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1. Identification and explanation of Starbuck’s competitive strategy according to PORTER?
2. Discussion of Schultz’s use of the following to implement the competitive strategy of Starbuck’s:
3. Discussion of strategies and business activities Schultz has used in expanding Starbucks internationally?
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Porter’s Five Forces analysis helps to investigate the attractiveness of the firm or the industry by using various factors that are influencing the market and analyzing their threat level. It includes bargaining power of the suppliers and buyers, a threat from substitutes, new entrants and existing rivalries. Porter's Five Forces Analysis is presented in the points below:
Buyer's Bargaining Power (Medium): According to the analysis, Starbucks faces a medium level of threat from the bargaining power of the buyers. This occurs because the number of buyers for the company is huge (Fleisher & Bensoussan, 2009). It has been seen that the buyers in the coffee industry, mostly buys one or two cups of coffee with snacks at a time. The buying behavior of the customers does not get affected by the change in the price of the product.
Supplier's Bargaining Power (Low): The bargaining power of the suppliers poses a quite low threat to the company. Inputs of the firm are a standard that makes the threat lower. There are a huge number of suppliers which helps the company to switch between its suppliers.
Threats from new entrants (Medium): The Company faces a moderate threat from new entrants. This is because the company operates on a large scale that helps it to have a good competitive advantage in the market. Hence, it is difficult for a new company to compete with the present position of Starbucks.
Threats from substitute (High): Starbucks faces a very high threat from its substitute products. Sometimes consumers prefer to have carbonated soft drinks or any other non-alcoholic beverages other than the products of Starbucks that makes it face a huge threat from substitutes.Threats from existing rivalry (High): The Company faces a relatively high threat from existing rivals in the market. There are a huge number of players in the coffee industry in which the company operates (Hodgetts & Luthans, 2008). Hence, it faces a huge threat from other existing companies in the market.