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Case 7

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Case 7: Dunkin’ Donuts: Betting Dollars on Donuts
Porter’s Five Forces Analysis for Coffee Industry
Porter’s five forces provide a great deal of information about the attractiveness of the coffee industry. There are many customers in the market for coffee. According to Schermerhorn, (2007) “400 billion cups of coffee are consumed every year making it the most popular beverage globally.” This is a opportunity that is shown in the coffee industry. Many customers for coffee provide a large base of revenue for the coffee selling firms.
There are a few big competitors that Dunkin’ Donuts needs to worry about for the future. Schermerhom (2007) states that” Starbucks [is] rethinking its positioning strategy and McDonald’s [is] offering a great tasting coffee at a reasonable price.” Starbucks is trying to position its coffee as a cheaper product. This will make Starbucks more of a competitor than in the past. Since McDonald’s is trying to sell a better tasting coffee, the company will also be more directly competing with Dunkin’ Donuts.
Suppliers are another interesting part of the puzzle. According to the Dunkin’ Donuts website, Dunkin’ Donuts has reformulated its food and beverages according to its DDSMART criteria to meet healthier criteria. This healthier food probably costs more to make causing a threat to the company. Dunkin’ Donuts should advertise how their food meets these new standards to drive more customers to buy their goods. However, there is an opportunity being formed right now. According to Schermerhom (2007) the company has begun shifting its donut production from individual stores into centralized facilities designed to serve 100 stores apiece. This will help create greater economies of scale to reduce the price of making the…...

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