Starbucks has grown to become one of the largest coffee companies, increasing its market share from 1% to 20% over the last 25 years. While the specialty coffee industry has few barriers to entry, Starbucks has established economies of scale, proprietary technology, and customer loyalty that make it difficult for new entrants to compete. The document discusses Starbucks' strengths like its brand image, relationships with suppliers, and store locations. It also notes weaknesses like expensive prices and potential overcrowding. Opportunities for growth include expanding into new markets and extending its brand, while threats include rising coffee costs and new competitors.

1. Starbucksstrategy BOIN Anne-cécile DOMAIN Marine PIVA Benedetta

2. Starbucks is one of the most important companies in the specialty coffee industry This industry is the most rapidly growing segment of coffee industry The competitive environment its market share increased from 1% to 20% in the last 25 years 14/01/2011 Strategic Management Boin Domain Piva

3. Competitive rivalry. Companies of varying sizes and different exposures to specialty coffee such as: two of the largest companies in the fast food industry who have recently entered the specialty coffee industry: FiveForcesAnalysis 14/01/2011 Strategic Management Boin Domain Piva

5. new entrants have no access to the most important distribution channels;

6. incumbents have proprietary technology for the specialty coffee’s quality and production;

7. incumbents have develop customers’ loyalty 14/01/2011 Strategic Management Boin Domain Piva

8. Substitutes. The threat of substitutes is relatively low because coffee is an icon and an everyday good, so when people want coffee, that is what they consume Suppliers. Starbucks has a good bargaining power on its suppliers due to its large size but it doesn’t abuse this power. Starbucks is completely dependent upon its suppliers and it always demands a very high quality of bean as well as environmental policies, e.g. energy conservation and farming methods, and employee benefits The company treats its suppliers as partners Dairy and paper product suppliers are not a threat. Starbucks sources from multiple suppliers and looks for vendors who have sustainability purposes FiveForcesAnalysis 14/01/2011 Strategic Management Boin Domain Piva

9. Buyers. The principal buyers in the specialty coffee industry are individual consumers Starbucks has over 40 million consumers a week eighty percent of Starbucks’s revenue comes from customers who visit coffeehouses an average of 18 times per month: regular customers the threat of customers is low for Starbucks: it is unlikely that a customer integrates backward making coffee at home to replace coffeehouse products and experience FiveForcesAnalysis 14/01/2011 Strategic Management Boin Domain Piva

10. STRENGTHS The SWOT Analysis Brandimage Goodworkplace Goodrelationshipwith coffee suppliers Coffeehouses’ locations 14/01/2011 Strategic Management Boin Domain Piva

11. WEAKNESSES The SWOT Analysis Corporate image Overcrowding and cannibalism Expensive price 14/01/2011 Strategic Management Boin Domain Piva

12. OPPORTUNITIES THREATS The SWOT Analysis Expansion into European and Latin American markets Brand extension Distribution agreements Growthofcostof coffee beans Customers trend can change New competitors and disrupting innovations 14/01/2011 Strategic Management Boin Domain Piva

13. The vision: highqualitycoffee ecofriendlyand responsiblecompany Strategic direction: a rapidstore expansion large range of beverages strongrelationshipwithsuppliers Vision and strategic direction 14/01/2011 Strategic Management Boin Domain Piva

14. Buyout of competitors Marketpenetration: eco-friendlyproducts Marketdevelopment: responsible coffee shops Diversification: mugs, CD’s, … Outcomes 14/01/2011 Strategic Management Boin Domain Piva

15. The “thirdplace” Starbucks wants its coffeehouses to become the third place between home and work for its customers develop the quality of welcome and of service for the customers  employees’ training Be unique for customers welcoming events within the stores (degustation, groups playing soft music,…) 14/01/2011 Strategic Management Boin Domain Piva

16. Increaserevenues revenues would be increased thanks to higher prices. Those higher prices would be justified by the quality of the coffee, of the service and of the places (the experience) Remind about the quality Starbucks must put emphasis on the high quality of its coffee and its products in general refocus on the original idea that made this brand so famous Revenues and quality Customers are willingtopay high prices 14/01/2011 Strategic Management Boin Domain Piva

17. Expansionofcoffeehouses Starbucks would have to expand even more internationally and implement in location where they can find the kind of customers it is looking for It could for example open news shops in places of work, in airports, in students’ neighborhood or in cultural places such as cinemas or theatre 14/01/2011 Strategic Management Boin Domain Piva