Tracing Letters for Toddlers

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Table of content
Table of content 2
1. Definition of Industry 4
1.1 General Overview of the Industry 4
1.2 Customer Overview 4
1.3 Overview of Industry Profitability Factors 5
2. Industry’s dominant economic traits - overview 7
3. Competitive Forces that impact competition (Porter Model) 8 3.1 Competition within the Coffee Shop Industry 8
3.2 Substitute Products 9
3.4 Power of Suppliers 10
3.5 Power of Customers 11
4. Driving Factors that are causing the industry’s structure to change 12 4.1 Expansion/Growth 12
4.2 Product/Service Innovation 12
4.3 Collaboration/Partnership 13
4.4 Image/Lifestyle 13
4.5 Technology 14
5. Competitive positions & possible strategic moves of key companies 16 5.1 Starbucks 16
5.2 McDonald’s 17
5.3 Dunkin’ Donuts 18
5.4 Caribou Coffee 19
5.5 Coffee Bean & Tea Leaf 20
5.5 Peet’s Coffee 20
6. Key factors that determine success in the future 21
6.1 Product and Service Innovation in the Future 21
6.2 Technology 21
6.3. Education About Coffee 21
6.4 Cooperation 22
6.5 Quality Control, Consistency 22
6.6 Meeting Demand 22
6.7 Role of Regulations 23
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7. Attractiveness of the industry 24
7.1. Factors in favor of an attractive industry 24
7.2. Factors in favor of an unattractive industry 25
7.3. Conclusion 26
7.4. Most likely future scenario 26
8. Appendix 27
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1. Definition of Industry
1.1 General Overview of the Industry
The coffee shop industry in the U.S. includes 20,000 stores with combined annual revenue of about $11 billion. Major companies include Starbucks, Dunkin’ Donuts, Caribou, Coffee Bean and Tea Leaf, and Diedrich (Gloria Jean’s). The industry is highly concentrated at the top and fragmented at the bottom: the top 50 companies have over 70 percent of industry sales. Coffee is one of the world’s largest commodities. The top green coffee producing countries are Brazil, Colombia, and Vietnam. Many grower countries are small, poor developing nations that depend on coffee to sustain local economies. The U.S. is the world’s largest importer of green coffee beans and the largest consumer of coffee. With the exception of Hawaii and Puerto Rico, the United States’ climate cannot support coffee trees. Coffee consumption is highest in the Northeast, where over 60 percent of the population consumed coffee daily in 2005, according to the National Coffee Association (NCA). Per capita consumption is highest in the Central U.S., where coffee drinkers average 3.7 cups per day1. Major products sold by coffee shops include beverages as well as complimentary food items. Beverages include brewed coffee and tea; espresso drinks (cappuccinos, cafe lattes); cold blended beverages; bottled water; soft drinks; and juices. Food products include pastries, bakery items, desserts, sandwiches, and candy. Many coffee shops sell whole or ground coffee beans for home consumption. Some coffee shops sell coffee or espresso-making equipment, grinders, mugs, and other accessories. Most coffee shops serve high-quality, premium coffee known as specialty coffee. 1.2 Customer Overview

The typical and most committed coffee drinkers are 25 to 45 year old, affluent, educated adults. While baby boomers have driven the success of coffee shops, specialty coffee appeals to a diverse adult demographic, including college students and young adults. Larger companies may also sell coffee beans wholesale to commercial customers, such as grocery stores and restaurants.2 1First Research Industry Profile, http://www.firstresearch.com/, December 28,2006 2http://findarticles.com/p/articles/mi_m4021/is_2001_June_1/ai_76579399 4

1.3 Overview of Industry Profitability Factors
Consumer taste and personal income drive demand. The profitability of individual companies depends on the ability to secure prime locations, drive store traffic, and deliver high quality products. Large companies have advantages in purchasing, finance, and...
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