Green Mountain Coffee Case
Porter 5-force model
Rivalry: a strong force
Green Mountain coffee as a premium coffee maker, has only two current large threats, Starbucks, and Seattle’s best coffee. The leader of the premium coffee industry is Starbucks and does have the necessary resources to effectively compete with Green Mountain Coffee. Another issue facing Green Mountain Coffee is the threat of new entry. Since the premium coffee industry is a growing market, and with a relatively easy entrance into the market, this in turn increases the overall amount of product in the market and creates an overabundance in product. To combat rivalry as well as ensure supply Green Mountain as been very active in starting up coffee bean farms in South America to ensure quality and availability in the future. One strong point that Green Mountain possesses is that as far as premium coffee producers go, they are highly visible in work place offices as well as available at many gas stations in which they lend or lease coffee making equipment to these establishments and offer superior service, train, and perform preventative maintenance on this equipment. The potential switching costs for the buyers of Green Mountain would make it unattractive for them to switch to another supplier.
Threat of Substitutes: A weak force
The reasoning behind why the threat of substitutes is a weak force is that on general the reason people drink premium coffee is not to satisfy thirst, it is to enjoy a tasty, hot, caffeinated beverage. The only true threat of substitutes would be premium teas, such as the brand that Starbucks has marketed, or regular coffee. However the threat of a buyer switching from premium coffee to standard coffee would most likely occur because premium coffee is not available.
Buyer Power: A Strong force that is weakening
Due to the nature of the still fledgling industry, new suppliers of premium coffee are entering the market all the time. Companies...
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