Starbucks Case Analysis
MGT 409-001
[Starbucks] case analysis
Background/Problem statement (30%) Starbucks, as a world’s leading coffee-drinking retailer, provide “standardized” coffee drink and coffee related products as well as homelike experience to its customers. It has 15,700 locations globally and set its expansion goal to 40,000 stores worldwide while this goal has been delayed since the expansion targets for recent years have not been reached. At the same time, due to the intense global expansion, net revenue and earnings increase accordingly yet the profit growth has reduced and stock price decreased as well as customer visit declined due to losing exclusivity. The strategic issue in this case is whether Starbucks should focus on global expansion continually or on fixing the profitability.
Strategic analysis & options (20%) Porter’s Five Forces Analysis: * Power of buyers: Medium. Starbucks’ customer’s experience distinguished itself from other fast-food liked coffee providers. However, if the price outranges consumer’s expectation, they could still walk away to Starbucks rivals. * Power of Suppliers: Low. Dealing with a large corporation like Starbucks, big amount of supplier’s sales can probably enable Starbucks to dictate the price. * Threat of new entry: High. The entry barrier for coffee industry is relatively low and also fast food chains have untried and join the competition, for instance, McDonald’s. * Threat of substitute: Low. The substitutes include coke and other soft drinks. However, they cannot perfectly replace due to the taste and consumers differences. * Competitive Rivalry: High. Coffee industry is extremely competitive with rivals for Starbucks including McDonald’s, Bigby’s, Dunkin’ Donuts, and others are playing certain parts resulting in less dominant position of Starbucks within the industry.
Integration (30%)
After the analysis, I suggest Starbucks should repay their attentions back on enhancing customer’s experience with
[Starbucks] case analysis
Background/Problem statement (30%) Starbucks, as a world’s leading coffee-drinking retailer, provide “standardized” coffee drink and coffee related products as well as homelike experience to its customers. It has 15,700 locations globally and set its expansion goal to 40,000 stores worldwide while this goal has been delayed since the expansion targets for recent years have not been reached. At the same time, due to the intense global expansion, net revenue and earnings increase accordingly yet the profit growth has reduced and stock price decreased as well as customer visit declined due to losing exclusivity. The strategic issue in this case is whether Starbucks should focus on global expansion continually or on fixing the profitability.
Strategic analysis & options (20%) Porter’s Five Forces Analysis: * Power of buyers: Medium. Starbucks’ customer’s experience distinguished itself from other fast-food liked coffee providers. However, if the price outranges consumer’s expectation, they could still walk away to Starbucks rivals. * Power of Suppliers: Low. Dealing with a large corporation like Starbucks, big amount of supplier’s sales can probably enable Starbucks to dictate the price. * Threat of new entry: High. The entry barrier for coffee industry is relatively low and also fast food chains have untried and join the competition, for instance, McDonald’s. * Threat of substitute: Low. The substitutes include coke and other soft drinks. However, they cannot perfectly replace due to the taste and consumers differences. * Competitive Rivalry: High. Coffee industry is extremely competitive with rivals for Starbucks including McDonald’s, Bigby’s, Dunkin’ Donuts, and others are playing certain parts resulting in less dominant position of Starbucks within the industry.
Integration (30%)
After the analysis, I suggest Starbucks should repay their attentions back on enhancing customer’s experience with