Starbucks External and Internal Environment Essay

Starbucks External and Internal Environment - Essay Example Business of Starbucks is complemented by three operating segments such as International division, United States division and Global Consumer Products division. The study has selected UK in order to analyze critical success factor and resource capability of Starbucks. Impact of external environment on business policy of Starbucks will be measured by using PESTLE and Porter’s Five Force analysis. SWOT, value chain analysis and VRIO framework will be used to understand internal strength of Starbucks. Critical success factor (CSF) analysis will be important part of the study. Starbucks Corporation was established by Jerry Baldwin, Gordon Bowker and Zev Siegl in the year 1971. In the initial years Starbucks operated business with single store located in Pike Place Market of Seattle. The company is headquartered at Seattle, Washington, U.S. Distribution network of the company is complemented by 6700 owned stores and 4080 licensed stores in USA. Starbucks has established their presence in more than sixty countries with the help of 20,000 stores. The company offers hot drinks, food items, various coffee drinks and other retail merchandise. As of 2011, market capitalization of the company is US$37.84 billion while sales revenue was more than US$ 13 billion. The company is facing competitions from various big players such as Dunkin' Brands, Nestle, McDonalds, and Wendy's International, Inc. Strategic Group map for Coffee industry can be explained in the following manner: (Source: Brown, 2011) Task A (1) Analysis of Starbucks External Environment Macro Environme nt Analysis PESTLE will be used to analyze macro environment condition of UK. Political UK is one of the most influential countries in the world and plays crucial role on deciding business policy in North Atlantic Treaty Organization. Government in the country has taken stern steps such as 24% budget cut for department of media, sports and culture in order to reduce overall financial deficit in the country. Government in the country has planned to reduce corporate tax by 22% within next two years and raise income tax bar ?8,200 to ?9,205. Economic Economic recession has contracted GDP growth by 0.2% while industry growth rate of the country has slumped to 0.8% last year. Economists forecasted unemployment of UK will touch 8.4% by the end of 2012 and more than 2.5 million people will get unemployed within next one year Social Budget deficit of Government has created challenge for people of the country to maintain standard living style while "managed migration" police government has f urther deteriorated the situation. Working age population in the country is growing at a rate of 7.7% for last two years. Technology Retailers are using latest technologies such as RFID, ERP and