The paper "Chatime and Street Beverage industry " is an outstanding example of a marketing case study. The Street Beverage industry has been one of the most booming industries in Australia despite the high staff turnover issues in the industry. In order to adequately analyse this industry, this report uses Porter’ s Five-Forces Model which encompasses Buyer Effect, Supplier Effect, Extent of Rivalry, Impact of Substitutes, and Restrictions to New Entrants. A case of Chatime is also used and its competitive strategy in Australia discussed and its suitability thereof commented upon. A Description of CHATIME and the Street Beverage Industry Australia is generally known to be a top market in as far as quality gourmet coffee and tea is concerned.
As a matter of fact, Australians have a food culture in which they must routinely take quality gourmet coffee or tea at least every day. For that reason, the Street Beverage industry in Australia has thrived for the longest time even in the worst of economic turmoil. With players such as Gongcha, Gloria Jean’ s Coffees, Starbucks Coffee, McDonald’ s McCafe, Boost, and Top Juice, the Australian Street Beverage industry has remained stronger even in such economic crunches as the 2007/2008 economic meltdown (Euromonitor International 2014).
In fact, according to IBISWorld, in comparison to its competitors such as the restaurant and catering industries, this industry experienced growth of up to 2.3% in annual revenue even as most of the industries in Australia and the world over experienced massive losses during the 2007/2008 economic crunch. Datamonitor (1998) explains that despite the industry’ s growth, it has the highest staff turnover. This is attributed to the fact that most workers in this industry work part-time as they study, and after completion of their studies, they then resign. According to IBISWorld (1987), 79% of the industry players are multinational businesses such as the McCafe and Starbucks Coffee, with the remaining 21% being indigenous businesses who are majorly smaller sized.
In terms of revenue, the Street Beverage industry in Australia contributed $5 billion worth of revenue to the government in the 2011/2012 financial year. Being a Taiwanese global franchise teahouse chain Chatime is one of the 79% foreign players in the Australian Street Beverage industry.
With a global presence of over 1000 outlets in over 20 countries, Chatime is known for its “ pearl” milk tea (Chatime 2015). Specifically, some of its products include milk tea, flavoured milk tea, fruity milk tea, tea espresso, among many other products. Industry’ s Competitiveness Analysis – Porter’ s Five-Forces Model In order to comprehensively describe the competitive environment of a particular industry, Michael Porter proposed five fundamental parameters which he named “ Porter’ s Five Forces” . According to Porter (2000), the five forces are restriction to new entrants, the buyer effect, the supplier effect, the extent of rivalry, and the impact of substitutes.
This paper utilizes these five forces to perform an in-depth analysis of the Australian Street Beverage industry, with a key focus on Chatime – a Taiwanese franchise chain as follows. Restrictions to New Entrants Of the five Porter’ s five forces, restriction to new entrants is founded on the fact that if the industry has not implemented stringent measures to curb the free and easy entry of competitors into the market, the industry is likely to weaken its position (Porter 2000). Generally, the street beverage industry in the world over is relatively easier to enter mainly due to the little capital required to set up such businesses.
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