Business & Marketing: Porter's Competetive Force Model In Starbucks (Essay Sample)

Porter’s Competitive Force Model in Starbucks Student Institutional Porter’s Competitive Force Model in Starbucks Introduction The porter’s model analyses the competitive forces facing a company in the industry's environment. These forces may range from the competitors, suppliers who to some extent control the market; the customers would influence the prices of a product, substitute products offered by other companies that can easily replace the products provided by the firm one operates. How a firm positions its brand in the market is essential according to this porter’s model. The paper is going to analyze how Starbucks uses the porter’s model as a strategy of being competitive in the coffee making industry. The coffee selling industry has fewer barriers Entrants venturing into this business, therefore, may be many. Using low prices could be one of the strategies they employ in order to get a market share in the market. However, Starbucks is an already established coffee outlet, enjoying a significant market share; therefore, it commands a robust networked supply chain. That means it has reliable suppliers who have access to quality coffee products as well as have more information that is helpful to the coffee selling outlet. Cloud services and emailing technology have made communication, fast and easy. Using its brand name customers trust its products and remain loyal to the products due to its many years in the market. Throughout the years they have made many resources that include money, hence can easily play for raw materials efficiently and on time. (Wei, 2016) Starbucks faces threats from several substitute products. These substitutes range from cold drinks such as juices and alcohol to hot beverages such as tea not forgetting homemade refreshments such as yogurts. Substitutes are a significant threat to the firm, to overcome this Starbucks sells premium products such as coffee makers, and they also ensure that they sell quality coffee with excellent services that keep their customers coming back for repurchase. The loyalty card services they offer helps them track and analyze a customer’s purchasing habits. To some level, this mitigates the effect that is brought about by the substitutes. The bargaining power of suppliers is a minimal threat to the large coffee outlet. Starbucks choices to work directly with coffee and cocoa farmers, this eliminates intermediaries such as suppliers. A shorter supply chain is easy to control and direct contact with raw material producers reduces the purchase price (E. Dobbs, 2014). The company also educates the farmers on how to grow and sell their products, in the process of teaching them they can benefit from these raw materials. Therefore, suppliers to Starbucks have less control of pricing and cannot dictate the market's supply and demand. Lastly, Starbucks has many competitors that include big brand names like Dunkin. Since the entrance to the coffee industry has minimal barriers of entry and exiting, Starbucks has e...