cup of coffee emotional atmosphere competitive edge high quality coffee and products reachable...
TRANSCRIPT
Cup of coffee emotional atmosphere
Competitive Edge
High quality coffee and products Reachable locations Community to share the coffee drinking experience
Starbucks Model
1. Great attention to detail in stores Employees well trained and qualified
Wide range & types of coffee, drinks, food
2. Attract coffee and non-coffee consumers
3. Transcended traditional coffee houses into a pleasant experience Employees are pleasant and consistent in service
Coffee into a social platform
Starbucks has been able to attract the non-customers through their business model of focusing on people
Starbucks did not take away from its competitors or make coffee go away. It simply made it more popular!
Porter’s Five Forces
Michael Porter of Harvard Business School
A helpful, widely used framework for classifying and analyzing the factors that determine the intensity of competition and levels of competition in different industries
Profitability of an industry
3 sources of horizontal competition
Competition from substitutes, entrants, and rivals
2 sources of vertical competition
Power of suppliers and buyers
Threat of Substitutes
Price depends on availability of substitute products
Elastic demand
Travel agencies
Inelastic demand
Gas
Starbucks Coffee
Threat of Entry
Barrier to Entry
Capital requirements
Absolute cost advantages
Product differentiation
Retaliation
Industry Rivalry
Concentration
Product differentiation
Excess capacity and exit barriers
Bargaining Power of Buyers
Price sensitivity
Greater the importance, greater the sensitivity
Less differentiated, more willing to switch
Intense competition creates eagerness for price reductions
Relative bargaining power
Size and concentration
Buyer’s information
Integrate vertically
Bargaining Power of Suppliers
A firms ease to switch between different input suppliers and the bargaining power of each party
Supplier usually lack bargaining power due to size
Suppliers of complex, technically sophisticated components may have greater bargaining power
Starbucks Porter’s Five Forces Analysis
Threat of substitutes
Tea
Juice
Soft Drinks
Water
Energy Drinks
Smoothies
Threat of Entry
Low- the market is highly saturated and substantial amount of financial resources associated with buildings and properties are required in order to enter into the industry
Starbucks Porter’s Five Forces Analysis
Industry Rivalry
Costa Coffee
McDonalds
Caribou Coffee
Dunkin Donuts
Bargaining Power of Buyers
Large- there is no and minimal switching cost for customers, and there is an abundance of offers available for them
Starbucks Porter’s Five Forces Analysis
Bargaining Power of Suppliers
High- demand for coffee is high and coffee beans can only be produced in certain geographical areas
Starbucks – Resources
Tangible
Over 20,000 stores
Worldwide market
Drink variety
Customization
Drive-thru locations
High Income
$1.38 B in 2012
Intangible
Starbucks experience
Brand equity
Store locations
Near premium stores
Human Resources
Employees
Expertise
Skills
Knowledge
Organizational culture
– organizations values, traditions and social norms
Starbucks - Internal Capabilities
Stay the #1 coffee shop worldwide
Starbucks experience
20,000 locations
Brand equity
Continued expansion
Brand equity
High income
location
More convenient experience
Drive-thru windows
Organizational culture
External Capabilities
External capabilities
Acquisitions
Mergers
Strategic alliances
Coffee bean farms
100% ethically sourced by 2015
Apple
Kraft - Mondelez
Resource & Capability Analysis
Identify key resources/capabilities
Brand equity
Location
Drink variety
Human resources
Create/sustain competitive advantage
Starbucks experience
Premium coffee shop
Resource & Capability Analysis
Identify key resources/capabilities
Brand equity
Location
Drink variety
Human resources
Create/sustain competitive advantage
Starbucks experience
Premium coffee shop
Six Paths Framework 1: Look Across Alternative Industries
2: Look Across Strategic Groups Within Industries
3: Look Across the Chain of Buyers
4: Look Across Complementary Product and Service Offerings
5: Look Across Functional or Emotional Appeal to Buyers
6: Look Across Time
Six Paths Framework Path 1: Alternative Industries
•Substitutes
•Alternatives
Six Paths Framework Path 2: Strategic Groups within Industries
•Out competing by Price and Performance
•Break out of Tunnel Vision
•Trade up or Trade down
Six Paths Framework Path 3: Chain of Buyers
•Purchasers can differ from actual users
•Typically focus on one single buyer group
•What are the Chain of buyers for Starbucks?
Six Paths Framework
Path 4: Complementary Product and Service Offerings
•Untapped Value
•Other services affect demand
•Before, During, After
Six Paths Framework Path 5: Functional or Emotional Appeal to Buyers
•Functional vs. Emotional
•Industries have trained customers in what to expect
•Starbucks created emotional atmosphere in which customers enjoy their coffee
Six Paths Framework Path 6: Time •Trends affect business over time
•Protecting the environment
•Grounds for your Garden
•Market today to what it might deliver tomorrow
•Difficult
