Essay Starbuc

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The study of Starbucks Corporation leads one on a multifaceted journey through an organization’s insinuation into a culture, its dominance of a market and its creation of a brand synonymous with loyalty, integrity and longevity. Consequently, Starbucks puts great emphasis on employee morale and satisfaction levels. Many policies within Starbucks have been geared to make the internal Starbucks’ culture comfortable for employees, such as their innovative full health-care program for all employees working more than 20 hours a week. Starbucks leverages its customer loyalty, premium quality coffee and the homey atmosphere of its stores to fend off competition. 1. Five Forces Analysis (OUTLOOKS hlm 184)

Industry Rivalry : The industry rivalry within the specialty coffee industry has changed dramatically since 1987. Unlike the early days of the specialty coffee industry when Starbucks competed primarily against other small-scale specialty coffee retailers they now compete against companies of varying sizes and different exposures to specialty coffee. Starbucks competes with a variety of smaller scale specialty coffee shops, mostly concentrated in different regions of the country. The current impact of the industry rivalry force created by the competition between specialty coffee retailers is very high, especially as contrasted to what it was at the time of Starbucks’ rapid expansion twenty years ago. The growth of the industry has slowed while the number of competitors within the industry has increased. The largest industry rival currently facing Starbucks is the McDonald's restaurant fast food chain. The key to McDonald's success has been the consistent quality standards they achieve for their food, coupled with their quick service and low prices. The specialty coffee industry has experienced explosive growth over the past 20 years. As a consequence, many companies have recognized the potential for profit and have tried to capitalize by entering the industry. This has resulted in a drastic increase in competition within the specialty coffee industry. The diversity among these competitors still remains very high but the grounds on which companies are differentiating themselves are changing. As larger and larger companies enter the industry the strategic stakes become higher, pushing some companies such as Dunkin' Donuts and McDonald's to differentiate themselves through price superiority. In summary, the current impact of the industry rivalry force created by the competition between specialty coffee retailers is very high, especially as contrasted to what it was at the time of Starbucks’ rapid expansion twenty years ago. The growth of the industry has slowed while the number of competitors within the industry has increased. Both of these factors, in addition to Dunkin' Donuts and McDonald's high strategic stakes in the specialty coffee industry, have caused this change from weak to strong industry rivalry. Potential for New Entrants : The primary deterrents to entry in the specialty coffee industry are the various barriers to entry. The economies of scale within the specialty coffee industry have increased as the size of the top players has increased. Larger companies are able to economize on their accounting operations and marketing budgets by facilitating their specialty coffee operations from the same department as for all segments of their businesses. Companies which have national distribution channels can transport their specialty coffee at a relatively low cost compared to potential new entrants who have no such developed distribution systems. There is numerous cost disadvantages imposed on new entrants that are independent of the economies of scale considerations. As the industry matures, the ability to access distribution channels and select from the highest quality coffee beans has becoming increasingly difficult. Most of the favorable store locations within the larger metropolitan areas have already been...
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