Starbucks

Starbucks Analysis –

Using Porter’s five forces model to inform business strategy and retain competitive advantage

Cynthia Heisen 3125747

Hayley McGregor 3034156

James Pace 3045032

Munirrih Mahabat 3089564

Starbucks is a global empire with huge success and profitability overseas. However, their global expansion has been challenged in both Australia and emerging markets, due to increased competition and changing customer expectations (Seaford et al., 2012). Following an analysis of the company’s current state using Porters five forces model, recommendations will be provided to help Starbucks position and leverage its competitive capability both domestically and globally.

Starbucks in Australia

Coffee Bean suppliers have high bargaining power and the cost of purchasing coffee beans within Australia has risen dramatically due to poor crops in Brazil (Lynch, 2014). To reduce costs and diversify risk, Starbucks should develop strategic alliances with emerging suppliers that are closer to Australia, such as Vietnam (Ngoc Pham, 2014; Porter, 2008). Craven et al (1997) advises that successful strategic alliances must be well-planned and built on trust. Starbucks has built effective long-term partnerships through implementation of Coffee and Farmer Equity (C.A.F.E.) practices and an “open-source” approach to the industry (www.starbucks.com). To reduce the power of existing suppliers, Starbucks must extend C.A.F.E. practices to new markets (Porter, 2008).

In Australia, coffee is a popular commodity and customers desire organic experiences. Starbucks needs to ensure there is alignment between their products and the needs of customers, which requires additional market research and benchmarking (Roberts, 2001). Starbucks imposed themselves in a highly commercialized manner with above market priced products that proved to be unsustainable and undesirable. However, Starbucks must harness their strengths to push...