PESTEL stands for political, economic, social, technological, environmental and legal factors affecting the business and it is widely considered to be one of the most effective analytical tools used to analyse the impacts of external factors to the company. The following table represents PESTEL analysis conducted for Starbucks Coffee Company:
Industry-specific rules and regulations
The level of relationships between USA and countries that produce coffee beans
The level of political stability within a country
Buying power of consumers
Local currency exchange rates
Local economic environment within each market Starbucks operates
Changing family patterns in USA and Europe
Changing work patterns
Changes in lifestyles of population
The level of education of population in local markets
Changing values among population
Emergence of innovative technology
Developments in agriculture
Environmental rules and regulations
Environmental disasters in countries producing coffee beans
Global warming and other environmental issues in a global level
Introduction of policies and regulations by health authorities about caffeine production and consumption
Introduction of tougher customs and trade regulations
Licensing regulations related to the industry.
Political factors impacting Starbucks Coffee include political stability in local and global markets, as well as, the extent of international relationships between Starbucks home country US and countries in African continent and Latin America that harvest coffee for the company, and other countries where Starbucks operates its stores. Starbucks CEO Howard Schultz is a politically vocal “calling on Americans to sign a ‘Come Together’ petition online and at stores” (Wong, 2013, online) to voice concerns about the US debt issue. However, implications of Schultz’s political activities on Starbucks brand image are difficult to assess.
Economic factors that affect Starbucks in global markets include changes in exchange rate between USD and local currencies in international markets, tax rates, and changes in pay rates in each individual market where the company operates its stores. Most notably, the global financial and economic crisis of 2007 – 2009 and its effects on consumer buyer behaviour have resulted in significant economic challenges for the company.#p#分頁標題#e#
Social factors such as changing values in society, shifts in consumer lifestyles, and demographic changes do have implications on Starbucks revenues on certain ways. Globalisation of lifestyles and spread of western culture amongst developing countries in Asian and African continents can be specified as one of the most significant social factors that has had positive effects on Starbuck’s growth prospects. However, certain social factors such as increasing health concern amongst population in relation to caffeine and sugar consumption, a tendency fuelled by the media (Glasby, 2012, p.114) belong to the list of key social issues Starbucks has to deal with.
Technological factors may impact Starbucks operations through innovations in coffee preparation processes, as well as, agricultural innovations. Key issues in this area may relate to Starbucks competitors gaining competitive advantage thorough technological innovations in various business processes and patenting these innovations creating a barrier for Starbucks to share the benefits.
Environmental factors represent another source of substantial challenges for Starbucks Coffee. These challenges are associated with potential damage to brand image to be caused by activities of a wide range of environmental groups assisted by the media.
Legal factors are associated with general and industry-specific rules and regulations that may affect profitability and long-term growth of Starbucks Coffee. Moreover, certain practices by the company may trigger negative legal implications for the business.
A recent scandal in the UK, where Starbucks Coffee reportedly paid only GBP 8.6 million in corporate tax, despite generating revenues of at least GBP 400 million due to dubious schemes can be mentioned to illustrate this point. Negative legal implications of this incident was narrowly avoided by Starbucks by paying additional GBP 5 million corporate tax in summer 2013 (Tricker and Tricker, 2014, p.201).