Skip to main content

9 - Tacit Collusion - Starbucks

Although there is no clear evidence of Starbucks collusion, but we can guess it employs strategies to discourage competitors to directly compete. Think about, how many coffee places we know within our own city? Maybe 3 or 4, and Starbucks is mostly one of them. So why is it this way? Starbucks is continually sending soft signals but providing good quality of product with excellent service which is consistent almost every Starbucks store. Other food-chain competitors such as McDonalds and Dunkin are focused on food items and Coffee as side item, whereas for Starbucks Coffee is the main product and even Starbucks not trying to enter food market whole heartily. Starbucks strategy about food is just to offer minimum options with just enough food which would go along coffee. This strategy might not be threating to McDonalds or Dunkin, because as food is side items for Starbucks, Coffee is side item for them.

Although this non-forcible market co-operation working well for these companies, but this really limits options for the customers. For better food options, someone will look for better food chains or local stores, but for better quality they must to go Starbucks or some local coffee shop which is serving at par or better coffee with similar or less price than Starbucks. For e.g. in Memphis, French Truck coffee is one such local vendor for quality coffee. But they are not available at all places like Starbucks.


Comments

Post a Comment

Popular posts from this blog

15 - Starbucks International Strategy

Starbucks mostly wants to own its own stores for best experience and it has done that successfully in US. Although drinking coffee in bar was not famous when Starbucks was started in 1970's. Howard Schultz inspired from this idea in Italy, started serving brewed coffee in US. He was an American Businessman and understood the economics, work, and local cultures of US, so was likely aware of the risks and opportunities of the time. He made Starbucks a success story in US and now we can find Starbucks stores in almost all the major and even small US cities.  But replicating same success would not that be easy. It would need lot of capital, cultural experiences, macro and micro economic indicators, and specifically language and accent. Some of these things can be replicated using the local hires, but creating a success at the level Starbucks would want to would not be easy without local partnerships and alliances. Starbucks heavily relied on license model for half of its stores and als...
Post a Comment
Read more

14 - Starbucks Acuiqsitions

Starbucks acquired many companies over the years. Let’s look at these acquisitions strategies employed by Starbucks.  Teavana • Type of business: Tea and Accessories • Acquisition price: $620 million • Date purchased: December 31, 2012 Starbucks acquired Teavana as Product Extension Merger and started offering loose leaf tea and tea related products in its stores and online. Although this acquisition gave Starbucks 379 new locations, but Starbucks closed them all instead.  La Boulange • Type of business: Bakery Chain • Acquisition price: Reported $100 million • Date purchased: June 4, 2012 This is mix of Vertical Integration and Product Extension acquisition. Since Starbucks started selling bakery products in its stores as Product Diversification strategy, it was sourcing these bakery products from La Boulange. Later Starbucks decided to acquire La Boulange to vertically integrate its operations and kept 400 locations came with this acquisition. Later Starbucks dec...
Post a Comment
Read more

3 - Mr. Porter Coffee Please

1. Threat of Entry             a. Economies of Scale: Starbucks currently have 5 roasting facilities and opening a new one in China, which will be biggest so far and will serve approx. 6000 Starbucks in China itself. At this scale, it is very hard for any new entrant to compete with Starbucks on cost. https://u.osu.edu/commoditychaincoffee/manufacturing-page/ https://stories.starbucks.com/stories/2020/starbucks-announces-new-roasting-facility-in-china-extending-its-global-roasting-network/             b. Product Differentiation: Starbucks not only buys best coffee beans out there but also help them grow. They always use Arabic Coffee beans, which are considered best in quality for dark roasting and never mixed them any other type to cut down the cost and increase profit. “Starbucks Arabica beans are different from regular Arabica beans. At every step, we go to grea...
Post a Comment
Read more