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Starbucks vs Costa Coffee Analysis

University: New College Durham

  • Unit No: 4
  • Level: High school
  • Pages: 9 / Words 2173
  • Paper Type: Assignment
  • Course Code: BMAF004-20
  • Downloads: 279
Question :

This sample will let you know about:

  • Explain about the Pestle analysis.
  • Discuss about the comaprison between Starbucks vs Costa Coffee.
Answer :
Organization Selected : Starbucks

INTRODUCTION

Starbucks is the American coffee chain and operates in over 30,000 locations worldwide. It offers variety of premium products such as premium teas, fine pastries, and other treats. Costa coffee is a coffee house chain which is subsidiary of Coca Cola Company, it has 3,401 stores across 31 countries. It provides hot and cold drinks, snacks, pastries and also limited edition of reusable cups. The reason for selecting these two companies is their USP. The USP of Starbucks is that it provides premium coffee while USP of Costa Coffee is its customized products without any additional charges (Lakshminarayanan, Maggio and Best, 2017). Currently Starbucks is closing its store in UK as its business is incurred a loss of £17.2 million, September 2018.

Workers of Costa Coffee, has made claims against the poor working conditions in its stores which includes retention of tips, refusal to pay for sickness, working outside the contracted hours etc. This report covers external business environmental factors affecting both the companies, representation of organizational structure of both Starbucks and Costa coffee, comparison between the performance of both the companies which includes both financial and non-financial performance. Also, the overall comparison between the companies.

EXTERNAL ENVIRONMENTAL ANALYSIS

Pestle analysis is a tool used in identifying key factors that are influencing the business from outside. The Pestle analysis of the industry is carried out and its impact on both the companies.

Political factors: The key political impact is the Brexit. This factor will impact all the industries operating in UK. The Starbucks and Costa Coffee is concerned over sourcing and procurement of its raw material. So, both the companies are forming norms and strategies to meet their sourcing needs. Also, it may cause increase in cost of import of material.

Economic factors: It refers to the economic performance of the country. UK's economy is currently facing the risk of recession (Gopalakrishna, Victor and Fleischmann, 2016). But the recent trend shows that consumers are not reducing their coffee consumption but are moving towards low priced alternatives. Starbucks and Costa Coffee both can take trend as an opportunity along with increasing cost and falling profitability.

Social factors: It refers to change in the culture, behaviour needs, attitude, belief, taste of the customers. As the customers are moving towards lower priced products and both the companies are providing the same but with the challenge of maintaining the same quality. Also, the increasing trend of green and ethical customers needs to be taken care of. Starbucks have only focussed on baby boomer generation and spending by these generations is tapping off so company needs to look for other strategy to face the challenge. This may not be the problem for Costa Coffee as it has huge customer base with varied generation.

Technological factor: This factors refers to the advancement and innovation in the technology. This brings an opportunity for the both the companies to improve its mobile apps and increase the mobile purchases to gain more revenue. The most challenging technology is the emergence of home based speciality coffee machine which is big threat to Starbucks and Costa Coffee as their substitutes are easily available.

Legal factors: It includes all the legal rules and regulations that are required to followed to meet to avoid any legal problems. It includes consumers rights law, labour law, employee protection act, etc. Starbucks has currently complied with all the rule and regulations and working within the legal aspects of the country (Goswami, 2018). It is improving its performance by fully complying with the product safety regulation on ingredients from Genetically Modified Organisms (GMO). Costa Coffee is facing major problem as its workers are claiming bad working environment in all the stores of Costa Coffee. The claims include extended working hours, retention of tips, no pay sick leaves etc.

Environmental factors: It includes all the business activities that negatively impact the surrounding environment. The government and consumers are putting pressure on organizations to make its operation environment friendly and take steps for the welfare of the society as a whole (Ferreira, 2017). These factors can impact the trust of the consumers so both the companies have to take care of it. Starbucks and Costa Coffee have already implemented responsible sourcing practices and also introduced products with recyclable packaging. Order assignment help from our experts! 

ORGANIZATIONAL STRUCTURE

Organizational structure in turn is very crucial which in turn determines the flow of necessary information within several departments of the company.

Starbucks tends to have a matrix organizational business structure where the structural design tends to involve the intersection among various different department of the business. Matrix organizational business structure is one of the effective organizational structure where the reporting relationship in turn are set up on the grids (Branco and Kobakova, 2019). Employees tend to have reporting relationship. This in turn provides clear articulation of the goals and objective of the company. This way it helps in creating functional objectives. There has been efficient utilization of the limited resources and also helps in high retention of the employees or expert throughout the life of the project. Matrix organizational structure helps in establishing trust, improving and coordinating communication and also helps in clarifying decision authority. This in turn helps Starbucks in accomplishing specific goal of the project by bringing together various individuals from different product, divisional and functional departments (Voigt, Buliga and Michl, 2017).

Matrix organizational structure helps Starbucks company to effectively share the information which in turn helps in increase in the knowledge. This organizational structure is very useful in bringing managers and employees together in order to attain specific organizational goal and objectives of the Starbucks company. This approach aids improving capability to effectively utilize the resources, technologies and skills. It also helps in improving communication and cooperation across the various functional departments. It also helps in bringing in flexibility which in turn aids to higher financial decision making. This structure helps Starbucks to effectively build the capabilities of the employees within the organization. It also helps in rapidly creating the efficient large scale project which in turn leads to higher operational growth and sustainability of the Starbucks.

