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Porters 5 Forces On Starbucks Essay

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Michael Porter’s Five (5) Forces Model Analysis on Starbucks

February 20, 2011

Ashley Jumpp

Texas A&M University - Commerce

Author’s Note:

Jumpp, Ashley, Marketing   501, Department of Business, Texas A&M University – Commerce

Contact: ajumpp@yahoo.com

Michael Porter’s Five (5) Forces Model Analysis on Starbucks

Starbuck mission statement: “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

The Five Forces
“We aren’t in the coffee business, serving people. We are in the people business, serving coffee”
Howard Schultz, Starbucks Chairman and Chief Global Strategist

 Industry Rivalry
      At the center of the five forces model is industry competition (segment rivalry). All other forces all tie in to this one force because competition feeds off of new entrants, substitutes, and buyers suppliers power.
      The assumption is that the relevant industry is confined to the competitors within the specialty coffee segment. The environment in which the specialty coffee industry compete is made up of both product based competition because of the products that Starbucks offers and environment-based competition because of the atmosphere of the locations that Starbucks offers.
      There are large amounts of competition in the industry because of the variety of coffee introduced to the market. The product based competition is primarily with the basic coffee companies, who could attempt to enter the specialty coffee segment and some of the larger basic coffee companies, who made most of their sales in grocery chains, but who could introduce their own specialty versions of already popular supermarket brands.
      Competitors include specialty coffee restaurants and beverage outlets, regional specialty coffee companies, espresso stands, carts, stores, whole-bean coffee sales with franchise operators and independent specialty coffee stores in both the United States and Canada (Second Cup)....

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