Jai Shah 5 Forces

Jai Shah 5 Forces

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Unformatted text preview: hased a drink at a Starbucks, compared to the combined 21 percent who did so either at all smaller chains or independent stores, despite the fact that Starbucks increased their prices in January of 2012. (Starbucks Brand Loyalty Keeps It Ahead Of The Artisanal Coffee Movement) They achieve this by loyalty schemes and brand imaging, which independent coffee shops or new entrants will struggle to achieve due to their small scale. On top of this, because the chains have so much financial power, a new entrant would easily lose should the entrant and the existing chain coffee shop enter into any form of price competition. In summary, therefore, although not so many resources are needed to set up a coffee shop and existing firms in the food industry can easily enter the market, the barriers to entry remain high because of the power of existing chain coffee shops and the unlikeliness of small independent coffee shops to expand nationally. The threat of entrants is therefore moderate. 2. Bargaining Power of Suppliers (Low) Coffee shops tend to buy coffee unrefined and undifferentiated from suppliers, and then undertake the second stage of production themselves. For this reason, when coffee is bought, it is completely homogenous. Of course, there are slight differences in quality depending on where the coffee is grown because of variances in soil and climate; however, these remain relatively insignificant because of the number of coffee suppliers in each particular region is so high. For example, in Kenya, a countr...
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This document was uploaded on 03/02/2014 for the course MANAGEMENT MOA at NYU.

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