Mba 580 Environmental Forces W2 Hw

Forces from the Remote

Economic Forces in Starbucks Corporation

The importance of economic indicators to the strategic planning process in any organization is the ability to benchmark economic conditions that contribute to improve profitability, business growth and market size. Leadership sets up the mission “to establish Starbucks as the most recognized and respected brand in the world.” In doing so, they have created a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Corporation, 2007).

Today, they have expanded lunch programs to a total of 4,150 stores and introduced the ability to warm pastries and provide hot breakfast sandwiches to stores across the nation. Starbucks retail stores are operated through a number of joint venture and licensing arrangements in South East Asia countries as well as Thailand, Singapore and China. When they do the business in foreign countries, the most important issues will have to be aware of the exchange rates. They are planning to open 2,400 stores internationally in 2007, and they have approximately set financial growth targets for total revenue 20 percent and annual earnings-per-share 20 to 25 percent for the next three to five years. In addition, they have proposed new stores count target to 40,000 worldwide (20,000 U.S. and 20,000 International) in the long-term (Starbucks Financial Release, 2007).

Starbucks have succeeded several economic factors as well as price elasticity of demand. Price elasticity of demand can be determined by the percentage change in the quantity demanded with the percentage change in price. They should consider household income that people are willing to spend more on food and beverages when household income increases. Starbucks innovation in joint ventures has opened new markets and opportunities increasing product use among different demographics. Starbucks has proven to be highly innovative in business culture that offers prepaid cards, priced from $5 to $500. Joint ventures with Pepsi Company, Dreyer's Grand Ice Cream Inc and inspiring entertainment with the launch of “Hear Music” have developed Starbucks with great success. Starbucks has shown their values, leveraging market power, resources, and capabilities to achieve returns higher than their competition (Investment Group, 2001)

Social Factors

The social factors that affect Starbucks involve the beliefs, values, attitudes, opinions and lifestyles of persons in the external environment as developed from cultural, demographic, education, ethnic conditioning and customers’ needs and the size of the potential market (Pearce-Robinson, 2004). Starbuck’s approach to corporate social responsibility (CSR) includes developing “ethical sourcing practices for products such as coffee and cocoa, strengthening their involvement in education programs focused on cultural diversity globally, funding water projects in developing countries, and reducing our environmental footprint” (Starbucks Corporation, 2007). Social forces results from the efforts of individuals to satisfy their desires and needs by controlling and adapting to environmental factors.

Starbucks Company profile states that they “offer benefits package to both full-time and part-time employee included medical, dental, vision and short-term disability insurance, paid vacations and employee stock options package.” They also provide training programs to facilitate the knowledge of products and discount stock option for global partners. The benefits package promotes employee motivation, strong workforce and the implementation of this policy has been highly successful for Starbucks. These benefits packages decrease employee turnover and encourages them to be attentive in order to satisfy consumer needs. They treat employees as the most valuable asset for the company and empower to make decisions. They continue to sustain the values of personal dignity, mutual respect, shared success and diverse workforce culture in the organization. In addition, they focus on ethical sourcing that offers affordable loans for farmers, sustainable farm management practices, the prohibition of forced child labor, and economic transparency to increase their value chain (Starbucks Company Profile, 2007).

The Starbucks Foundation has begun to serve impoverished communities and support education funds for the children where it operates through social,