Porter's Five Forces Starbucks

Starbucks has created a competitive advantage with their product quality by setting themselves apart from their competitors. “The Company has stayed with the upper-scale of the coffee market, competing on comfort rather than convenience, which is the case with its closest competitors, McDonald’s and Dunkin Donuts” (Mourdoukoutas, Panos). Consumers believe they are receiving a better product and experience when they purchase from a Starbucks as opposed to another large food service company that may sell coffee.

This Module 1 SLP will be the first part of an in-depth market analysis. The company I have chosen is Starbucks Coffee Company. The first Starbucks opened in 1971 at Pike Place market in Seattle, WA. Eleven years later, Howard Schultz was hired by the company to be the director of retail operations and marketing. The first Starbucks with the current coffee house look and feel was opened in 1984 in downtown Seattle. The Starbucks headquarters is still located in Seattle, WA. Currently, Starbucks is relying on retail expansion, product innovation, and service innovation to achieve this long-term goal once set by current chairman Howard Schultz: “The idea was to create a chain of coffeehouses

Although Starbucks follows many of the five generic competitive strategies the strategy they follow most closely is the broad differentiation approach. Starbucks has put an emphasis on product differentiation in order to keep up with their ever-expanding company base. They have been extremely successful in their differentiation compared to their competitors. Starbucks offers such a multitude of products, which allows them to appeal to a variety of consumers. There are seven differentiating features of the generic competitive strategies. The following are ways in which the

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

• Analyze Starbuck’s industry environment using Porter’s Five Forces Model. Is it attractive or unattractive overall? Which of the five forces is the most important threat to Starbucks and why?

This Michael Porter 's five force analysis of Starbucks coffee shows the intensity of the five strengths of the firm, and the bases of these powers. Starbucks coffee 's prosperity shows its viability in tending to these outside elements in its industrial surroundings. However, this five forces investigation highlights current industry conditions that force present and developing concerns significant to Starbucks Coffee 's business. Following are the five forces of Michael Porter 's model. These five forces have different intensities or powers on the basis of the market position of Starbucks.

Starbucks wants to have one of their coffee stores in every neighborhood worldwide – a lofty vision that is not realistically attainable, but speaks to the company’s desire for concentrated growth. Facing the challenge of how it should leverage its core competencies against various growth opportunities, Starbucks must convince shareholders that it can continue its phenomenal growth record by leveraging its strengths and opportunities, while minimizing weaknesses and possible threats. Even though Starbucks enjoys strong brand and name recognition, the organization must achieve the desired growth without cannibalizing or saturating the market.

The key issues facing this firm were its attempts at massive expansion and creating new value innovation. The need to expand could cause the company to become over exposed and risk its ability to change. New players in the field such as McDonalds pose a new potential threat of competition, though it is unclear if they share the same market. What can Starbucks do to compete with the competition? There are alternative actions Starbucks can take to secure its competitive advantage it has upheld for so long. The one item that truly

Starbucks roasts high-quality coffee beans to make espresso drinks and sells coffee products through multiple retail channels. The company has over 24,000 stores in 70 countries. Starbucks target market is affluent adults ages 18-40. This market segment makes up 49% of the company’s sales. In addition to targeting a specific market, the company employs a differentiation strategy. Along with the high-quality coffee, the company offers an experience within their stores which justifies higher products. Some aspects of this “coffee experience” include free Wi-Fi, friendly baristas, fast service, and comfortable seating. Also, the company relies on new product development as a strategic choice. This includes adding alcoholic beverages and food to its coffee shop. All of this is done with the idea of making the higher priced product worth it for the consumer.

There are five major strategic issues that Starbucks has faced in the last year. These five issues include: consistency and quality in products and services, protection of suppliers and future supply, social responsibility in the public eye, remaining innovative, and identifying new and untapped markets.

For more than three decades since Starbucks started its operations, the company was considered as a leading coffee chain operator. However, in 2008, the company faced a significant financial downturn that almost cost it its position in the marketplace. Through strategic planning and adopting a differentiation strategy, Starbucks, under the CEO Howard Shultz, recovered from the financial decline to regain a competitive advantage over other big companies like McDonald's and Panera Bread. This paper will discuss the business strategy and management for Starbucks Company and emphasize the importance of business strategy. It will cover the strategic basics of Starbucks, its financial downfall, an analysis of its profitability and a comparison with its key competitors as well as its technological threats and opportunities.

Starbucks is a leader in the coffee industry and a mogul in the business world. Starbucks is now the largest chain in the world of coffee houses. They purchase and roast whole bean coffees to sell, along with handmade tea beverages, food items, and coffees that are sold inside their retail stores. “As of Oct 3 2010, Co. has 8,833 company-operated retail stores and 8,025 licensed stores worldwide (Starbucks)”. To maximize brand recognition and brand awareness to become the most respected and recognized in the coffee world, Starbucks implanted a marketing program that uses marketing mix to satisfy the wants and needs of its large target audience. Discused below is the breakdown of the marketing mix: product,

Starbucks Corporation could continue their expansion into international markets. Currently operating in 44 countries, they should continue to focus on these markets and while opening into new markets. Domestically, Starbucks has become over-saturated, causing their product to lose value. The corporation should narrow their focus on the US market and shift their primary focus internationally. This alternative could increase the product value in America, increase international sales, introduce new markets, and gain new consumers. The success of this alternative also has potential to raise the stock prices for Starbucks Corporation. Considering Americans are over familiarized with their brand,

Starbucks started in 1971 and by creating a cozy third place to customers beyond home and work and offering a slightly higher price yet fine quality coffee, within 25 years, it had opened just over 1000 stores. In order to maintain its leadership position, Starbucks had continued pursuing growth opportunities by selling Starbucks products through mass distribution channels and expanding its retail footprint. Along with the rapid expansion and success, Starbucks has encountered financial downturn in 2008, and the rise of competitors from both high price independent coffee shops, smaller coffee chains that resembled pre-expansion Starbucks model, to low price fast food restaurants chain McDonald’s and Dunkin’s Donuts has deteriorate the

Since starting its business operations in 1971 Starbucks has worked its way up to becoming the global leader within the specialty coffee industry and has revolutionized not only this sector, but the entire coffee culture. However, through rising competition and increasing criticism within the media and public, Starbucks has to re-think its position and further growth. The corporation still has various opportunities to expand and improve its business, and should take actions in order to defend its position.