Business management - Starbucks Essay Example | Topics and Well Written Essays - 3000 words

Business management - Starbucks - Essay Example Information obtained from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-irhome, also posits to the effect that â€Å"Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, a selection of premium teas, and beverage-related accessories and equipment, primarily through company-operated retail stores.† The company also sells coffee products and tea through other channels like licensed retail stores. According to information obtained from its official website, Starbucks was established in 1985 and its operations are mainly guided by its mission statement: â€Å"To inspire and nurture the human spirit—one person, one cup, and one neighbourhood at a time.† The company also strives to be the world’s leader in production of fine coffee. Its success as the world leader in the coffee industry can be attributed to the differentiation strategy it uses. This report will specifically focus on the United States Segment where the company has its own stores as well as licensed stores. Starbucks is very popular in the US and of notable concern is the fact that its operations are also shaped by trade practices as well as regulations such as North American Free Trade Agreement (NAFTA).The economic forces in the US also shape the operations of the company. However, the US operating segment contributed 69% of total net revenues for the fiscal year 2011. 1.1 Task A: ANALYSIS OF STARBUCKS’ EXTERNAL ENVIRONMENT This section of the report critically analyses Starbucks’ external environment. PESTEL analysis will be used to analyse the macro environment while Porter’s five forces model will be used to analyse the micro environment. This part of the paper will also identify the opportunities and threats that exist in the external market. 1.2 PESTEL Analysis There are vario us external factors that shape the operations of Starbucks and PESTEL is an acronym for political, economic, social, technological, environmental as well as legal factors impacting on the operations of the organisation and this too is going to be used to carry out the external environmental analysis. The table in index 1 shows the external factors that impact on the operations of the above mentioned company. Starbucks FY11 Annual Report (2011) shows that the company managed to raise the highest amount of revenue of $11, 7 billion from its operations. This is the highest amount of revenue to be generated by the company after the global economic recession that was witnessed in the US around 2007-2009. The success of the company can be attributed to the external factors that are obtaining in the environment where the company operates. As shown in appendix 1, political stability in the US plays a pivotal role in the success of the

How Fuel Costs Have Affected the Airline Industry Essay

How Fuel Costs Have Affected the Airline Industry - Essay Example The aim of this paper is to discuss all of this, as well as all characteristics and factors involved in the matter of how fuel costs have affected the airline industry. This is what will be dissertated in the following. The six most primary airlines in the United States have been ailing since 2001; four out of these six were in fact forced to file for bankruptcy in 2005. According to some analysts, the entire airline industry is on the brink of collapse altogether; the primary cause being that of ever-increasing fuel prices. "It's very bad right now, it's unsustainable," said Kevin Mitchell, Chairman of the Business Travel Coalition based in Pennsylvania. "It's as bad as it gets. If (oil) goes up another couple of dollars it's going to be more of a pain but it's going to be hardly distinguishable from the pain that the airlines are feeling right now." (Delaney, 2006). In fact, according to Mitchell, the American airline industry basically refused entirely even to recognize the shift in the marketplace five years ago. "They failed to understand that consumers were demanding everyday, low, affordable airfares. The carriers in Europe recognized that and began to take action in 2001 and 2002 to become competitive with low-cost carriers. The US carriers were stubborn throughout the whole time, thinking that as soon as the economy would rebound, so would business travelers willing to pay $2500 for coast to coast fares, and of course that never happened." (Delaney, 2006). In fact Northwest Airlines, the nation's fourth-largest airline which is based in Eagan, Minnesota, has made many headlines since the year unfolded. "It reported $450 million in losses the first quarter of 2005, it's stock prices are declining, it's fuel costs are rising, it asked its labor unions to freeze their current pension programs in lieu of new contribution plans, it is attempting to cut annual labor costs by $1.1 billion, and on July 1 the union representing its mechanics authorized a strike vote." (Oo, 2005). The current spike in oil prices is especially taking its toll; taking the airline industry into uncharted territory and raising many questions about the economic viability of many players in the industry. Increasing fuel prices have also had effects on global trade, which is one of the United States' most profitable resources. "No doubt increasing oil prices are likely to dampen global trade. Air cargo traffic is a leading indicator of any economic slowdown. The air cargo industry itself, in which fuel accounts for 20-30% of the operational cost, is poised to be the prime casualty of the new era of expensive oil," says a report entitled 'The Oil Crisis and its Impact on the Air Cargo Industry.' "Jet fuel prices have almost tripled in the past four years. As a result, the world's airlines spent over $100 billion on fuel in 2005, a 50% increase over 2004. At reasonable oil prices of $30-$40 a barrel, world air cargo traffic was projected triple over current traffic levels." (IAGS, 2006 ). Fuel expenses rank in as the number-one or number-two cost category in regards to the airline industry, and because of this, airlines have an enormous built-in financial incentive to reduce consumption;