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Business Environment of Starbucks

University: DOCKLANDS ACADEMY

  • Unit No: 6
  • Level: Post Graduate/University
  • Pages: 16 / Words 4117
  • Paper Type: Assignment
  • Course Code:
  • Downloads: 60
Question :

This assessment will cover following questions:

  • Starbucks is the most renowned coffee brand in the coffee industry. What is the scope and size of Starbucks?
  • Describe the internal and external environment of Starbucks by using SWOT analysis?
  • How the external environment can be examined of Starbucks?
Answer :
Organization Selected : Starbucks

INTRODUCTION

Business Environment refers to the surrounding of an organisation, which is related to all the factors and elements that either influence or impact the workings and functioning of an a company. Furthermore, it is a very important factor for a firm to analyse this environment as it provides a prominent insight to the companies in relation to these aspects as it helps in enhancing the scope of improvement when it comes to formation of strategies and operations (Wood and Logsdon, 2017). In this relation, the report below is based on Starbucks, which is one of the most effective, recognised and leading organisations of the organisation. In this relation, the report covers appropriate and effective insight onto the business environment of the company, which covers explanation of different types, sizes and scopes of a company, along with demonstration of interrelationship of several functions and how they link with the organisational structure. In addition to this, it also undertakes use contemporary examples in order to demonstrate several factors which either positively or negatively influence the organisation, as well as internal strengths and weaknesses of specific businesses and their interrelationship with external macro factors.

TASK 1

P1. Different types and purpose of organisations with their legal structures

Organisations is the group or unit of people who are gathered in order to meet the individuals as well as organisational goals.

Private Organisation: These organisations are runs and owned by the individuals in order to earn profit and also the part of economy and contribute huge share in the economy. Moreover, these organisations raise their own profits by themselves and also follow the rules an regulations which are made by government and make their own policies to operate their own business. The profitability form the private sector organisation is beneficial for the owners, shareholders and the investors. Moreover, these businesses can also collaborate with the government or the public bodies agencies and termed as public-private partnerships. For instance, Starbucks which is an American coffee company and founded in 1971 and also operates around 30,000 coffee shops in different locations.

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Purpose: The overall objective of these organisations is to improve their profitability, enhance clarity among employees and choose the proper culture for the organisation in order to run their business.

Legal Structures:

  • Sole proprietorship:This structure include single individual who runs and operate its organisation as it is the single trader and in this structure small amount of capital is required in order to set up their organisation and also has few benefits. Furthermore, this kind of business does not need complex paperwork as sole trader is only responsible for the profits and losses. For this, they alone need to gather funds and capital for their business and also bear risk for their business ventures. To set up this kind of venture, they does not need the permission of government.
  • Partnership:These association are set up by two or more individuals and the limit of person is maximum 2 and minimum 20. Here, each partner is responsible for all the debts and these partners make agreement in order to justify their rights and responsibilities which is also known as partnership deed. This deed is a document which depicts the power, authorities, responsibilities and share ratio etc. about each partner. This structure is complex as it include lot of paperwork and also take more time in order to form it.
  • Corporation:It is formed by the individuals who make their own firm in order to operate their business. These firms are runs and owned by the stakeholders and they are appointed by the Board in order to regulate their business. In order to form this structure, different legal structures and formalities are required and they also need to carry their own rights and trademarks.

Public Organisation: These enterprises are run and owned by the government and public bodies in order to provide their services to general public. These organisations are run and owned by the state, local and central government and also the combination of both the public enterprises and services. These organisations runs on the commercial basis has full support of government and provide different services which is runs by the state government. Moreover, funding of these enterprises are raised by the state or local government. In addition to this, public sector organisations are join with private businesses and termed as public-private partnership. For instance, National Health Service (NHS) which is the independent public healthcare service provider in UK and also various places such as England, Scotland, Wales and many more.

Purpose: Its purpose is to make changes in the economy also help in developing the country and spread awareness among people.

Legal Structures:

  • Central Government:It carry different types of business functions which are operated by them and it help in order to control and manage the services and functions of an organisation. Moreover, central government has the authority and right to make rules and regulations according to them. Here, the organisations who come under this should take permission from the government in order to operate their organisation and also involve them in decision making process (Thompson, Strickland and Gamble, 2015).
  • State Government:This government share their powers and authorities along with the national government as they perform many functions which are controlled and managed by the state government because some products and services are provided by only the state government.
  • Local Government:The function of local government is to gather funds and capital by considering the name of community charges which is called as the council tax by its other name. Moreover, they plays a significant role in order to analyse the requirements of individuals.

