Porter’s Five Forces Analysis Of Starbucks

Starbucks Coffee is confronted by the strong force that is competitive rivalry. This force refers to the influence of each competitor on the other.

Numerous firms.

Switching costs are low

There are many firms.

Starbucks is faced with many competition from companies of various sizes, specialties, or strategies.

Thus based on this component of the Five Forces competition should be among Starbucks Coffee’s top priority challenges.Bargaining Power of Starbucks Coffee:

The impact of customers in groups and individuals on businesses is what defines the force. Starbucks Coffee’s case demonstrates how customers have a strong bargaining advantage.

Switching costs are low

Weak force: Small number of buyers

Substitute availability

Starbucks Coffee’s bargaining power is one of the most important factors affecting its business. Customers can move from Starbucks to any other brand because it’s affordable. Starbucks can be avoided if customers prefer other brands. These strong attributes outweigh that individual Starbucks Coffee coffee purchases are very small.

Starbucks Coffee should consider the analysis model for customers’ bargaining ability as their top priority.

Starbucks Coffee Suppliers’ Bargaining Power:

These external factors are contributing to Starbucks Coffee’s weak bargaining power or force of supply.

High supply diversity (weak forces)

Moderately large suppliers (moderate force).

Weak force – Large overall supply

Starbucks is not affected by the bargaining power suppliers. The overall supply is greater than the individual supplier’s impact. Starbucks also has a policy to diversify its supply chain. This policy reduces suppliers’ influence even though they have a smaller supply chain than Starbucks.

Starbucks Coffee can use the analysis model to determine which suppliers are most in demand and what they need.

Substitutes of Starbucks Products in Threat

The effect of substitute services or substitute goods is known as the treat of substitution force. Starbucks is concerned about the risk of substitution because of these external factors:

Alternatives are available.

Alternatives at a low cost

Switching costs are low

Porter Five’s force analysis model shows that substitutes can have a strong potential to negatively impact Starbucks Coffee’s businesses. Starbucks customers can easily switch to substitutes, as there are many options such as drinks from restaurants and other goods from grocery stores.

Starbucks has partnered several firms to expand its brand into other categories. Starbucks icecream now ranks as the number one brand in coffee icecream. Starbucks is looking at new store designs and is also trying to increase its coffee shop’s business. The cafe Starbucks is being tested in Seattle. It’s a European style family bistro that serves everything from huckleberry pancakes to Mediterranean chicken breasts on focaccia. Starbucks also has Circadian, a bohemian coffeehouse concept in San Francisco. It features a tatters rug and high-speed Internet access.

Starbucks customers don’t need to spend money on the shift. In fact, many substitutes are cheaper than Starbucks products. They must make substitutes a priority concern.

New Entry Threats

This is the potential impact of new players in an industry. Starbucks Coffee has found that the following external factors are contributing to the moderate threat from new entrants.

Brand development is expensive. (Weak force)

Moderate cost to do business (moderate workforce)

Moderate supply chains cost (moderate forces)

Starbucks Coffee’s business is impacted by new entrants, but they are not significant. Starbucks is open to new entrants because they have lower costs to do business and can develop supply chains. But, Starbucks has a very strong brand that makes it hard for them to compete.



Cody Young is an educational blogger. Cody is currently a student at the University of Utah pursuing a degree in communications. Cody has a passion for writing and sharing knowledge with others.

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