International Rivalry Analysis: Starbucks Vs Dunkin Donuts

This report presents a comparative analytical discussion on the international business rivalry between Starbucks and Dunkin Donuts using VRIO analysis framework.

Running head: BUSINESS MANAGEMENT
International Rivalry Analysis: Starbucks Vs Dunkin Donuts
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Introduction
This report presents a comparative analytical discussion on the international business
rivalry. To analyze the business situation and performances, the resources and capabilities of two
businesses will be analyzed using VRIO framework and those will be compared. VRIO stands
for Valuable, Rare, Inimitable and Organization. VRIO analysis is an analytical tool that helps to
evaluate the resources of a firm and thus, it suggests the competitive advantage for the firm
(Knott, 2015). In the given report, the international business rivalry and competitive advantage of
Starbucks and Dunkin’ Donuts will be examined by using VRIO analysis framework.
Company information
Starbucks is an American coffee and Beverage Company and a coffeehouse chain that
operates across the world. It was established in Seattle in 1912 and currently has around 30000
stores around the world. The brand has always focused on product quality and customer service.
The primary business strategy of Starbucks is product differentiation. The company focused on
premium product quality, excellent customer service and ethics to establish the business
(starbucks.com, 2019).
Dunkin’ Donuts is another very popular coffee and baked products chain, which is a rival
of Starbucks. It is also a multinational coffee and baked food chain. However, the number of
stores is around 11000 across the world, which is quite less than Starbucks. This company also
focused on product differentiation as the major business strategy, and along with that, it also
focused on serving baked breakfast items. The brand offers good quality coffee products at lower
prices and offers very quick customer service (dunkindonuts.com, 2019).

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The resources and capabilities of these two companies are analyzed and compared using
VRIO framework.
Starbucks: VRIO analysis
Resource/
capability
Valuable Rare Inimitable
and non-
substitutable
Organized Competitive
advantage
Strong
international
presence
Yes Yes Yes Yes Sustainable
comparative
advantage
Variety of high
quality coffee
Yes No No Yes Realized
Temporary
competitive
advantage
Strong brand
image
Yes No Yes Yes Competitive
parity
Customer
service
Yes No No Yes Realized
Temporary
Comparative
parity
Store
atmosphere
Yes No No Yes Realized
Temporary
competitive
parity
Supply chain Yes Yes No Yes Realized

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Temporary
competitive
parity
Table 1: VRIO analysis of Starbucks
From the above table, it can be said that, Starbucks has a very strong global presence, which
satisfies all the four criteria in the VRIO framework. Thus, it leads to sustainable comparative
advantage. The company provides a wide variety of specialty coffees and beverage products
which is a valuable capability and organized to exploit. However, this is not rare or non-
inimitable. The other companies in this industry are also providing wide variety of coffees and
beverages and hence, are not limited to only Starbucks. It has temporary competitive advantage
in this aspect. Starbucks has very strong brand image, which is valuable, non-inimitable, and
organized to exploit while it is not rare in the industry. Thus, it results in comparative parity. The
customer service and store atmosphere are also valuable and organized but not rare or non-
inimitable; hence, these also lead to temporary comparative parity. The supply chain of the firm
is highly efficient and hence valuable. It is also rare and organized but it is inimitable. Thus, this
leads to temporary comparative parity (Sminia, 2017).

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Dunkin’ Donuts: VRIO analysis
Resource/
capability
Valuable Rare Inimitable
and non-
substitutable
Organized Competitive
advantage
Coffee for the
average
Americans
Yes Yes No Yes Sustainable
comparative
advantage
Convenient
drive thru
services
Yes Yes Yes Yes Realized
competitive
advantage
Strong
presence in the
Eastern USA
Yes Yes No Yes Competitive
parity
Quick
Customer
service
Yes No No Yes Realized
Temporary
Comparative
parity
Store
atmosphere
Yes No No Yes Realized
Temporary
competitive
parity
Pricing
strategy
Yes No No Yes Realized
Temporary
competitive

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parity
Table 2: VRIO analysis of Dunkin' Donuts
In the above table the VRIO analysis of Dunkin’ Donuts is presented. It can be seen that that
Dunkin’ Donuts has a brand image of coffee for average Americans, which satisfies all the four
criteria and thus, results in sustainable comparative advantage. It also gains comparative
advantage for its highly convenient drive thru services. Although it has very strong brand image
in the Eastern U.S., but it is imitable and hence, it gives a temporary comparative advantage in
comparison to Starbucks. It enjoys temporary comparative parity regarding quick customer
service, store atmosphere and pricing strategy (Hopkins, 2017).
Conclusion
From the above analysis, it can be said that Starbucks is heading the competition though
its strong global presence and variety of products offered. On the other hand, Dunkin’ Donuts
has captured a larger share in the Eastern U.S. in comparison to other parts of the world.
However, it offers variety of coffee, beverages and baked food items at a price lower than
Starbucks and hence, it has gained a comparative advantage as coffee for the average Americans.
However, due to brand value and international market share, Starbucks has more sustainable
comparative advantage than Dunkin’ Donuts.

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References
dunkindonuts.com. (2019). Dunkin’ Donuts. Retrieved from http://www.dunkindonuts.com/
Hopkins, R. A. (2017). Determining Your Role in Global Markets. In Grow Your Global
Markets (pp. 13-31). Apress, Berkeley, CA.
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), 1806-1822.
Sminia, H. (2017). The resource-based view. In The Strategic Manager (pp. 71-92). Routledge.
starbucks.com. (2019). Starbucks. Retrieved from https://www.starbucks.com/