Overview

Starbuck’s Case Analysis

Overview

Starbucks is a $5.3 million yearly sales company primarily in the Specialty Eatery Industry. They are the number one specialty coffee retailer in the world and ranked number 372 in Forbes 500 companies. Starbucks currently has stores in 35 countries and have managed to build in their brand loyalty having customers that consume their products in average 18 times a month. Coffee is the second most traded commodity in the world and specifically specialty coffee is a $9 billion industry.

Porter’s Five Forces Model

- Supplier Power: The bargaining power of suppliers is very low. Coffee is the second most traded commodity in the world and any coffee producer wants to supply its product to big, secure, and stable companies such as Starbucks.

- Barriers to Entry: It is extremely hard for new companies to enter the market because the barriers of entry are high. Starbucks is the leaders in the market and is hard to break into this industry at the same level. There might be local specialty coffee shops but they can not be compared to the size of a company such as Starbucks.

- Buyer Power: Buyer bargaining power is high given that there is relatively no switching cost.

- Threat of Substitutes: Threat from substitutes is high. Because of the shift to a healthier lifestyle and the endless possibilities substitute products represent a big threat.

Basic Competitive Strategy

Starbucks Coffee uses a differentiated strategy. They have positioned their product as an affordable luxury. They not only sell top quality, fresh coffee but they also focus on selling to their customers the experience and the concept of a coffee bar. Starbucks strategically chooses its store locations and longs to offer much than just coffee. Not only they provide an upscale atmosphere but they also offer merchandise. In their marketing strategy Starbucks also includes seasonal...