Value Chain Analysis for Starbucks

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Cereal Industry: Global, Irish and European
Market Size and Growth Rate:
Global Figure 1 (Appendix...1)
YearMarket Size (Billion)Growth %
CAGR, 2004-2008: 3.3%
European Figure 1.1(Appendix...1.1)
YearMarket Size (Billion)Growth %

CAGR, 2004-2008: 1.3% Figure 1.2
%Market Share (Company’s)

Number of Rivals (Appendix...2)
Global, European and Irish Markets are oligopolies; they are dominated by a few large companies. GlobalEuropeanIrish (Hot Cereals)
General MillsCereal Partners WorldwideOdlum’s
KraftWeetabix LtdKelkin
(Breakfast Cereals Industry Profile: Europe 2009), (Breakfast Cereals Industry Profile: Global 2009) Scope of Competitive Rivalry (Appendix...3)
* The scope of competitive rivalry is multinational
Buyer needs and requirements(Appendix...4)
* Supermarkets/Hypermarkets – need to meet consumer demand * Catering companies – need to buy in large bulk capacity * Hospitality industry – need smaller individual selection of boxes to meet consumer needs * Individual customers – all have different needs and requirements (taste preferences or health reasons) Degree of product differentiation(Appendix...5)

* Packaging – Different colours and styles are used to differentiate products * Taste – Different flavours of cereal are made to distinguish one product from another * Companies use huge advertising budgets to convince customers that there product is different and unique Product innovation(Appendix...6)

* Success driven by innovation
* Large scale budgets spent on research and development
* Co-branding products with other companies
* Diversifying brands in new directions e.g. Coco Pops, Coco Wheels Supply/Demand conditions (Appendix...7)
* Farmers grow most of the ingredients that are used in breakfast cereals, such as wheat, grain and oats * Other suppliers include manufacturers of plastic and cardboard * The U.S. import sugar, so companies operating there are reliant on suppliers to supply them sugar Demand

* Customers can change brand or buy substitutes with little cost effect * Hypermarkets/supermarkets (retailers) decide who gets shelf space * Retailers have to stock popular brands to satisfy consumer demand Pace of Technological conditions(Appendix...8)

* High pace of technological change in the cereal industry * New technologies are necessary to keep up with product innovation * New technologies are allowing the cereal industry to ship their raw materials globally were it can be manufactured cheaper * The internet is allowing these companies to order supplies, distribute products and communicate with customers quicker

Vertical integration(Appendix...9)

The Global cereal industry is a vertically integrated industry. Companies participate in more than one stage of the industry * Kellogg’s are involved in the manufacturing and marketing of their products, they operate in many countries * General Mills are involved the manufacturing, marketing and distribution of their products * Kraft Foods manufacture and market food and beverages in many different countries

Economies of scale...
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