similarly, the relationship between such countries and the United States is important. Legal-political issues such as labor disputes may affect the relationship between Starbucks and its suppliers. Similarly, the occurrence of war may disrupt supplies to the company. All these situations may adversely affect the corporation’s business activities. The establishment of export quotas for coffee producers and other restrictions may affect coffee prices, as seen from the past. Legal matters such as import laws may also affect the company’s business. For instance, additional tariffs and complexities may affect the company’s margins.
- Social and Cultural Trends
A new coffee culture has emerged around the world. This has seen the Starbucks’ sales volumes grow, as the culture has gained a widespread audience. The culture is related to consumption of premium products such as Starbucks coffee, and other specialist offerings. The culture is related to consumers between the ages of 18 and 49. These demographics are equally split between the genders. Consumers of this culture, give themselves a sense of identity, from what they drink. A shift from such behavior may affect the market demand (D’Costa 1).
- Environmental Issues
In recent times, there has been a trend towards environmentally friendly business practices. Starbucks has also participated in this trend. For instance, it reduced the size of its paper napkins, and garbage bags, in 2004. This resulted in a waste reduction of 816.5 metric tons (Linton, Liou and Shaw 230). The company has also used other strategies in maintaining environmentally friendly business. Firstly, it uses coffee cups that are sourced from recycled materials. Alongside that, the company offers consumers with discounts for bringing their own cups. Starbucks Corp has also participated in the Fair Trade movement. It is the largest North American buyer of the Certified Fair Trade Coffee. This amounts to around 10% of the global product market. Starbucks has promoted fairness and equality towards its stakeholders. For instance, it has invested some of its profits towards its employees and growers (Starbucks Corp. 20).
D’Costa, K. “The Culture of Coffee Drinkers | Anthropology in Practice, Scientific American Blog Network.” Scientific American Blog Network. N.p., 2011. Web. 1 Oct. 2013.
Linton, April, Cindy C. Liou, and Kelly A. Shaw. “A Taste of Trade Justice: Marketing Global Social Responsibility Via Fair Trade Coffee.” Globalizations. 1.2 (2004): 223-246. Print.
Starbucks Corp. Striking a Balance: Corporate Social Responsibility. 1st ed. N.p., 2004. Web. 1 Oct. 2013.
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