Costa coffee business structure in turn is considered to be one of the most renowned coffee chain which focuses on providing high value operations through effective supply chain and operational strategy. Costa coffee tends to follow functional business structure. This structure tends take into consideration top to down flowchart approach. Top executive comprise of high ranked executives (Maamoun, 2020). Middle layer comprise of managers which includes accounting, marketing, engineering and human resource departments who in turn have to report to the high degree top executives within the company.

The last organizational layer comprise of lower operational team which includes workers, employees, etc. The low level workers are accountable to middle managers. Functional organizational structure is very easy to understand and it also helps business to work in a systematic compartmentalized manner. Functional organizational structure is very useful in vertically structuring various departments of the company with specific roles to the employees (Lakshminarayanan, Maggio and Best, 2017). There in turn is considered to be the separate department like accounting, marketing, engineering, finance, etc. The key advantage of the functional organizational structure is that it helps in setting a clear career path within various departmental units. This in turn helps Costa Coffee to effectively minimize the cost associated with the operations. Need Assignment Samples?Talk to our Experts!

ORGANIZATIONAL PERFORMANCE

Organizational performance is referred to as the actual output which in turn eventually leads to actual output against the organizational goals and objectives (Purkayastha and et.al., 2019). It helps in effectively utilizing the resources in order to attain organizational goals and objectives. Organizational performance tends to critically analyze the key main activities which mainly influences market performance, financial performance and shareholder value performance.

Starbucks sales has gone up by 5%. The net sales of the Starbucks has rose by 7% to around $6.75 billion. Starbucks performance has been better when compared with the Costa coffee because Starbucks tend to offer high variety of drinks which in turn eventually leads to long term sustainable growth in the future (Dineva, Breitsohl and Garrod, 2017). As per the operations of the UK, the revenue of the Starbucks has rose by 4.1%. There is in turn considered to be increasing trend in the total expense of the company when compared with the total revenue of Starbucks over the particular financial year.

Non financial measures in turn are considered to be effective measure which in turn are not expressed in monetary terms. The Starbucks has also opened 319 stores in Quarter 2. This in turn results in higher operational growth and sustainability of the company (Gopalakrishna, Victor and Fleischmann, 2016). Starbucks tends to have high degree of competitive position because it tends to provide high degree of quality services to the customers which in turn helps in creating competitive position. Starbucks also focus on continuous innovation and it also has high degree of brand reputation and goodwill across the globe. This in turn attracts large number of customers from across the globe.

The revenue of the Costa Coffee in turn has increased the revenue in the year 2019 to 1.34 billion from 1.29 billion in the fiscal year 2018. On the other hand, Costa coffee non- financial performance factors includes retention of customers which in turn helps in increasing the customer share which eventually leads to high degree of sales (Ferreira, 2018). Cost Coffee also tends to focus on using data in order to increase sales and customer rates. Another non performance factor associated with the non- financial factor is high degree of customer experience. Struggling with dissertation , get dissertation help london from our experts!!

COMPARISON AND CONCLUSION

STARBUCKS

COSTA COFFEE

The Starbucks company tends to focus on carrying out function through matrix organizational structure.

The Costa coffee company tends to focus on carrying out function through functional organizational structure.

Starbucks tend to offer range of drinks and food (Starbucks vs Costa Coffee, 2020).

The Costa coffee company tends to have less variety of drinks but large variety of snacks when compared with the Starbucks.

Starbucks tend to have 30000 plus shops in around 78 countries.

Cost coffee tend to have over 3882 stores in around 32 countries.

Starbucks have high degree of brand reputation which in turn offers high quality products and services to the customers (Mason, Cole and Goza, 2017).

Cost coffee in turn has grown over the years which in turn results in expansion of the business across various countries.

The revenue of the Starbucks has rose by 4.1% in the year 2019.

The revenue of the Costa Coffee in turn has increased the revenue in the year 2019 to 1.34 billion (Maye, Kirwan and Brunori, 2019).

Starbucks also focus on continuous innovation and it also has high degree of brand reputation and goodwill across the globe.

Cost Coffee also tends to focus on using data in order to increase sales, customer experience and customer rates.

From the above carried out study it has been concluded that, there are several external environmental factors such as political, social, economic, legal, technological and environmental factors which in turn largely influences the functioning and operations of Costa coffee and Starbucks. This study summarizes that, Starbucks tend to follow matrix organizational structure. But on the contrary, Costa coffee tends to follow functional organisational structure which in turn focuses on improving the performance and attaining organizational goals and objective of the company. This study also summarizes that, Starbucks is considered to be one of the better performing company when compared with the Costa Coffee. Starbucks tend to have more outlets when compared with the Costa coffee which in turn results in high degree of sales, revenue and profitability for the Starbucks. This study in turn also tend to state that, Starbucks have higher customer base because of its presence in 78 countries across the globe.

Read more - Digitalisation Healthcare of Organisations

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