Starbucks Porter's Five Force Analysis Essay

751 Words 4 Pages
Starbucks Coffee facing competitors as other brands but as they are able to provide unique taste to their customer where the satisfaction levels of customer are high with Starbucks.

➢ Large number of companies.
➢ Low switching cost.
➢ Variety of partnerships.
The company is facing a large number of competitors which different size, specialties and strategies For example Starbucks faces the competitive force of McDonald’s, Costa coffee, Burger King, Café Nero, M c cafe and Dunkin Donuts, as well as other specially coffee companies the strong force of competition is also due to the low switching cost means that it is easy for customer to shift from Starbucks to other brands available on the market.

Thus competition should be among Starbucks
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➢ Low switching cost.

Porter Five force analysis model indicates that substitutes have strong potential to negative impact Starbucks Coffee’s business Starbucks customers can easily shift to substitutes because there are many substitutes such as beverages from restaurants, bottled beverages and other good from grocery stores.

As Starbucks has Partnered with several firms to extend its brand into new categories’ For example it joined with PepsiCo to sump the Starbucks brand on bottled Frappuccino drinks Marked in a joint venture with Brayers, Starbucks ice cream is now the leading brand of coffee ice cream. Moreover at the same time it is trying to squeeze more business out of its regular coffee shop, Starbucks is also examining new store concepts. In Seattle, it is testing Café Starbucks; A Europeans style family bistro with a menu featuring everything from huckleberry pancakes to oven roasted seared sirloin and Mediterranean chicken breast on focaccia. Where as Starbucks is also testing Circadian in San Francisco a kind of bohemian coffee house concept with tatters rug, high speed Internet access and live music as well as coffee
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They must consider the threat of substitutes as among its priority concerns.

Threats of New Entry:

This force refers to the potential effect of new players in the industry In Starbucks Coffee case the following external factor contribute to the moderate force of the threat of new entrants:

➢ High budget of brand development.
➢ Moderate cost of doing trade
➢ Moderate supply chain cost

The new entrants have important but not strong effect on Starbucks Coffee’s business. New entrants can compete against Starbucks because of the moderate costs of doing business and supply chain development however new entrances find it difficult to compete against established brands like Starbucks because it is very costly to develop a strong brand.

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