Question

Review Starbucks website and conduct other research about the organization to answer the following questions: What are the competitive and environmental forces impacting the industry in which the organization operates? What factors are the most critical in order to compete successfully in this industry? What external opportunities and threats does the organization face? The factors that you should consider include: Five Forces of Competition Model Threat of new entrants Rivalry among competing firms Bargaining power of buyers Bargaining power of sellers Threat of substitute products The External Environment Economic Physical Global Technological Demographic Sociocultural Political/legal

Answer 1

The major factors that impact the industry are :

Economic Environment : As Starbucks is operating in multiple countries and buys the coffee beans and other ingredients at a centralized place, fiscal policy in terms of tax levied on the import and export of the commodities play an important role.

Physical Environment : Coffee is more popular in colder regions than the plains.

Global Environment : Starbucks need to customize its brand communications as per the understanding of the customers in different locations.

Technological : Processing of coffee beans and preparation of coffee, procurement of the basic ingredients also impact the market.

Demographic : As the products of Starbucks are on higher side, so the income of the population needs to considered.

Socio-cultural environment : Coffee is prepared as per the needs and preferences of the customer.

Political / Legal : Legal imposition of the government in terms of fee paid is always crucial.

Five Forces of competition model

Rivalry among competing firms : Due to the entry of many competitors in this market like Barista, Coffee Day etc, the market has become highly competitive.

Threat of Substituents : As popularity of tea is more than the coffee and it is even more in hilly areas, there is a high threat of substituents.

Threat of New Entrants : Due to flexible and motivating environment, Starbucks has an established base. Thus there is low threat of entrants.

Bargaining Power of buyers : As the buyers want to have best quality products at reasonable price, so the buyers have high bargaining power.

Bargaining power of suppliers : Getting associated with all suppliers who have unique product and who supplies the best quality product is always a privilege and thus the Bargaining power of suppliers is high.