Sample Essay on PESTEL Analysis on Starbucks
PESTEL analysis on Starbucks indicates the political, economical, social, technological and environmental factors that affect the operations of this company. Starbucks is one of the largest coffeehouses across the world. However, to maintain its position, this company must engage in constant research to identify these factors and come up with effective measures to counter them.
By conducting a PESTEL analysis, Starbucks can leverage buying power of consumers to gain a significant advantage over its competitors by providing cheaper alternatives. This can be seen by the move by this company to incorporate mobile computing in its marketing where it has engaged Apple to offer discounted coupons in the apps that can be used in iPhones. PESTEL analysis of Starbucks identifies different factors that the company faces and how it counters them.
One of the major political factors that this company faces is challenges in sourcing raw materials. This issue has captured the attention of some politicians from the West as well as countries where the company gets its raw materials from. For this reason, Starbucks has to be keen on environmental and social norms while sourcing raw materials. It must also adhere to the sourcing strategies that appear appropriate and in compliance to practices of Fair Trade that are accepted globally.
In addition, Starbucks must adhere to regulations and laws of the countries where it gets the raw materials from. Its home market in America has regulatory pressures that the company must face as well. For instance, its business processes are scrutinized closely.
Economic recession that hit the entire world is among the economic factors that Starbucks has to face. This recession has affected the profitability of this company. Due to recession, some consumers turned to low-priced alternatives reducing sales opportunities for this company. Increasing labor and operational costs are also other economic factors that affect the operations of Starbucks.
While offering cheaper alternatives, Starbucks must maintain high quality of its coffee. This enables it to capture consumers in both the middle and lower class. Consumers also want to identify with certain brands in the market. As such, Starbucks must do its best to be a popular brand liked by most consumers across the social classes.
Starbucks uses technology to market its products. Use of innovative technology can also boost the operations of this company. For instance, the company can introduce payments via mobile devices.
Activists and some consumers have raised concerns over Starbucks business practices. Starbucks must consider these concerns to maintain confidence and trust among its consumers.
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