Pestle Analysis 5m2u6p

PESTLE ANALYSIS: The acronym PESTLE stands for 6 factors which affect the business. The factors are:  Political: Raw materials can be considered as the main political factor in of sourcing. Therefore the organisations have to follow social and environmental norm and incorporate sourcing strategies. It gives importance to fair trade practices. Starbucks also needs to follow the laws and polices based on countries from whom they are going to buy their raw materials. Activism and increased political awareness in developing countries have made this essential. The organisation must evaluate political stability within the nation. Other factors include policies linked to tax and employment laws.

 Economic: The marketing activities of any organization get affected by the economic environment. Organizations must be aware of the credit, currency risk and debit financing. The marketing activities get affected by wealth, interest rates, exchange rates, economic growth etc. These factors affect the buying behavior of a customer. Exchange rates of the goods affect import and export and interest rates will affects organizations as there is availability of bank finance. Another factor to be considered is that if the market price of a product increases then consumers buying habit would definitely reduce. People in UAE have high standard of living. The government is putting in efforts to expand UAE economy in every possible way. Therefore if the UAE economy is high then the consumers will be willing to pay for products. The economic crises can be considered as the prime external economic driver for Starbucks. This factor injured the Starbucks profitability. This has led to change the focus of the consumers to cheaper alternatives. Starbucks needs

to come up with other alternatives as consumers have not quit buying coffee. Other economic issue faced by the organisation is the rising labour and operational costs. Lot of stress is caused due to the inflationary environment and falling profitability. Others include local currency exchange rates and Local economic environment in different markets.  Social: The socio cultural environment portrays the demand and likings of customers and this would differ with life style, demography, custom, culture etc as the likes and dislikes of customers are changing. The population

of UAE is

highly multicultural with Emiratis and

expatriates and the current population is approximately more than 1.87 million. The population highlights different nationalities with various cultures. The population of UAE prefers and quality products that force the organisations to implement new strategies for the targeted population. Starbuck can provide their products at low price however they may have to sacrifice their quality. This is the major socio-cultural challenge they face. They will be able to capture consumers from all income types. There are consumers who are stuck to the green and ethical label and are worry about the environmental and social cost of the brands. Therefore the organisation must be aware of this trend. Other social cultural factors they may face are the consumer’s preferences, their working patterns, lifestyle, educational level, changing values and family patterns.  Technological: UAE

government

has

given

much

attention

for

technology

development. The organization is awarded many times for their innovative technologies. Starbucks have incorporated lot of aspects in of technology. Customers are using cards at Starbucks to speed up the process of transactions. This card is incorporated with

wireless technology that allows s to wave their cards at the POS terminal for completing the transaction. Their products can also be purchased online through their websites. They can enjoy the benefits of the mobile trends. They have partnership with apple for introducing app that is based on discount coupons which has influenced the mobile wave. The organisation provides Wi-Fi facilities in their cafes. The consumers can access and surf web while having coffee at Starbucks. This adds value to their brand and enhances the customer’s experience. They have also introduced payments through mobiles but is still in the testing stage and is not incorporated in all the outlets.

 Legal: The legal factors of UAE have created certain issues for the Starbucks operations. In UAE the country is governed by the ruling families. They have adopted sustainable trading policies as well as follows government restrictions, worldwide adaptability and anticorruption implementation. It’s essential that the organisation ensures that they are not violating any rules and regulations in their business operations. They must also be careful in of the introduction of caffeine and the policies associated with the consumption from the health authorities. Other legal issues which the organisation may face in is stricter customs, trade regulations and Licensing regulations.  Environmental: Many of the activists and international advocacy are concerned regarding the Starbucks business operation practices. Starbucks are socially responsible organization who reduces waste which they create during the business process and as well reduces the energy, carbon and other resources of the business. They also have adopted techniques for recycling and composting. Consumers too have expressed concern. Therefore the organisation must consider steps

to consider environmental factors for winning the consumers trust and

not

polluting

environmental

the

rules

environment.

and

Starbuck

regulations,

must

environmental

consider issues

concerning nations that produce coffee beans and global warming and other environmental issues.