Business and the business environment of Starbuck Essay

Business and the business environment of Starbuck - Essay Example Strong and persistent focus on international sales led to significant growth and expansion of this company during the subsequent years. During the second quarter of 2010, for instance, Starbucks’ profits increased eightfold to $217.3 million (Starbucks, 2010a). Currently, this company has more than 1700 stores in various locations in the world. It distributes its products in terms of stores and does not sell franchises. Apart from specialty coffee, this company owns other two brands namely; Tazo Tea and Seattle’s Best Coffee. This paper examines the external and the internal environments affecting the performance of this company. It also analyzes the key stakeholders of this company and their relationships to the company. PESTEL Analysis The following PESTEL analysis will examine in brief the factors of the external environment that affect the performance of this Starbucks namely economic, environmental, political, legal issues, social and technological factors. Politic al Environment One of the political factors affecting the performance of Starbucks is trade restrictions in terms of tariffs and other non-tariff barriers placed by various countries across their international borders. Strict and coercive trade barriers may adversely affect the ability of this company to source the best beans and to export its output to over 50 countries in which it operates (Anon, 2010). In addition, this may adversely affect its reputation, sales and competitiveness in the global market. Secondly, political stability in the countries where Starbucks operates is an important issue. In Israel, Starbucks was forced to put off all of its operations due to political hostility between the Palestinians and Jews (Starbucks, 2012). This adversely affected its strategy for expansion into the international market. Generally, political environment is unfavourable to some extent and presents threats to this company. European Union recently expanded to include Hungary, Slovakia , Poland, the Czech Republic, Estonia, Slovenia, Latvia, Lithuania Cyprus and Malta (Kole, 2011). This makes trade across the borders of these countries more liberal and opens opportunities for Starbucks to expand its operations into those markets. Finally, Starbucks has in the past been evading paying corporate taxes in various countries in Europe and this issue has adverse effect on its reputation in the European market (Kole, 2011). Recently, this company has bowed to pressure from the UK government authorities to pay taxes from 2013 henceforth. It is vital for Starbucks should be compliant to such government requirements in all countries where it operates to avoid damaging its image. Economic Environment The stability of the US dollar is a vital issue to the operations of Starbucks. Weak monetary policies, for instance may lead to a decline in the dollar rates in comparison to other currencies (Oxford University Press, 2010). The company may as a result incur higher costs of vit al inputs such as coffee, milk and sugar. This may force the company to pass the extra cost to the consumer, which may put at risk its reputation, sales and competitiveness. The recent economic crisis that peaked in 2007 and 2008 led to increased unemployment rates in many countries. For instance, the number of unemployed persons in Britain rose three-fold to 2.5 million by 2010 (National Coffee Drinking Trends, 2011). This also adversely affecte