Introduction
Every business needs to examine the external environment to make different strategies in the competitive business environment. The purpose of the company is to derive competitive business insights and analyze the industry situation. In strategic planning or decision-making process, the external environment evaluation is the best approach. The business sustainability and competitive advantage can be ensured through making some effective strategies, and obviously, it is possible a due to the effective evaluation. External environmental evaluation is good to have the sustainable advantage over the competitors. Adaptation of several strategies, based on this effective evaluation is lucrative for any organization.
Company (Starbucks)
Starbucks, a prominent coffee chain in the United States of America, has gained and sustained the success in the competitive industry through a perfect evaluation of the business environment. Through good business intelligence, the management team has implemented some remarkable strategies. Now, due to the changing trends in the business environment, there is a need to use a strategic analysis tool to evaluate the external environment and make decisions in the best interest of the company. The company is dealing with different coffee products for customers, and competitive analysis is required to obtain competitive factors.
Starbuck Porter’s Five Forces Analysis
Bargaining Power of Buyers
The bargaining powers of buyers are moderate to low due to different factors. For Instance, customers, in the competitive market contain low bargaining power due to high quality and differentiated coffee products by the company. Interestingly, customers are willing to pay high process as compared to the competitors due to the quality. However, on the other hand, customers intend to navigate several market trends, which can also make the bargaining power high. The degree of high buying power due to new trends is comparatively low. However, it exists, and the management is aware of it (Chasan, 2016).
Bargaining Power of Suppliers
The bargaining power of suppliers in the competitive coffee industry is low due to many opportunities; the company created for suppliers around the globe. Captivatingly, the company is focusing on concentrated suppliers and enabling the flow of raw material or ingredients ethically. For Instance, the company is looking to develop local coffee farmers through effective supplier policies. Standardizing the supplier’s process is helpful for the company, which keeps the bargaining power low. Due to better relations with suppliers, suppliers seem loyal to the company. Educating tea and cocoa farming communities is a good decision, and it enables the low bargaining power of suppliers (Taylor, 2017).
Threats of Substitutes
The threat of substitutes is high in the market, and it is due product portfolio expansion by other retail chains and beverages. It is a fact that competitors are coming up with differentiated products for customers. Also, the visibility of substitutes in coffee market is also in the limelight due to the product imitation. The availability of substitutes in the coffee market is triggered by the product development process. Furthermore, it has been revealed that the competitors are offering coffee products at low price, and it depicts the lower switching cost for customers (Team, 2016).
Threats of New Entrants
A threat of new entrants is moderate due to opportunities for new entrants to compete with Starbucks at a local level. When an organization intends to enter the market, it does not need to come up with big capital. The company, a new entrant in the coffee industry, can enable the easy formation. However, it seems tough for new entrants to grab the big market share like start bucks. Thus, it makes the threat of new entrant moderate. Quality, brand image, differentiation, business ethics, and social responsibilities are several factors, which have been carried by Starbucks. Conversely, it may take much time for new entrants carry these factors and gain the competitive advantage over existing coffee giants (Team, 2016).
Competitive Rivalry
The competitive rivalry in the competitive market is high for this company due to emergences of local and international coffee giants. There are many firms, which are offering diverse profits and services to increase the market share. For Instance, top competitors in the industry are Dunkin Donuts and McDonalds, which also contain high market share. The number of firms is depicting competitive strategies in the market to make the difference, and big a top coffee giant. Starbucks has to react to business sustainability. Some firms, low switching cost, and diversity in coffee products are top strong forces, which makes the rivalry quite intense (Taylor, 2017).
These were some aspects of porter five forces model regarding the Starbucks Company. The trends of the business have been changed, and the company, through better adaptability and versatility, can make several changes, as far as the competitive actions in the competitive coffee market are concerned (Taylor, 2017).
Conclusion
In the end, it is to conclude that the external evaluation of the business is necessary to make competitive strategies. To make customer assertive and responsible, it seems imperative to make strategies, which are better than the competitors. With the passage of the time, different trends are to be navigated to alter the internal process and come up with the products, which are pertinent. A good recommendation, based on this competitive evaluation, is to adopt the customer-centric approach, as it is better for long-term business sustainability. By considering all factors, derived from this strategic analysis tool, the Starbucks management can gain the sustainable competitive advantage for a long run.
References
Chasan, E. (2016, May 17). Starbucks Raises $500 Million With Its First Sustainability Bond. Retrieved from https://www.bloomberg.com/news/articles/2016-05-16/starbucks-raises-500-million-with-its-first-sustainability-bond
Taylor, K. (2017, December 13). How Howard Schultz went from living in Brooklyn public housing to growing Starbucks into an $84 billion business. Retrieved from http://www.businessinsider.com/starbucks-howard-schultz-success-story-2017-12
Team, T. (2016, October 13). Starbucks Is Maintaining Its Competitive Edge. Retrieved from https://www.forbes.com/sites/greatspeculations/2016/10/13/how-is-starbucks-maintaining-its-competitive-edge/#bdbe1e8759c1
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