Porter’s Five Forces Analysis of Starbucks

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Michael Porter, a Harvard Professor introduces his ideology of the Five Forces model that
shapes the competition in the industry. Each force is interrelated and therefore leads into
the other to show the elements directly involved in the further success or ultimate success
of the firm.
Starbucks Coffee Co. throughout its existence since 1971, with its great management team,
innovative style of thinking and strong will to succeed in compliance with its mission and
vision statements has and continues to overcome its barriers by recognizing such strategic
planning as those included in Porters five forces model. The model includes such
components as Barriers to Entry, Supplier and Buyer Power, Threat of Substitutions, and
most importantly the Industry Competitors. Starbucks throughout its existence has
addressed each and every one of Porters forces with a positive edge that has greatly
contributed to the success of the company. Starbucks took many risks and spent capital that
it really did not have. To build a corporation based on intuition and a trip to Italy has
undoubtedly paid off in the long run which is evident throughout the year that Starbucks
has been in operation. Howard Schultz, CEO and founder of the company, has stuck to his
conviction not to sacrifice long-term integrity and values for short-term profit." He knew if
he played his cards right and stuck to his guns it would only be a matter of time that
Starbucks would become the world largest coffee industry in the world. He wanted the
company to become and international outlet for coffee consumers which not only included
men and woman but also addresses the needs and wants of those of all ages and
nationalities, children, students and any other category of people that have and interest in
Starbucks diverse product line. With constant dedication to the companys vision and
mission statement and believing in the value of market share and name recognition and
how critical they are to the success of the company, he was able to achieve his goal within
a few years. During this time of course he has been able to open a total of 1,100 stores and
continues to do so until this day.
Starbucks Coffee Co. continues to address the issues introduced in Porters Five-Force
Model as such:
New Entrants (Barriers to Entry in to the Coffee Industry):
There are many barriers to entry such as economies of scale where new firms entering the
market will have to contend to the competition in the area of price and costs. The aspiring
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