Porter Analysis of Starbucks
Porter Analysis
“Starbucks Case”
I. Threats of Competitors Now a day, Starbucks is very well known in the market, so with this competitors are arising rampantly. Small coffee retail outlets are growing rapidly in America and it seems to be multiplying. Based on the study of the Ivey Management, there are more than 3485 competitors in the market. All are coffee retailing or even café or with carts. In US, they have low barrier to entry in the retail specialty coffee market. This has resulted in a drastic increase in competition within the specialty coffee industry. The diversity among these competitors still remains very high but the grounds on which companies are still innovating and changing. As larger and larger companies enter the industry the strategic stakes become higher. An example of competitor is Caribou; they implemented an American Style café which is very suitable to the country while Starbucks implemented European Style which is new to the Americans yet somewhat not the same with their culture.
II. Threat of New Entrants Like what is said in the case study, the entry of barrier for coffee industry is very low. There are many potential new entrants like the once with no problem in capital as well as large or well-funded companies. Since the trend of specialty coffee is going up while basic coffee industry is going down, may are investing or starting a business of specialty coffee. Well, McDonald’s do want to invest on selling Starbucks Coffee which is a potential New Entrants who wanted to engage in coffee industry.
III. Threats of Buyers Due to premium coffee are with high cost, buyers tend to not buy specialty coffee. Another is consumption of coffee was reduced from 2-3 cups per day to 1.7 cups per day only. Based on the study, appearance and development of the product affects the buying power of the customers. Another point is the new entrants offering low cost but quality coffee. This can greatly affect to the
“Starbucks Case”
I. Threats of Competitors Now a day, Starbucks is very well known in the market, so with this competitors are arising rampantly. Small coffee retail outlets are growing rapidly in America and it seems to be multiplying. Based on the study of the Ivey Management, there are more than 3485 competitors in the market. All are coffee retailing or even café or with carts. In US, they have low barrier to entry in the retail specialty coffee market. This has resulted in a drastic increase in competition within the specialty coffee industry. The diversity among these competitors still remains very high but the grounds on which companies are still innovating and changing. As larger and larger companies enter the industry the strategic stakes become higher. An example of competitor is Caribou; they implemented an American Style café which is very suitable to the country while Starbucks implemented European Style which is new to the Americans yet somewhat not the same with their culture.
II. Threat of New Entrants Like what is said in the case study, the entry of barrier for coffee industry is very low. There are many potential new entrants like the once with no problem in capital as well as large or well-funded companies. Since the trend of specialty coffee is going up while basic coffee industry is going down, may are investing or starting a business of specialty coffee. Well, McDonald’s do want to invest on selling Starbucks Coffee which is a potential New Entrants who wanted to engage in coffee industry.
III. Threats of Buyers Due to premium coffee are with high cost, buyers tend to not buy specialty coffee. Another is consumption of coffee was reduced from 2-3 cups per day to 1.7 cups per day only. Based on the study, appearance and development of the product affects the buying power of the customers. Another point is the new entrants offering low cost but quality coffee. This can greatly affect to the