Starbucks Corporation, May 2015.

Starbucks Corporation, May 2015

Ngo Minh Tan - M0745035

Vu Hoang Thien Kim - M0745028 Pham Nhat Anh - M0745027

1. Situation analysis

1. Product market

1. Market size, grow up or not

Table 1: Starbucks’ Stores by Country, 2017 - 2014[pic 1]

Market size was growing up gradually based on the total store in each year. There are two types of stores, including company-operated stores and licensed store. However, with the global financial crisis hitting the company, chairman and founder Howard Schultz returned as CEO at beginning of 2008 and to save in operating costs, he carried out the closure of almost US stores (approximately 90%) and EMEA stores (roughly 70%). Instead of, Schultz had been done international expansion to other regions especially China/Asia-Pacific - emerging markets.

1. Market share for the major competitor, degree of the competition intense

Table 1: Leading chains of coffee shops in the US, 2014

[pic 2]

Starbucks has been referred to as one of the largest coffee houses within the coffee market. In term of chains of coffee shops, Starbucks does not has a single direct competitor. Its closest competitor is Tim Hortons coffee house with less than 10% number of stores as compared to more than 10,000 stores of Starbucks situated in United States. Starbucks hold a dominant position within coffeehouse market.

Table 2: Brand market share of packaged coffee shops in the US, 2014

[pic 3]

As well as competition from the Dunkin’ Donuts in premium packaged coffee and Green

Mountain in single-cup capsules, by 2014, Starbucks was US brand leader in retail sales of both two market shares above.

1. (Whether there is a) new trend for the market, demand side or supply side.

The attractiveness of the global coffee industry can be seen as relatively high. Positive market growth in emerging markets requires Starbucks to shift the strategic focus away from saturated markets in developed economies (mostly the U.S. and Europe) to ascending economies such as China, India, and Brazil. Market attractiveness is moderated by high bargaining power of buyers and sellers.

1. Industry analysis

1. Industry structure, and its major drivers which will determine the profitability

The food service industry is one of the largest industries in the United States. As shown in Table A3 below, we can see that the food service industry was ranked 4th in all US industries. And Starbucks is one of the top three leading companies in this industry. We use Michael Porter's 5 competitive pressure model to analyze the structure of the food service industry.

Table 3: The profitability of US industries, 2000-2013

[pic 4]

1. Potential Entrance

In general, the entry barrier of the food service industry is quite high with the cost of joining the industry, characterizing products and establishing an appropriate distribution channel system: