Answering Casestudy

Answer the question 1:

Comparison between 2 industries: coffee industry (which Starbucks joins) and the mobile phone industry.

I. The key environmental influences (PEST)

In coffee industry, social change and technological change are two main factors in external business environment that influence much on he change of industry.

Social changes:

- The effect of demographic pattern: this industry tends to cater to the needs of particular groups which is normally over 18 year old and different gender which affect the total number of available customers. Most of people who are over 18 like to drink coffee.

- Change in tastes and habits: some customers have brand loyalty, but some pay attention about the services and conveniences, for example, the ambience of the venue, including decor and musical background, ease of payment and even the availability of Internet facilities.

Technological changes:

- The information technologies such as: Internet and E-commerce have great impact on this industry. Thanks to this Starbucks can attract more customers and reduce the costs: Starbucks innovates to cut transaction costs and speed up service, introducing automatic expresso machines in some stores and prepaid Starbucks cards. In its 60 Denver stores it is possible to prepay on the phone or the Starbucks Express website and have the coffee waiting on arrival at the store. Starbucks claims the largest Wi-Fi network in the world, a high-speed wireless Internet service to about 1,200 stores in North America and Europe, developed together with Mobile International and Hewlett Packard.

- As we see in the case study "There is nothing in the technology of coffee production which creates a significant obstacle to entering the industry. The major entry problem is location". Therefore, the point here can involve the transportation and distribution channels can be paid attention more.

In mobile phone industry, the key factor is technological change. In modern society, people would like to accept the high technology and the conveniences. The old group requires a mobile phone that easily uses and has some specific functions, suitable with their physic. And the greatest threat was the convergence of mobile telephony with PDAs (Personal Digital Assistants) and with the internet (e.g. MSN Messenger). If mobile phone industry has 3G, the Internet is increasing fast with new innovations.

In conclusion, coffee industry is affected much by 2 factors: social & technological change and mobile phone industry is affected much by only one factor: technological change. And we can see that both of industries have being seen the enormous influences of the Internet on them.

II. Porters' Five Forces

Comparison:

• The rivalry of both industries is very strong.

• Threat of new entrants: In coffee industry, new entrants easily jump in and the main problem in this industry is the location. However it is very difficult to join the mobile phone industry because of enormous costs incurred and the reputation of existing companies in industry.

• Bargaining power of buyers: it is low in coffee industry whereas is high in mobile phone industry.

• Bargaining power of suppliers: because Starbucks needs high quality of inputs, somewhat the suppliers have power. In mobile phone industry suppliers have more