Political Influences Relationships between coffee producing nations and US State & Local government controls

Economic Influences Constant demand for food and beverages Changes in disposable income could influence purchase levels

Social Influences Consumer preferences could shift from coffee to other beverages

Technological Influences Use of technology can improve operational efficiencies

Pest
political influences Tariffs and International Trade regulations: Countries belong to trading blocks such as APEC, G20 and most importantly CAIRNS GROUP for agriculture (news.bbc.co.uk), where the main aim is to reduce the effects of tariffs. However Global companies such as Starbucks are still affected because it operates across borders and is in over 50
countries therefore high tariffs might mean that Starbucksreputation and ability for sourcing the best coffee beans; which involves importing fromdifferent countries could be compromised, subsequently affecting its global sales and competitiveness.

.Government stability Political stability of countries is an important issue that firms need to consider becauseother indicators may point to a country as being investor friendly, however that couldrapidly change when there is elections or political instability (e.g. Egypt). This could leadto massive disruption in a firms operations and strategy or in a worst case scenario whereStarbucks was forced to completely pull out of Israel because of such issues thus negativelyaffecting its strategy for expansion.Political influence is unfavourable in this case and presents a threat to Starbucks. Economical Influences

Exchange Rates:The falling dollar rates compared to other currencies (Bloomberg.com) which was causedpartly by weaker monetary policy will affect imports. Most of Starbucks vital supplies suchas coffee beans, sugar and milk will be affected because they are imported, thus incurringhigher cost due to weak dollar. This raises a question as to whether the company will passthe extra cost to consumer and risk making its coffee even more expensive.Income Distribution:After the economic crises of 2007 that led to job losses, unemployment figures rose (to 2.5million in Britain 2010 Office for National Statistics). This affected i ncome disparitywhich became unequal. Hence people that were previously able to afford Starbucksexpensive specialty coffee now saw it as a luxury thus leading to low sales in somelocations. This in effect affects the companys expansion plan. In this case EconomicInfluences has an unfavourable impact. Social Influences Changing Tastes:The changing taste in America indicates that people are consuming more specialty coffeewhich amounted to about $1.3 billion in imports (Restaurant Hospitality). This influencesStarbucks because it provides an opportunity to exploit this market and gain higher marketshare in the coffee market.In India and China however, tea is still mainly preferred, so Starbucks might have to alterits strategy there. This will not be too difficult taking into account the trend ofAmericanisation and its success across developing countries so far.Health consciousness:Governments push toward healthy eating in western countries due to concerns regardingobesity might influence companies such as Starbucks to update its menu in terms ofintroducing new lines and healthy alternatives to be sold together with coffee.This in other words means that Social Influences is favourable and can provide anopportunity for Starbucks. Technological Influences Wave of Technological trends:Technological advancements have never been so fast, hence firms need to consistentlyfollow the trends and exploit any opportunities that may result and implement any changerequired. For example, Starbucks have embraced the new phone payments system thatwas introduced recently which helps cut long queues at peak times.Social network memberships is growing by the millions e.g. facebook has over 500 millionusers and users have an average of 130 friends, additionally, time spent on the site is over700 billion minutes a month (facebook.com). Exploiting this trend offers companies suchas Starbucks a p latform to relate and share ideas with customers. It has already used socialnetworking sites such as facebook (with over 19 million friends) and a forum which itruns, to communicate and engage with customers and communities (Economist.com).Technology has a favourable impact for Starbucks.

Environmental Influences Environmental pressure groups:Non Governmental Organisations and pressure groups possess incredible ability to coercebusinesses into changing their practices. They could influence busin esses through lobbyingand boycotts. Such measures usually impact the intangible assets of a firm which usuallyinvolves tarnishing a companys brand name. Starbucks however works with theFair-Trade movement (Economist.com) and the accreditation that comes with suchalliance massively improved Starbucks image, hence Environmental influences is favourable for Starbucks. Legal Influences Not all countries welcome big firms because they like to protect their indigenous firmsfrom unfair competition and takeover. Legal issues such as Monopoly and nationalprotectionist laws will affect Starbucks because of its size and its plan of expansion. E.g.countries like India guard against such practices with a legislation that bars externalcompanies from owning more than 51% in a merger (see Section 5). The more this happensin other countries, the more Starbucks expansion plan is restricted. Thus legal influencesare unfavourable for Starbucks.In summary, the PESTEL analysis found that External influences was altogether balancedsince Sociological, Technological and Environmental factors were favourable, while the other factors such as Political, Environmental and Legal factors still pose a valid threat.Nonetheless Starbucks strengths counteracts some PESTEL factors because although itcant control the external environment, it has become more flexible to change (closing600 stores in order to adapt) and is quick at exploiting opportunities. As Accenture (theconsultant company) puts it; outthinking the competition is useless unless you canout-execute them as well.