Porters Five Forces
Current Competitive Force
Porter's first force that Porter describes is current rivalry among existing firms. In the specialty eateries industry, Starbucks' current and direct U.S competitors are Diedrich Coffee, Seattle's Best Coffee, and Einstein/Noah Bagel Corporation (hoovers.com). The competition, however, is not equally balanced. Diedrich Coffee operates 370 coffeehouses in 37 states and 11 countries (hoovers.com). Seattle's Best Coffee operates 160 coffee cafes and 20 Italian coffee cafes in 17 states and 8 countries (hoovers.com). Einstein/Noah Bagel Corporation operates 460 bagel cafes in the U.S (hoovers.com). Starbucks has 4,709 locations in over 20 countries (hoovers.com). It is clear that Starbucks has few major competitors, and the competition has nowhere Starbucks' volume of operations. Starbucks is the leading retailer, roaster and brand of specialty coffee in the world. Smaller competitors, however, pose potential threats to the company. For example, the average Starbucks location draws on a population base of 200,000 (msn.com). In San Francisco and Seattle, Starbucks draws on population bases between 17,000 and 19,000 (msn.com). In cities where Starbucks does not draw on small population bases, smaller competitors can attract some of Starbucks' 200,000 person population base. A slowing industry market growth is another threat facing Starbucks. According to the market research firm Allegra, compound market growth between 1997 and 2001 was 57% (hoovers.com). From 2002 to December 2004, the market it estimated to grow 14%. (hoovers.com). Competitors are selling similar products, including specialty coffees as well as high quality foods. In this slowing market, competition is high. Score: -2
Threat of Potential Entrants
Porter's next force is the threat of Potential Entrants. Starbucks, being the world leader in its industry, has controlled access to distribution channels. Starbucks has exhibited this control over...
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