Pestle of Starbucks

PESTLE analysis of Starbucks.

Political: Taxation policy

When farmers in coffee bean producing countries pay higher taxes, it automatically increases the price Starbucks pays to purchase coffee beans they purchase. Any changes in taxation in the industry, is usually passed on to consumers. In June 2003, Tanzania’s Minister of Finance harmonized local government taxation to enhance rural productivity of the coffee bean. Tax was reduced for farmers and the savings is in turn passed on to companies like Starbucks thereby reducing their cost of purchasing coffee bean.

Deregulation

International trade regulations/tariffs - Trade issues will affect Starbucks predominantly when exporting and importing goods. When a country's government imposes a tariff it not only results in an efficiency loss for Starbucks but large income transfers can become inconsistent with equity. This extra charge can turn a bargain into a rip-off. Also, since 9/11, trade relations have been adversely affected between the USA and some other countries.

Economic:

Economic Growth

When there is stagnant growth in the nation, Starbucks sales may also remain stagnant or even decline. Consumer income reduces when there is negative growth leaving less disposable income.

Inflation: Cost of business would increase for Starbucks through inflation, menu costs will raise as Starbucks have to create new price lists.

Competitors pricing

When competitors begin a price war, for Starbucks that can drive down profits and profit margins as they try to raise or hold on to their share of the market.

Globalisation

Globalisation of the coffee market has meant farmers of the bean now earn less money than they used to. This can cause a lack of interest in being a coffee bean farmer which will result in a decrease in the amount of coffee produced causing a decrease in Starbucks supply levels and expected profits.

Exchange rates

Starbucks are affected by exchange rates when dealing with...