One of the main political factors that affect Starbucks is the sourcing the raw materials.
Starbucks will need to know whether the country they are selling their products in is politically stable. Given that Starbucks currently operates in many countries. The stability of which coffee houses source their raw materials can affect Starbucks’ supply of products; if there is any disruption at the location at which the materials are being sourced, this may be due to environmental factors.The government affects Starbucks externally as the government supports businesses in order to keep them running. Additionally, the government can change the way Starbucks works such as updating and changing rules and regulations that Starbucks must agree to be able to continue with their business. National minimum wage can also affect a Starbucks.
This means that if employees are receiving a lower pay than the national minimum wage they are more likely to be demotivated to work and therefore may not perform to their best potential which will affect the business’ performance and success. However, Starbucks pays all its employees in the UK national minimum wage so that all their employees receive equal treatment so that their business runs smoothly.Tax rates affect Starbucks in several ways as taxes are compulsory contributions run by the government on employee incomes and business profits, or which is added to the price of goods, services, and transactions. This may affect the Starbucks, as consumers may feel that the price is too high for the product or service and therefore not purchase it. Corporation tax is also another type of tax which affects Starbucks, as corporation taxes are imposed in business profits and other income, therefore this means that in reality, the business will receive less profit than they would if they didn’t have corporation tax taken of it. Likewise, if the corporation tax rate is high this may also mean that costs will be higher which will lead to the business increasing their prices.
Taxes can affect consumers as well as Starbucks’ business itself, this is because if the government lowered taxes it would have a positive impact on Starbucks as this would mean that consumers would have more money to spend in Starbucks because the government would not have taken so much money from consumers.The economy is another factor which affects the success and failure of Starbucks. The economy relates to factors such as interest rates which can affect Starbucks if they need to borrow money from a bank, for example, if they need to pay an additional amount of money in order to pay off the loan it may affect profit levels, as they will have to lose some of their profit to pay off the interest to the bank, this means that their profit level will decrease.Exchange rate is also an economical factor that affects the success and failure of a business as it is a vital role for firms who export goods and import raw materials as it is the amount of one currency exchanged into another currency. This means that a depreciation which is when there is a decrease in the value of a currency compared to another currency, will make exports and exporting cheaper for business. On the other hand, businesses importing raw materials will experience higher import costs.
For example, an increase in the prices of raw materials, such as coffee beans is one of the most significant economic factors for Starbucks. In summer 2016 Starbucks “raised the price of some items as much as 30 cents as it contends with rising coffee costs”.Costs impact a business tremendously as it is the amount of money paid in order to get something these include fixed costs, variable costs, direct costs and indirect costs. Costs have an impact on a business success and failure as, if costs are low this means that a business is more likely to be able to produce more profit, as profit is revenue minus costs. However, if costs are high this means that a business is going to be less likely to produce a large amount of money as costs are the amount of money which leaves the business.Therefore, Starbucks needs to keep its costs low in order to gain more profit out of the business.In relation to consumer spending, this can also have an impact on Starbucks.
This is due to the fact that consumer spending fluctuates depending on the amount of income their receive and how much they spend on other things such as debts and government taxes. For that reason, it is important that Starbucks is conscient of its consumer’s spending and does not place its prices too high so that their consumers don’t purchase their products and go to competitors.Due to a variety of social changes and trends, this indicates that customers in the UK have different opinions on different products. Therefore, Starbucks has to keep up to date which what products are selling the most to increase profit. Starbucks also need to be aware that customers are mostly influenced by social media and trends. Social factors such as lifestyle, shape who we are as people and also affect what we buy. This signifies that Starbucks needs to be aware of their customer’s lifestyles and preferences in order to please them and increase growth and profit.Social factors have an impact on the profitability of Starbucks, therefore changing demographics and other factors can impact the businesses.
However, it can also depend on consumers’ preference too. Changing consumers’ preference can also have an impact on the sales of coffee at Starbucks. Demographics can impact Starbucks because Starbucks target is women and men of 20-40 years old and a sudden change in the demographics of this age group could have a subsequent effect on Starbucks’ revenues in the long term on the business. Social media is an important aspect of a business, as businesses which do not have social media as seen to not be a good business.
Social media allows customers to give feedback and send private messages to the business, or if they wish they may post information publicly on their social media profile. Starbucks has many different social media accounts such as Facebook, Instagram, and Twitter which allow their consumers to give them positive or negative feedback but also to see the products and services they have on offer.Competition also affects Starbucks as a business externally, this due to the fact that there are many other companies who sell similar products to Starbucks, such as McDonalds and Costa, which may have an impact of Starbucks, this is because consumers may decide to purchase the products from the competitors as it is cheaper and the products are similar. This will have a negative impact on their profits and decrease it, but primarily if all their consumers go to competitors Starbucks will completely fail as they will have no-one to sell their products to. For that reason, it is essential that Starbucks sells unique products in its stores to draw consumers into purchasing the product. Starbucks has many ways of being unique compared to consumers, for example, when a consumer orders, the employee writes the consumer’s name on the cup, and doesn’t spell the name correctly. But there is a reason for this, it is so that the consumers shares pictures of the cup on social media, which advertises Starbucks even further, which attracts more consumers to buy a drink and see if the employee spells their name correctly.Technological changes have influenced Starbucks, as the change in technology has allowed Starbucks to develop and grow as they have the resources to do so.
