Jai Shah 5 Forces

Starbucks upgrades espresso machines wsjcom np nd

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Unformatted text preview: 011. The rivalry between McDonalds and Starbucks is rife, with the Consumer Reports magazine, rating the McDonald's drip coffee as better tasting than Starbucks. (McDonald's Takes On A Weakened Starbucks) With companies aiming capitalize on the profit by entering the specialty coffee segment, competition and rivalry amongst firms has soared, and competitors have to engage in creative forms of competition to attract customers. Industry rivalry as a whole, therefore, is extremely high. Conclusion To summarize, the most powerful of Porter’s Forces in the specialty coffee industry is Industry Rivalry, which is tremendously high primarily because of Fast Food chains entering the market, that have access to similar economies of scale as Starbucks. Next, equally strong are the Threat of Substitute Products and the Threat of New Entrants. For substitutes, there are many alternatives, such as tea and carbonated drinks that act as a stimulant, emulating the effect of coffee to a certain extent. Despite this, many of the substitutes can be dismissed because they target a less wealthy demographic and taste distinctively diff...
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