Pest Sturbucks

PEST ANALYSIS
PEST is an acronym for: Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit strategic plan.

PEST analysis is very important that an organization considers its environment before beginning the marketing process. In fact, PEST analysis should be continuous and feed all aspects of planning. Theorganization's marketing environment is made up from: 1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e.g. Political forces, Economic forces, sociocultural forces, and Technological forces.

Political
Taxationpolicy
High taxation imposed on farmers in countries producing the coffee bean will usually mean Starbucks pay a higher price for the coffee they purchase. Any fluctuations in taxation levels in the industry are almost certainly ultimately passed on to the consumer. Recently, Tanzania's Minister of Finance harmonized and rationalized local government taxation to boost rural productivity of thecoffee bean. Tax was lowered for these 'small holder' farmers and this saving will have been passed on to purchasers of coffee like Starbucks.

Deregulation
A decade ago, the USA pulled out of the ICA (international Coffee Agreement) that set export quotas for producing nations and kept the price of coffee fairly stable. Coffee quotas and price controls ended. Since the deregulation farmers havesuffered

and their earnings have dropped. Many have struggled to make a living so have given up.

International trade regulations/tariffs - Trade issues will affect Starbucks predominantly when exporting and importing goods. When another 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.

International stability The international economy must be brought into consideration as it can affect Starbucks' sales and markets. The aftermath of 9/11 was an example of an economic downturn that affected the world market. If the worldmarket is in a slump it is not usually the ideal time for a business to look at grand expansion.

Employment law A reduction in licensing and permit costs in those countries producing the coffee bean for Starbucks would lower production costs for farmers. This saving would in turn be passed onto the purchaser.

Economic
Economic Growth If growth is low in the nation of location of Starbucksthen sales may also fall. Consumer incomes tend to fall in periods of negative growth leaving less disposable income. Consumer confidence in products can also fall if the economic mood is low.

Inflation rates - Inflation is a condition of increasing prices. It is measured using the Retail Price Index (RPI). Business costs will rise for Starbucks through inflation, as will shoe-leather costs asthey shop around for new 'best prices' of materials, menu costs will rise as Starbucks have to create new price lists. Also, uncertainty is created

when making decisions not least because inflation redistributes money from lenders to borrowers. A firm that borrows $1000 during an inflation period will pay back less in 'real terms' as the value of this money will decline over the period.Competitors pricing Competitive pricing from competitors can start a price war for Starbucks that can drive down profits and profit margins as they attempt to increase, or at least maintain, their share of the market.

Globalization Globalization of the coffee market has meant farmers of the bean now earn less money than they used to. This can result in a decrease of people willing to do it for a...