Final Exam Kasey Reynolds
Kasey Reynolds
1
Final Exam: Starbucks Case Study
External Analysis
The general environment of the coffee industry is affected by many different factors.
Social forces include factors such as lifestyle and cultural tastes. From their first store in Seattle,
WA Starbucks learned that customers wanted a place to sit down and have a cup of coffee, while other customers wanted to get coffee quickly by utilizing a drive-thru. Both of these options have been added to appeal to a larger customer base.
For Starbucks to expand internationally, they had to fully understand the preferences of the area and cater to that customer. For example, in France, Starbucks didn’t offer muffins in their bakery, but offered French pastries from local bakeries. Starbucks also had to change their offering to appeal to a healthier customer. They began offering “skinny” lattes, “better-for-you” smoothies, and low-calorie snack options.
Environmental, political, and economic factors affected Starbucks and their ability to obtain their coffee bean crop. Prices were subject to change, and weather could affect the health of the crop. Starbucks protected themselves from this issue by using purchase agreements and sourcing from multiple regions.
The coffee industry has low barriers to entry, making it easier for competitors to enter the market. There is a lot of competition from rival sellers, especially rivals offering premium coffee at lower prices than Starbucks, such as McDonald’s and their McCafe coffee offering.
Supplier bargaining power is low because suppliers are very dependent on the industry for their revenue, and coffee beans grow in 70 tropical countries, making up the second most traded product, and coffee is a commodity. Starbucks uses a fixed-fee agreement to help protect them
Kasey Reynolds
2
Final Exam: Starbucks Case Study from supplier bargaining power. They source their beans from many different geographic areas to avoid price increases due to changing economic, weather,
1
Final Exam: Starbucks Case Study
External Analysis
The general environment of the coffee industry is affected by many different factors.
Social forces include factors such as lifestyle and cultural tastes. From their first store in Seattle,
WA Starbucks learned that customers wanted a place to sit down and have a cup of coffee, while other customers wanted to get coffee quickly by utilizing a drive-thru. Both of these options have been added to appeal to a larger customer base.
For Starbucks to expand internationally, they had to fully understand the preferences of the area and cater to that customer. For example, in France, Starbucks didn’t offer muffins in their bakery, but offered French pastries from local bakeries. Starbucks also had to change their offering to appeal to a healthier customer. They began offering “skinny” lattes, “better-for-you” smoothies, and low-calorie snack options.
Environmental, political, and economic factors affected Starbucks and their ability to obtain their coffee bean crop. Prices were subject to change, and weather could affect the health of the crop. Starbucks protected themselves from this issue by using purchase agreements and sourcing from multiple regions.
The coffee industry has low barriers to entry, making it easier for competitors to enter the market. There is a lot of competition from rival sellers, especially rivals offering premium coffee at lower prices than Starbucks, such as McDonald’s and their McCafe coffee offering.
Supplier bargaining power is low because suppliers are very dependent on the industry for their revenue, and coffee beans grow in 70 tropical countries, making up the second most traded product, and coffee is a commodity. Starbucks uses a fixed-fee agreement to help protect them
Kasey Reynolds
2
Final Exam: Starbucks Case Study from supplier bargaining power. They source their beans from many different geographic areas to avoid price increases due to changing economic, weather,