Industry And Strategy Analysis : Porter's Five Forces Framework

1356 Words Jul 11th, 2015 6 Pages
Industry and Strategy Analysis

a. Porter’s five forces framework to the specialty coffee retail industry.

● Rivalry Among Existing Firms: Although Starbucks is one of the largest and most successful specialty coffee retailers in the industry, rivalry among existing firms is relatively high. The specialty coffee industry faces competition not only with retail coffee chains and local independent coffee shops, but also with fast-food chains, doughnut shop chains, and convenience stores. The retail coffee industry is not a rapidly growing industry anymore, which makes competitors share the existing market thus increasing competition within the industry. Competitors’ products are not highly differentiated, and there is minimal switching cost for customers making the price competition more intense among existing firms. The exit barrier of the coffee retail industry is fairly low, which is good for rivalry because competitors will leave the market easily when they have to. The company having a large and distinct brand image providing the quality of experience to their customers like Starbucks can have a great advantage when capturing the market share over its competitors. The specialty coffee industry has two main corporations that compete for dominance, namely Peet’s Coffee and Starbucks. Although these two corporations have been competing for years, Starbucks seems to have an edge over the competition and has done significantly better than Peet’s and all other coffee retailers.…
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