Voluntary Organisation: This type of business organisations came in market to do social welfare services. Here, membership is neither necessary nor required as anyone can become member to provide their services and its employees are paid or unpaid. Moreover, people join these organisations with the aim to do social and welfare services for the poor and needy people. These organisations are not for the profit and does not have formal legal structure in order to operate their business functions. As these enterprises are helpful for those who does not have enough resources and provide funds to them. For instance, Oxfam is a charitable organisations and put emphasis on the alleviation of global poverty and incorporated in 1942 and led by Oxfam international.

Purpose: Their objective is to connect and collect people and also enhance their services. These enterprises work and provide their services to the poor and needy people.

Legal Structures:

  • Trust:This type of charitable trust is owned and operated by the group of people which are considered as the trustees. These units are run and managed by the trust deed which is more flexible and managed. Trustees are not elected as they are appointed by the Board or the members. To establish the trust group, their members make an agreement which is in the written form or the document which depicts the following rights and powers and known as trust deed and also describe that an organisation is relies under legal terms and conditions and become the legal charitable trust.
  • Unincorporated Association:It is the type of charity which is set up the rules and regulations which is not mentioned or registered under constitution. In addition to this, this structure carry different limitations of liability as the members of management would enter into any sort of agreements on the behalf of charity. Here, enterprises add various features and restrictions on the regulations or the distribution of funding and capital. Unlike an incorporated association which is the example of limited company an unincorporated association is not a legal entity in terms of laws and legislations (Saleem, 2017).

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P2 Explain the size and scope of a range of different types of organisation

There are different type of organisations within the business environment including private, public and voluntary organisations. The basic objective of companies is to attract more shareholders and maximise the opportunities to sustain in market for longer period.

Private organisations:

These organisations basically works for maximising their sales and profits. The top level managers of the company develops strategies and plans that are implemented within the company. Starbucks corporation is an example of American coffee company and coffee house chain. This is basically involved in providing coffee and other beverages to people.

  • Background:Starbucks Corporation coffee chain of America. This company was founded in the year 1971 in Seattle (Starbucks Coffee’s Mission Statement & Vision Statement, 2019).
  • Vision: The vision of Starbucks is to treat people like family and provide them loyal services.
  • Mission: Their mission statementis to ensure and nurture the human spirit by creating a warm culture at coffee shops.
  • Objectives: The main objective of Starbucks is to maintain this coffee shop as one of the best recognised as well as reputed brands within the world. This company wants to expand it's business in global markets.
  • Products: There are a number of products and services offered by this coffee chain. Some of the coffee specialities of this company are cold and hot coffee, Teavana coffee, Frappuccino beverages, pastries, loose leaf teas, Fresh juices, etc. sometimes this company offers beer and wine too (Prajogo, 2016).
  • Size: This company provide services worldwide and there are approximately 28,218 employees working in Starbucks.
  • Structure:Matrix organisational structure is followed within Starbucks.

Public organisation

 These organisations include those firms which have more than fifty percent shares of Government. This is basically for helping people of country by providing services and products.

  • Background: The National Health Service was started by combining various health service of England, Wales, Scotland and Ireland. This was started in the year 1948 as social reform after the second world war.
  • Services & Products: They provide health services within countries and speacial care to poor people.
  • Vision: The vision of NHS is to connect people and organisations and develop an environment for improving well being and health of individuals.
  • Mission: The mission of this organisation is to bring different health services together for providing best outcomes to patients.
  • Size:This organisation seesone million patients and it has around 1.7 million staff. This is the fifth biggest employer in the world (Mission, vision and values of NHS, 2019).
  • Objectives:The basic aim of this organisation is to provide good health services to people and innovate the medical facilities.
  • Structure: National Health Service (NHS) follows Hierarchical type of organisational structure (Oriesek and Schwarz, 2016).

Voluntary sector

Voluntary organisations refers to those business entities mainly operate their functions for the welfare and development of the society. In reference to the present organisation which is OXFAM which is a voluntary organisation of UK.

