Faculty of Business, Brock University |
Starbucks Strategic Analysis |
MGMT 4P90: Strategic Management |
Submitted by: |
Amar Mohla |
Akshat Kaushal |
Tania RahmanVijay Bhullar |
Presented to: Professor Peter Yannopoulos, PH.DMarch 28th, 2012 |
Michael Porter’s 5 Forces Analysis
Michael Porter uses the 5 forces model to analyze the industry environment. His ideas on competitive strategy are the most pervasive analytical tool used in strategic management (Henry, 2011). The five forces is used to capture the variation of competition, to determine whether a firm outside an industry should enter the industry, to see barriers to entry, to determine attractiveness of firm and to determine where the organization stands in relation to their industry. These five forces also help increase awareness of a trend towards suppliers and buyers bargaining power as well. Unlike SWOT analysis which is company specific explained in the next portion of this project, Porter’s five forces framework is industry focused. Furthermore, the five variables in the porter analysis are the industry suppliers, buyers, potential new entrants, substitute products and competition among existing firms. This section provides a thorough examination of the five forces affecting Starbucks’ coffee industry environment.
Potential for new entrants
The first force in Porter’s model analyzes potential new entrants which may impact Starbucks’s business competition. The threat of entry will depend on the existence of barriers to entry and the reaction of existing competitors (Henry, 2011). In the case of Starbucks, their status is first entrant to the specialty coffee market which gives them an advantage over new entrants. Possessing geographical areas in prime markets is complementary to their status. Starbucks not only has...