Starbucks Porter's Five Forces Analysis Essay

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3.0 Starbucks Porter’s Five Forces Analysis
Porter’s five forces is generally used for strategy development and industry analysis. The five forces which shapes the competition within the industry are rivalry among competitors, the threat of substitute products and services, the entry of new competitors, the bargaining power of the buyers and the bargaining power of the suppliers.
The relationships among these forces is best presented in the following figure. Bargaining Power of Buyers Threat of substitutes Industry Rivalry Threat of new entrants
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At the same time, the higher the price of coffee the higher the buyers bargaining power. As buyers’ expectation is high, the money they spent in Starbucks must meet their demand. In order to meet their demand, the service standards of the baristas must be acceptable, newly hired baristas have to be properly trained, promoting a barista before he or she was properly trained and declining beverage quality affect the organization. Written by Howard Schultz. “Too often we picked bad location’s or didn’t adequately train newly hired baristas. Sometimes we transferred a good manager to oversee a new store, but filled the old post by promoting a barista before he or she was properly trained. This was the kind of operational rigor we let slip and then didn’t attend to the subtle but negative cumulative effects, such as declining beverage quality, because every metric we were looking at said everything was fine.” (Howard Schultz, 2011, p.40).
3.3 Threat of New Entrants
The threat of new entrants to compete with Starbucks is possible. One of them in the industry is Dr Café. While Dr Café has about 6 outlets in Singapore according to Dr Café, “We are executing the Global Expansion plan to reach coffee lovers worldwide and above all we are proud to share the experience and real journey from the land of coffee the Dr Café way.” (Dr-café.com, 2015, online).
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Substitutes for Starbucks coffee, include tea, soft drinks, energy drinks water and juices. The price increase in China has caused the Chinese to protest in early 2012. Besides turning to the internet for complains, customers may look for other substitutes, they may patronise other competitors like Coffee Bean and Tea Leaf, Costa Coffee, Caribou Coffee, Dunkin Donuts, Macdonald’s, and other small cafes and coffee

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