  • Background :OXFAM is a confederation of approximately 19 independent charitable organisations and the main focus of these is to remove global poverty (Oxfam,2019). This was founded in the year 1942.
  • Vision: The vision of this organization is to start a global movement against poverty and give a positive life to all.
  • Mission: The mission of this organization is to develop lasting solutions for injustice of poverty.
  • Size:This organisation is working worldwide and helping people to fight against poverty.
  • Objectives:To help different individuals to fight against poverty and lead a respectful life.
  • Structure: Functional organizational structure is followed by OXFAM.

TASK 2

P3 Relationship between various organisational objectives and structure

Different departments working within company are interrelated and they have to collaboratively work for achieving the organisational goals. In context of Starbucks, there are different departments working effectively for providing good services to people. The interrelation between different departments is mentioned below -

Marketing and finance – Starbucks marketing department is involved in creating different strategies and plans to enhance the sales of the company. Effective and strong market researches are conducted by Starbucks in order to attract potential customers. The finance department of Starbucks creates budgets for market plan and research plan. The finance department is associated with maintaining all funds and money related issues of the marketing department. Starbucks marketing campaigns are planned and the finance department fixes a proper fund to organise the same. The inter relationship helps Starbucks for effectively using the money and funds for various market researches, campaigns and marketing activities (Madhavaram and Hunt, 2017).

HR and marketing – The HR department of companies are involved in recruiting and selecting best candidates who can work effectively. In Starbucks, the HR managers post job vacancies in different online and offline portals. On the other hand, marketing department of Starbucks is involved in enhancing sales of the company. This is done by conducting effective market researches. Also promotions are done for making the brand popular. There is interrelation within marketing and HR department. The marketing managers provide information to HR department about the skills and abilities which must be present within the candidates. Starbucks has unique style of marketing it's coffee i.e. by writing name on cups in which coffee is served. So all employees are instructed to provide great services to customers (Jong and Higgins, 2015).

Organisational structure 

Organisational structure followed within Starbucks is matrix and this is a hybrid mixture of other organisational structures. The structural design within Starbucks includes intersections among different components of business. This can explained with an example, the product based divisions of Starbucks are intersect with geographical and functional divisions. This intersects with each other. Starbucks has various departments including HR, finance and marketing. Corporate HR provide regulations and policies that are implemented within the company. The hierarchy of corporate structure facilitates top down monitoring and controlling. There are basically three types of regional divisions within the company including Middle East, Africa, Europe and Asia Pacific. Starbucks has product-based divisions in its organizational structure and These divisions address product lines (Hillary, 2017).

Organisational structure of Starbucks

                         Illustration 1: Organisational structure of Starbucks, 2019

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TASK 3

P4. Identification of positive and negative impacts of macro environment

Macro environment of a business organisation contains all the external factors that influence working of the organisation. In addition to this, Starbucks is planning new operations within the United Kingdom, as it is willing to expand its market in the Fine Dining sector within the United Kingdom (Fabuš 2017). Hence, there are several factors that are associated with the same and are mentioned below:

  • Political:

One of the major factors which influence a business environment is the political one. These include the factors that are associated with the political stability and other essential aspects associated with the political environment of a country. Hence, as for Starbucks, the political environment of the UK is explored below:

  • Positive: One of the positive impacts of the political environment of the UK upon Starbucks is that the government appropriately supports the food and beverage sector in context of develop appropriate infrastructure in terms of exploring more markets as well as supply chain management.
  • Negative: Due to the likelihood of Brexit, the political environment of the country is becoming quite uncertain, which could be a major drawback to the company in context of managing its supply chain and expand its operations in an uncertain environment.
  • Economical:

This factor appropriately includes the overall economic performance of a nation, that directly influences the operations and functions of an organisation. In relation to UK, the impact of this pointer is explained in an effective manner (Erasmus, Strydom and Rudansky-Kloppers, 2016).

  • Positive: The economy of the United Kingdom is very much progressive and is one of the world's largest economies, which could be an opportunity for the company to ensure further investment in the economy to assure highest returns.
  • Negative: Due to the global inflation and likelihood of Brexit, the economy, despite of being progressive is running slowly, due to decrease in value of Pound. Hence, this could be a major disadvantage for the firm to ensure consistent working capital for its new operations.
  • Social:

These factors undertake the trends and customer demands prevailing in the market, which shapes up the functions of the company in a way which ensures high preference of the company within the marketplace.

