Case study, strabucks, 2010

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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 newcompany 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 Starbucksbiggest 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 itsstrong 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 thebig 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, musiccd's, thermos and other types of goods depending on the region. Finally the increase of health consciousness could be a potential threat, indeed some of the drinks are known to have as many calories as a Mc Donald's menu. Nutrition and health is a theme that people pay more and more attention to, therefore a new comer could easily open a new concept chain offering a wide range of healthy/bio food andbeverages and steal part of Starbucks customers.

1 -10-largest-coffe-chain-in-the-us/

Global Strategy 2010 – Case study The intensity of competitive rivalry When Starbucks started in 1971, the shop only sold coffee beans, it is only in 1987 that it started to be a coffee house, at that point it was more of a little business so their was nointensive competitive rivalry. In the past twenty the coffee culture has grown really fast internationally, the idea to sit in a coffee shop, read the news paper or stroll on internet, just relax or simply coming to get a coffee "to go" is becoming more and more popular. It is only these last five years that Starbucks has really started to suffer economically, leading about a 150 shops to close in2008, to compensate these lost Starbucks is trying to expand in new markets such as China, were the chain is receiving much success and seen as a luxury product. Nespresso also entered the market as a strong competitor, they don't have the same coffee shop approach but by selling coffee machines and instant coffee steals some of Starbucks client. For this reason Starbucks also started its instantcoffee product, known as ready to drink (RTD) The threat of substitute products or services Tea is the biggest threat to Coffee companies. But most of them have already reacted in order to avoid that competition by selling tea in their coffee houses. Indeed in Starbucks you find a couple varieties of teas. For now their isn't a big competitor in the market, but it might appear fast since coffee...