Threat of substitute products - medium
The premium foods and even fast foods industry, there are substitute products for Starbucks. When the other industries can satisfy the customer need that coffee industry is satisfying then there will have a threat for Starbucks. Other beverage industries such as premium foods industry – Tony Roma’s, Chili’s both have provided a good atmosphere and environment for customers. These restaurants also offer free refill for certain drinks which is one of the threat in switching Starbucks customers to them since these restaurants also provide many of delicious food for customers. Fast foods industry such as Mc Donald, Carl’s Jr. both of the restaurants not only offer free refill for soft dinks but also for their coffee drinks product. Some of the consumers might come to these restaurants because of the cost per cup of coffee. In this case, image is very important for Starbucks, as well as the company’s ability to innovate and differentiate.
Threat of the entry of the new competitors - high
Fortune ranked Starbucks number one in innovation, quality of management, people management and also quality of products or services in the food industry 2007. According to The Star online, in Malaysia, Starbucks currently holds 45% to 50% of local gourmet coffee market. Starbucks is still the world and Malaysia leader in its industry. Starbucks is constantly innovating and showing strong product differentiation in their industry. However, some competitors such as Mc Café will be introduced by Mc Donald’s in the next five years. Mc Café offers premium coffee with reasonable price. Although Starbucks now is the strongest in its industry however must be aware of the threats to potential entrants since the profit is attractiveness.
The intensity of competitive rivalry - medium
Starbucks current Malaysia competitors are Coffee Bean & Tea Leaf, Dome Café, Gloria Jean’s Coffees, local brand competitor OLD...