Before expanding its business in Nigeria, there is a need for the company to have a thorough analysis of its internal environment. Through this, the leadership of the firm will be conversant with its competencies, which may either enhance its growth or change which are likely to derail its performance while expanding into the new country. SWOT analysis is one of the best models of comprehensively analyzing a firm, which will help in analyzing the capabilities and weaknesses faced by the company.
- Starbucks has extreme market positions and global brand recognition. This is a significant strength that the company should use when getting into the Nigerian market. The firm is already globally known and hence will not need to have a thorough marketing strategy, unlike in the case of a new unknown firm(Berger, 2018). It is ranked as one of the best brands globally. The firm efficiently leverages its expensive brand equity through product merchandizing and brand licensing.
- The firm has products of the highest quality, which is a significant strength and advantage. It gives a huge importance ton its product quality. Starbucks avoids standardization of the quality even in the event of high production output.
- The firm is famous for its enormous knowledge base workers, which is a vital asset of the company(Wu, 2017). Efficient employees reflect on the service delivery of the firm, a factor that significantly attracts a higher number of prospective consumers.
- Expensive products – As much as the products are of high quality, in this time of economic sluggishness, consumers may tend to find their products relatively, more expensive as compared to other firms.
- Negative large corporation image – Due to its huge brand, the firm comes under great scrutiny, meaning that it has to invest in CSR activities and also maintain tight control over its labor practices.
- A significant opportunity is a fact that the company has enough resources to explore other international markets(Real & Percell, 2018). It has a huge potential to grow, more so through expanding the merging and developing, markets.
- The firm has begun inflating its product mix through selling products such as fresh juices and tea, as a way of attracting more consumers.
- Technology advances are another excellent opportunity for Starbucks since incorporating modern technology can help in enhancing efficiency and productivity.
- The threat of competition – There are many restaurants with the same business models, such as McDonald’s. Pete’s coffee, amongst many others
- There is also the threat of changing customers’ states and lifestyles choices – More customers are moving towards the consumption of healthy products, where many are concerned about the risk of coffee in their lives.
Porters Five Forces Analysis
- The threat of New Entrants:
The threat of new entrants in the market is moderate since there are few barriers to entry hence many firms have the opportunity to venture into the market (Real & Percell, 2018).
- Threat of Substitution
There is a high threat of substitution, where reasonable substitutes include fruit juices, tea, alcohol, and other beverages (Real & Percell, 2018). Customers could also decide to have homemade coffees, which could be huge disadvantage to Starbucks, in that it would lose its clientele base.
- Bargaining Power of Buyers:
The powers of the buyers concerning bargaining are moderate, since the buyers can demand for the concession of the prices in place.
- Bargaining Power of Suppliers:
The power of supplier’s ranges is low. There are multiple suppliers of coffee internationally, meaning that the company can outsource suppliers from all parts of the world at low switching costs.
- Problem analysis
One of the major problems likely to face Starbucks in its venture into Nigeria include the bureaucratic process of registration and licensing from the government authorities. The fact that it is an international brand will mean more charges and more authorization by the authorities, which may be time-consuming or also relatively expensive (Real & Percell, 2018). Another issue likely to be faced by the firm includes high competition due to multiple firms that have opened stores in the country. There is a need for the company to have effective strategies that will help it in keeping up with the competition and attaining its set goals and objectives on the country.
Recommendations and Implementation Cost
First, the company needs to have strategies for dealing with international issues. It needs to transfer its core capabilities and competencies as a way of ensuring that its international expansion in an organic way. The company also needs to have a product mix, where it ought to take advantage of its growth opportunities such as Tea and Fresh juice products to keep up with the competition and changing markets (Real & Percell, 2018). The firm also needs to have a well-laid strategy 0f communicating with the Nigerian authorities as a way of ensuring that it has a smooth transition when venturing into the country.
Berger, A. A. (2018). The Starbucks Coffee Shop Logo. In Perspectives on Everyday Life Palgrave Pivot, Cham. 87-90.
Real, K., & Percell, H. (2018). Starbucks Corporate Social Responsibility Report.
Wu, H. C. (2017). What drives experiential loyalty? A case study of Starbucks coffee chain in Taiwan. . British Food Journal.
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