Competitive Analysis of Starbucks

This analysis focuses on the competitive advantage of Starbucks in the coffee industry, the challenges it faces, and its strategic position. It also discusses the industry structure and the main source of competitive advantage.

Competitive analysis of
Starbucks

Introduction
The coffee based industry of
USA has been operating in a
profitable manner for the last
few years. The industry has also
shown huge levels of growth in
the revenues and profitability.
Starbucks is a major
organization which operates in
the coffee industry of USA
(Team, 2018).

About the company
Starbucks Corporation is a
coffeehouse chain which has
its origin in the US. The
company operates more than
28,000 stores all over the
world. The concept of
“second wave coffee” has
been introduced by the
organization in coffee
industry of the country
(Starbucks.com., 2018).

Analysis of the specific industry
The structure of the coffee industry
is able to facilitate the operations
of the organizations. The industry
has grown in a huge manner in last
five years, Many threats are also
present towards the operations of
organizations which are present in
the industry. The prices of products
are affected by the worldwide price
of coffee (Team, 2018).

Main source of competitive
advantage
The most important source of
competitive advantage for the
operations of Starbucks is the
product differentiation. The
consumers are attracted towards
the products with the help of proper
levels of innovation. Preferences of
consumers have been taken into
consideration by the organization
(Kim, Kim & Holland, 2018).

Strategic position of the
company
The process of market
segmentation is implemented by
Starbucks for targeting the
consumers. The consumers are
thereby divided into different
groups. The strategic position of
the organization is thereby
developed with the help of
different types of products
(Tucker, 2017).

Strategic position
continued……
The availability of substitutes in
the industry is an important
factor which affects the power of
buyers. The suppliers are highly
powerful in nature and play a key
role in formation of strategic
position. The prices of products
are affected by the raw materials
which are provided to the
company (Van Loo et al., 2015)..

Key challenge faced by the
company
The challenge which is faced by
Starbucks in the industry is
based on substitute products. The
customers have huge number of
options which are available in the
industry. The supply chain based
costs related to development of
new organizations are low. This is
an important challenge faced by
the company (Tucker, 2017).

Conclusion
The study can be concluded by stating that Starbucks is
able to operate in the coffee based industry in a sustainable
and profitable manner. The competitive advantage which
has been developed by the company in the industry is based
on the different types of products which are offered to the
consumers. The challenges which are faced by the company
are thereby based on the buyers and the suppliers.

References
• Kim, S. H., Kim, M., & Holland, S. (2018). How customer personality traits influence brand
loyalty in the coffee shop industry: the moderating role of business types. International
Journal of Hospitality & Tourism Administration, 19(3), 311-335.
• Starbucks.com. (2018). Starbucks – The Best Coffee and Espresso Drinks. Retrieved from
https://www.starbucks.com/
• Team, T. (2018). Starbucks Is Maintaining Its Competitive Edge. Retrieved from
https://www.forbes.com/sites/greatspeculations/2016/10/13/how-is- starbucks-
maintaining-its-competitive-edge/#fef348a759c1
• Tucker, C. M. (2017). Coffee culture: local experiences, global connections. Routledge.
• Van Loo, E. J., Caputo, V., Nayga Jr, R. M., Seo, H. S., Zhang, B., & Verbeke, W. (2015).
Sustainability labels on coffee: Consumer preferences, willingness- to-pay and visual
attention to attributes. Ecological Economics, 118, 215-225.