Essay on Starbucks Coffee

2048 Words Feb 19th, 2009 9 Pages
Starbucks Corporation

Starbucks History:

Starbucks’ opened its first store in 1971, at Pike Place Market in Seattle, by three partners Zev Siegel, Jerry Baldwin and Gordon Bowker. Starbucks opened with the intent of being a gourmet coffee bean retailer and coffee equipment seller. The Starbucks name and logo came from two influences; a character named Starbuck in the classic book, Moby Dick, and a mining camp on the base of Mt. Rainier called Starbo. These two influences were combined to create Starbucks. In 1982, entrepreneur and current chairman, Howard Schultz, joined the company. When Schultz joined the company, he wanted to change the company’s focus away from in home coffee production and coffee bean retailing, to also
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The competition, however, is not equally balanced. Diedrich Coffee operates 370 coffeehouses in 37 states and 11 countries. Best Coffee operates 160 coffee cafes and 20 Italian coffee cafes in 17 states and 8 countries. Einstein/Noah Bagel Corporation operates 460 bagel cafes in the U.S. Starbucks has 15,000 locations in over 40 countries. It is clear that Starbucks has few major competitors, and the competition has nowhere Starbucks’ volume of operations. Starbucks is the leading retailer, roaster and brand of specialty coffee in the world. Smaller competitors, however, pose potential threats to the company. Competitors are selling similar products, including specialty coffees as well as high quality foods. In this slowing market, competition is high.

Threat of Potential Entrants

Porter’s next force is the threat of Potential Entrants. Starbucks, being the world leader in its industry, has controlled access to distribution channels. Starbucks has exhibited this control over distribution channels by setting guidelines for their suppliers to follow. One of their key attributes to success is innovation. Starbucks is constantly innovating and showing strong product differentiation in their industry. The industry, following Starbucks’ lead, is becoming more differentiated. For example, five months after Starbucks introduced a prepaid Starbucks debit card, Seattle’s Best launched its version of the marketing product. This industry differentiation is an opportunity for
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