Global Strategy 2010 – Case study

Case Study - Starbucks
1. Starbucks core business
a) Competitors strengths The threat of the entry of new competitors Starbucks is the biggest coffee shop chain in the world. In 1992 it only had 165 shops within the USA and end of December 2009 they expanded to 16'706 shops in more than fifty countries. Therefore to enter such an important market, a new company would need a great capital, nevertheless some preexisting chains can diversify and become a potential threat such as Dunkin' Donut and Mc Donald's with the Mac café concept. Indeed Mc Donald's has 32'000 restaurants around the world and offers a wide range of products, the Mc Café started in Australia in 1993 but has now expanded and has more the 1300 shops in the world. They are Starbucks biggest competitor, since they offer the same type of products for a lower price. On the international scale Starbucks other main competitors are Gloria Jean's and Costa coffee, these coffee house have taken the same concept as Starbucks; the relaxed lounge atmosphere, wifi access, large choice of products, the faire trade aspect, the friendly costumer-service relation... Nevertheless, thanks to its strong reputation and experience, the vision clients have of Starbucks keeps a competitive advantage. The Anglo-Saxon world is the place with the most competition since it is there that you find the biggest coffee and tea culture. The coffee chain industry has a many other threats but mostly at a national scale, in some countries the costumer will prefer going to the local coffee store than to the big American coffee chain. In the USA it is surprising that the second largest coffee chain (according to the 2006 ranking) is Caribou Coffee with only 322 shops1 versus 8000 for Starbucks, nevertheless so many little scale chains exist which put together are strong concurrence for Starbucks. To compete against these firms Starbucks has responded by selling other products such as mugs, music