  • Positive: One of the major opportunities of the company within the UK is that the customers are inclining more towards adopting fitness lifestyles and organic food. Hence, the firm must expand its operations by including food items that are healthier.
  • Negative: Customer preferences are changing drastically and they tend to shift onto different organisations due to low switching cost, which could be negative for the organisation in its expansion (Demil and et. al., 2015).
  • Technological:

These are the factors which are inclusive of all the technological advancements within the nation. In terms of Starbucks, this factor is explored below:

  • Positive: With technology advancements such as Artificial Intelligence and Automation, the organisation is very much effective and capable of inclusive
  • Negative: It could be quite costlier for the company to regularly update the technologies, which could be disadvantageous in long run.
  • Legal:

These factors cover the legislative environment of the country, which covers the laws, regulations and legislation associated with the company. Hence, for Starbucks, this environment is explored below:

  • Positive: The employment legislations such as Equality Act, 2010, expands the horizon for the company to ensure social inclusion in the organisation while expanding (Couto, Lopes and Sousa, 2015).
  • Negative: The regulations of the country are being very much unstable due to changing conditions with the EU. Hence, it could be a threat to the organisation in context of getting a firm legislative support.
  • Environmental:

In this factor, the environmental concerns are very much taken into consideration, which must be adopted by the company to support the environment.

  • Positive: There are several legislations, such as Environmental Protection Act, 1990, which provides the company a framework to successfully implement the expansion with adherence to environment.
  • Negative: Due to climate change issues globally, the firm might face challenges to acquire land within the United Kingdom to set up their fine dining in an appropriate manner (Cassidy, 2016).

TASK 4

P5. Internal and External analysis of specific organisations in order to identify strengths weaknesses

Internal factors within the organisations are the ones which are associated with the company and its internal processes. In context of Starbucks, SWOT analysis is included which are stated below:

STRENGTHS

WEAKNESSES

· Effective Brand Image

· Enhanced Supply Chain Management

· Premium pricing strategy

· Generalisation in product portfolio

OPPORTUNITIES

THREATS

· Strong Market Development in the UK

· Technological Advancements like AI and Automation.

· Intensive Competition in the UK with companies like Greggs.

· Controversy related to Brand image associated with Philadelphia arrests.

P6. Explain how strengths and weaknesses interrelate with external macro factors

It is highly important that the company appropriately and effectively interrelates its strengths and weaknesses to the external environment to develop an insight onto its competence (Bah and Fang, 2015). Hence, for Starbucks and its expansion in the UK, these factors are highlighted below:

  • Political:

The firm has effective supply chain as an effective strength. Hence, this strength of the organisation is quite effective in relation to overcoming the unstable political condition of the company.

  • Economical:

The nation is currently facing a major economic setback due to likelihood of Brexit, However, the firm's weakness associated with its high pricing would lead to disadvantage for the company in context of ensuring successful operations in the country (Aithal, 2016).

  • Social:

Customer preferences are highly important for the organisation to understand. However, due to its controversy of getting two men wrongfully arrested could divert the attention of customers.

  • Technological:

There are several appropriate advancements in the UK within technology such as AI and Automation, which could present countless opportunities to the company in context of ensure a competent enhancement of the business operations in the UK.

  • Legal:

The Equality act within the UK is highly necessary for the organisation to follow. This opportunity would be appropriate for the firm to enhance its strength associated with its brand image.

  • Environmental:

The firm must ensure development of its food products by implementing environment friendly factors, which is associated with improve the weakness of generalising within its food production operations (Aithal, 2015).

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CONCLUSION

Hence, it is concluded from the report that business environment is highly important for a business to enhance its operations within a particular country. Moreover, identification of different types and purposes and explanation of sizes and scopes of range of different types of organisations are required to understand different aspects associated with the same. Furthermore, explanation of relationships between different organisational functions and their linkages with organisational objectives and structures are very much important to ensure the interrelationships of these elements. Lastly, external and internal environment analysis with respect to the firm is crucial to determine the positive and negative impacts of these aspects upon the organisation.

You can also check out:-

Impact of Global Business Environment on SMEs Sector

REFERENCES

Books and Journals

Aithal, P.S., 2015. Mobile business as an optimum model for ideal business. International Journal of Management, IT and Engineering. 5(7). pp.146-159.

Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies, operating concepts & business systems. International Journal in Management and Social Science. 4(1).

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