Starbucks Competitors Analysis

Competitors Analysis

Starbucks can sustain a competitive advantage by collecting information about and analyzing the activities,products,and the services of its competitors (Porters,1980., Chen 1996., & Raouch &Santi ,2001).Chen (1996) and Raouch and Santi (2001) in their studies,reveal that there six major benefits that can be arise from the practise of competitors anlysis which are as follows:

1.Sensitization

2.Legitimation

3.Inspiration

4.Banchmarking

5.Improved planning

6.Improved desicion making

In addition ,Gilligan and Wilson (2000) suggest that the evaluation and the analysis of the competitors ,force organizations to answer the following questions:

1.Who are our competitors?

2.What are their objectives?

3.What are their strategies?

4.What are their strengths?

5.How they are likely to react?

Starbucks can answer the above questions by implementing the competitive intelligence system (CIS)that will assist the company to gather information regarding its competitors (Meek, Meek&Ensor , 2002).Some types of information that Starbucks can use to evaluate its competitors are the annual competitive reports, and the government statistics ,However the company can evaluate and analyse competitors advertising strategies ,and pricing policies by implementing observation techniques that will help the firm to collect information. The competitors of Starbucks in North America are Dunkin Donuts ,Tim Horton ,McDonalds, Diedrich Coffe , Seattle's Best Coffee, and Einstein/Noah Bagel Corporation. The Company also faces a loy of copmrtition on a global level. For example, in Europe and specifically. In Cyprus Starbucks face competition from Costa Café, McDonalds, and from national coffee shops.

Michael Porter's Five Forces Model

The marketers of Starbucks can use the Michael Porter's five forces model to analyze the nature of the company's domestic and global marketing competition in the coffeehouse industry and the analysis of the consumers. The figure below indicates the model of Michael Porter's five forces

Michael Porter's Five Forces Model

The examination and the analysis of these competitive forces facilitate the marketers of Starbucks to position the company in the coffehouse market by taking advantage of the opportunities and avoiding the threats of this external environment. The first force influencing competition is the competitive rivarly between existing players . In the U.S.A Starbucks is facing the competition from Dunkin Donuts, Tin Horton, McDonald, Diedrich Coffee, Seattle's Best Coffee, and Einstein/Noah Bagel Corporation. Diedrich Coffee operates 370 coffeehouses in 37 states and 11 countrys, Seattle's Best Coffee operates 160 coffee cafes and 20 Italian coffee cafes in 17 states and 8 countries and Einstein/Noah Bagel Corporation operates 460 bagel cafes in the U.S. Starbucks has 4,709 locations in over 20 countries (Hoovers, 2008., Starbucks, 2006., & Starbucks, 2007). In Cyprous, for example, the major competitors of Starbucks are McDonalds, Costa Cafe and other Cypriot coffee shops. Specifically, in Cyprus Costa Cafe has6 coffeehouses, McDonaldshas7 stores that sell coffee as well and Starbucks has 6 coffee shops. Consequently, Starbucks faces competition not only from these two global brands but also from national coffee shops which are smaller competitors and pose a great threat to the company. In addition, the competition that Starbucks faces is high because of the following reasons:

1. There are many companies that have the same size and similar strategies.

2. The differentiation between players and their products is high and this leads to a high price competition

3. The barriers for exit the industry are extremely high

The second force influencing comprtition is the threat of new entrans. However, the threat of new entries in this industry depends on the extent to which there are barriers to entry. There are several fundamental sources of barriers to entry that are as follows:

1. Economies of scale: Starbucks achieve economies of scale and it becomes difficult