Analysis Of Starbucks Five Forces And Value Chain – Case Study Example
Analysis of Starbucks Five forces and value chain The porters five forces are used, in theory, to analyse the industry and develop a strategy. The effects include competition, consumers, suppliers, substitution of products. Their relationship is explained diagrammatically as below.
Starbucks as a global coffee company generated $14.9 billion in revenues in the year 2013. It has a network of over 200,000 partners. Competition: it faces a lot of competition from well-established operators within the industry like McDonalds, Caribou Coffee and Costa. Customer bargaining is very high on its side due to low switching costs. In addition, there is a significant threat to its substitutes from tea, water, soft drinks among many others. Their suppliers also have a very high bargaining power due to the vast demand for coffee while only a few places favor its production. However, there is little threat concerning entrants because of the saturation of the market and massive investments required to establish operations into the market (Lee 2014).
Value Chain Analysis allows the firm to know varied aspects of its operation. These include infrastructure, human resources, technology development and procurement. The analysis exists as primary activities and supports roles. Inbound logistics of Starbucks involves establishment and communication of Coffee quality. The company operates in over 50 countries through its licensed stores. Outbound logistics includes sales of the products directly through its stores (Lee 2014). There is little involved in marketing as the quality sells itself. However, the company provides high-level customer service as stipulated in its mission statement.
Support services involve infrastructures such as well defined management planning, finance, accounting and legal support. HR is seen by the company as the most valuable asset and accorded the necessary requisite to work. The company uses technology to save on its costs and to bust efficiency and effectiveness. Its procurement wing deals with purchases required in production (Lee 2014).
Lee, H. (2014). Starbucks Building supply chain excellence. New York: Springer.