1) Porter’s five forces include: Threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and rivalry among competing firms. I believe there is a low threat of new entrants for Starbucks. Starbucks deals with threat of new entrants by use of product differentiation. In a commodity market, Starbucks differentiated itself by building a strong brand name and a unique culture. Also their access to distribution channels helps them compete with the threat of new entrants. They regularly negotiated fixed-price purchase commitments to secure an adequate supply of quality green coffee and to bring greater certainty to the cost of sales in future periods. Exporters desired to be Starbucks suppliers because they purchased more high-quality coffee than anyone else in the world.
Starbucks does not really have to worry about the bargaining power of suppliers although the particular green coffee they use is subject to supply and price volatility. The supply and price can be affected by multiple factors in the producing countries, such as weather, and political and economic conditions. Starbucks has power because of the large amounts of coffee they do purchase makes them desirable to suppliers.
Starbucks does have to deal with bargaining power of buyers because there is little or no switching costs for their customers.
Starbucks has to deal with the threat of substitute products. There are many different beverages individuals can choose to drink instead of coffee. Tea, soda, water, juice, and so on are the many other choices consumers have. Starbucks deals with this by expanding its existing product line to include many other beverages, and they offer the customer a good experience by having quality customer service and a quality product.
Starbucks has a high threat of rivalry among competing firms. They compete directly