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.
Porters Five Forces Analysis
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).
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.
The powers of the buyers concerning bargaining are moderate, since the buyers can demand for the concession of the prices in place.
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.
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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