Interesting, Dunkin is the least profitable of these four companies, and McDonalds has a high net margin. This is reflected is an ROE for that company of just 5%, compared with Starbucks' ROE of 27.69% and McDonalds' 39.8%. For the equity investor, Starbucks again has a strong ROE but not the strongest in its industry. Starbucks continues to have premium positioning in the industry. This should allow the company to earn higher margins and returns. While this is not necessarily the case, the strategic moves that Starbucks has made are reinforcing its competitive positioning. For a time in 2007-2008 it looked like other firms in the industry were going to bring Starbucks down to the mainstream, but the company has been able to reinforce its differentiated positioning, to the benefit of its margins and profits. That Starbucks does not enjoy the best margins nor the best profits in the industry is interesting, and worth taking into consideration when evaluating the company for investment. It appears that qualitative analysis of Starbucks' competitive position...
Perhaps given where the company was a couple of years ago, that assessment of mediocrity can be taken with a grain of salt.
Starbucks Situational Analysis ENVIRONMENT Important environmental factors relating to a firm include economic, cultural and social values, current values and trends, political and legal factors, and environmental threats or opportunities. These elements may impact or otherwise threaten a firm's success or opportunities for improving a firm's situation. With respect to the economic situation, both the United States and foreign economies are presently facing some degree of economic uncertainty. In addition to dealing
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