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Introduction
Starbucks is the most famous coffee shop in the world. It is not just a company success in
United State, it is a global company, and customers can find Starbucks in every big city
around the world. Drinking Starbucks is not just drinking a coffee, it also represent
customer’s premium status.
External Environment- Five forces for coffee shop industry
Threat of the new entrants- Medium
The entry barrier in this industry is low; however, it is not easy to get into the global
market, it will require high capital. Second, customer usually has high loyalty with the
coffee shop they like.
Rivalry- High
It is a very captivity industry; there are not just the competitors from US, also from other
countries. Every countries or even every city will have their own famous coffee shop, the
competitors is everywhere.
Potential substitutes- High
There are plenty of substitutes for coffee, such as water, juice, tea, and milk. Starbucks sell
all of them, coffee is the main product, but they also have milk, water, and tea. Compare to
the coffee price for Starbucks, other substitutes has attractive price. Buyer’s switching cost
is also low; customers can easily switch to the other substitutes.
Bargaining Power of suppliers- Low
There are plenty of supplier that Starbucks can choose, the product are not that much
different for one supplier to the other supplier. Therefore the bargaining power of suppliers
is low.
Bargaining Power of buyer- medium
The switching cost for customers to other brands are low, but normally buyers are less