A business which do not keep to date with advances in technology are left behind and may lose sales, as competitors may have kept up to date and may have developed their products, in order to increase their sales and their market share. However, Starbucks has made excellent use of their technology all across their business to drive performance. In 2015 they innovated a new digital innovation which was Mobile Order and Pay feature.
This innovation has made it easier for Starbucks to run, as there are new software and programs that can help with research and development to make it faster and of good quality. In the same way, Starbucks has already introduced Wi-Fi in its stores to allow their consumers to have access to the internet so that they can do some work while they are having a cup of coffee. Technology has had an impact the way that businesses run such as Starbucks. It has allowed Starbucks to have improved communication with other stores and staff. Technology has been beneficial for Starbucks as it is crucial that Starbucks improves its communication so that Starbucks can run more smoothly without having to have problems which communicating with other staff or stores in other locations. Having improved communication permits Starbucks magazines not having to travel to the other side of the world to show need ideas which have been created. This will reduce costs in terms of having to pay for travel and wasting time from having to travel, this is due to the fact that the current technology we have in our society today allows businesses, such as Starbucks to have conference calls and meetings from any location instead of having to waste time going to a different country to have a meeting which makes it easier for Starbucks to run more efficiently.Likewise, the use of automation products (which are products that do not need the assistance of humans to function) is also another factor that affects Starbucks because this may have an effect on employees’ jobs, due to the fact that having automation products replaces human jobs.
This can reduce the number of costs the business will have, as they will cut down on the amount of money Starbucks would have had to pay to its employees. On the other hand, automation products will have a direct impact on Starbucks employees as they will lose their jobs and may protest against Starbucks which may also affect Starbucks success.Furthermore, the availability of coffee machines for consumer to use at home is a factor that affects Starbucks, this is due to the fact that if consumers are able to make their own coffee at home, they are likely going to stop purchasing coffee from Starbucks which will have an effect of Starbucks’ cash flow and will decrease Starbucks’ profit and the number of sales will decrease. Laws and legislations can affect Starbucks, as legislations are laws or set of laws suggested by a government in which businesses must operate within. therefore it is important that Starbucks keeps to the law and legislations of not only the country that they are selling but also the countries where they are sourcing their raw materials from. Starbucks needs to be responsible for keeping up to date with changes made with legislations as if they do not do so fines will be imposed until the legislation are met and followed.
Additionally, if Starbucks keeps to the rules and regulations of the government it will help the Starbucks to maintain their excellent reputation in the market and maintain the success of the business in the long term. But Starbucks is extremely cautious when it comes to ethics and legal compliance.Some examples of laws and legislations that Starbucks should follow are regulatory laws which are standards that impact on how businesses are run in certain situations, labour laws which are regulations that concern about how businesses treat their employees and tax laws which are regulations that control how a business maintains and identifies its financial status to the government. Employment law is also another type of law which can affect a business as it is a law that deals with the legal rights of employers and employees. Starbucks treats their employees equally regardless of their race or ethnicity which helps the Starbucks operate effectively with high productivity and efficiency.
Recycling affects Starbucks, as a business must follow the government’s green policies in order to be eco-friendly. Many environmental factors affect Starbucks, as people want businesses to be sustainable. Starbucks does this by investing in farmer communities to help develop responsible growing methods and ensure a sustainable supply of quality coffee. This is seen through their coffee which is 99% ethically sourced and accredited by Conservation International under our CAFÉ Practices programme.In addition, Starbucks is working to reduce their environmental footprint (which is the number of greenhouse gases such as carbon dioxide emitted by something) and reduce their waste, by recycling more and promoting reusable cups. Starbucks aims to promote reusable cups through rewarding customers who bring in a reusable cup with a 25p discount on any drink they purchase. This also makes Starbucks consumers also begin to recycle as well.
Starbucks also does this through partnering with businesses for example Conservation International and the Business for Innovative Climate and Energy Policy (BICEP) to help Starbucks achieve their business aims and objectives, but primarily reduce their carbon footprint.In terms of environmental factors, another environmental factor is having LEED (Leadership in Energy and Environmental Design) in their stores to make the business more sustainable. Starbucks has more LEED building standards than any other brand in the world. They have LEED-certified stores in 20 countries around the world and recently celebrated their 1,000th certified store target.
This illustrates that Starbucks is aware of the surrounding environment and is working towards making their business more eco-friendly.Water is another aspect of the environmental factors that affect Starbucks. This is due to the fact that water is an important resource for Starbucks to produce its products, for that reason, Starbucks aims to use water responsibly and not waste it, it any way possible.
This is because they know that water is an essential aspect of people’s lives and it vital that we save it. Starbucks has decided to put water-efficient fixtures in their new stores to observe their consumption of water in their stores to spot where and when they are using excess water.