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Starbucks 5 Forces Essay

703 words - 3 pages

Starbucks 5 forces model
Starbucks is a U.S. based multi-national, which in addition to its flagship Starbucks brand, also has Tazo Tea, Seattle's Best Coffee, Starbucks VIA Ready Brew, and the Versimo System by Starbucks as part of its portfolio.
The flagship, "Starbucks" primarily provides high quality coffee beverages with lesser revenues being generated from its bakery items. The corporation almost exclusively owns all of it U.S. based restaurants instead of expanding through franchising. . As such, nearly all Starbucks restaurants are wholly owned or joint-ventures. A critical part of their expansion strategy is focused on maintaining a high quality product line as well as highly ...view middle of the document...

Teas, energy drinks, and soft drinks are all highly popular caffeine alternatives. Water and juices also represent a significant alternative beverage choice. The real threat, is that consumers will switch to a competitor. Thus this threat of substitutes is high.
Buyer Power: Customers of Starbucks have high buyer power. Starbucks is known for being one of the more expensive coffee options. There is no financial cost to the buyer should they choose to switch to either a competitor or an alternative. In fact, there is most like financial incentive in switching.
Supplier Power: Demand for high quality Arabica beans is very high globally. This however does not translate to suppliers having overwhelming leverage when setting prices. Starbucks, as well as other industry leaders, are free to switch between suppliers at no switching costs. Starbucks does insist on the highest quality beans and needs a tremendous amount of them to distribute across the 21000 stores that rely on them . Sourcing such high quality beans year round may be problematic due to drought or other reason. As such supplier power is medium.

Notes for suggestions
Foreign joint-ventures makes sense for...

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