Read: All the previous Case Group Discussion posts

Complete: Use recordings in Individual Case Group Worksheets to integrate, synthesize, and as a group completes the following chart.

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Strengths	Weaknesses	Opportunities	Threats	Key Issues (3-4)	Recommendations for each issue

"External Analysis"

Prompts:

What are the macro-environmental factors impacting your case companys industry? How are they likely to affect industry conditions?

Starbucks operates in the food service industry, which is influenced by macro-environmental factors such as economic conditions, demographic changes, and technological advancements. The increasing demand for healthy food options and the trend toward customization and personalization in the food industry are opportunities for Starbucks. However, the rising cost of coffee beans and other raw materials, as well as the impact of climate change on coffee production, are potential threats to the companys profitability.

Who are your key rivals and what are their strengths and weaknesses?

Starbucks key rivals are Caribou Coffee, Peets Coffee, and Tea, Mcdonalds, and Dunkin Doughnuts. Competitors of Starbucks, such as Mcdonalds and Dunkin Doughnuts, are at an advantage in the coffee rivalry, posing as a threat to the large chain coffeehouse. Unlike Starbucks, customer loyalty to these businesses began far before they ever offered coffee on their menus. Customers are much more likely to grab a cup of coffee along with their Dunkin doughnuts or McCafes breakfast sandwich than have to make another stop at Starbucks. With that being said, their low-quality, less expensive beans are not gaining their favor on the quality scale of coffee. Starbucks coffee still manages to win favor over customer consumption due to its precise engagement in coffee procurement. Starbucks has also expanded its offerings since its inception by offering warm breakfast options and bakery items to accompany its main product offering. The promise to produce quality coffee is what has kept them high in the ranks for the last 2 decades, and they only seem to be going up from here.

Apply the following models to evaluate the keyopportunities and threatsin the industry?

Porters five force model:

Operating or owning a business can come with many risks. There are risks that can make the business successful or the risk of failing. Some opportunities can come from within the company and some threats can come from external competition. Analyzing and evaluating the Starbucks case applying Porters Five Module are:

The risk or threat or risk of entry of new industry competitors. Starbucks is primarily in the coffee industry. This is an industry that has a low barrier of entry, and any company can enter the coffee industry. For instance, the McDonaldss example in our case presented was primarily in the business of hamburgers and fries. Eventually, they entered the coffee industry posing a threat to Starbucks. The advantage that Starbucks would have over McDonalds entering the coffee industry is that Starbucks has created a strong base of loyal coffee drinkers, and they have created a stronger barrier for any other competitors attempting to enter the industry to compete against them. Starbucks has established economies of scale which allow them to control the cost of coffee which can be more difficult for rivals entering the industry.

The rivalry of their competitive current competitors. Starbucks is in an industry where they can have many competitors. It can be from large corporations such as McDonalds and Dunkin Donuts to small mom-and-pop coffee shops or even smaller entrepreneurs starting up a business. Even though it may have many competitors, Starbucks has built many loyal customers that will continuously choose Starbucks.

The bargaining power of their suppliers. Starbucks has been able to establish a strong relationship with the coffee beans mills. They had the advantage of outbidding some of their European competitors by purchasing from the Columbian Coffee bean company Narino Supremo Bean company according to (Case 25 Starbucks, 2015). This allowed them the advantage of ensuring they had the best coffee and pricing over other competitors.

The bargaining of the buyers. As mentioned in the case, Starbucks at one point was losing business and customers had many other options to purchase from when looking for the most cost-effective cup of coffee depending on their spending budgets. As more competition enters the industry, it poses the threat of prices being lower than Starbucks.

The threat of substitute products for others in the industry can fulfill the customers desires. Starbucks may also be affected by the increase of substitutes for drinks that other competitors may offer such as teas, bottled waters, juices, and even energy drinks. Starbucks has now expanded its menus to help with some of the substitute products that others offer. They now offer items such as sandwiches and pastries to expand their offerings, along with other healthy food options to help reduce some of the threats.

Life cycle:

Changes that occur in the industry are important to determine the nature of opportunities and threats using the industry life cycle. There are five stages in the industry life cycle: embryonic, growth, shakeout, maturity, and decline. Starbucks is currently in the maturity stage of the life cycle as they possess a significant market share. While in the maturity stage, there are multiple factors that pose threats, such as price wars from competing firms and the risk of possible stagnant growth. On the other hand, the maturity stage does open some opportunities in the industry, such as the opportunity to build brand loyalty and the high entry barriers which gives Starbucks the opportunity to increase prices and profits all while beating out their competitors.

Strategic group analysis:

Starbucks operates in the coffee and specialty beverage industry, and its strategic group includes competitors such as Dunkin' Donuts, Tim Hortons, Peet's Coffee, Costa Coffee, Caribou Coffee, and independent coffee shops. Starbucks has a strong brand identity and value proposition that centers around premium, high-quality coffee, and a unique in-store experience. The company has invested heavily in its store network and distribution channels, which can be a barrier to entry for new competitors. Starbucks also has a large marketing budget and utilizes a variety of channels to reach customers. In recent years, the company has been expanding into new markets and diversifying its product offerings to include food, tea, and non-coffee beverages. Overall, Starbucks is a dominant player in the coffee and specialty beverage industry, and its strong brand and extensive resources make it a formidable competitor for other companies in its strategic group.