CPA 117

Topics: Coffee, Starbucks, Caffeine Pages: 59 (6641 words) Published: April 24, 2014
Case Scenario 3 Starbucks- Module2
1. Industry: is a global café and coffee shop industry.P7p2 2. Value chain: P7
3. Industry life cycle
Global:

Mature

P7p8

Australia

Mature

P16p8

US:

Mature

P8p2

China:

Growth

4. PESTEL
Global
Technology



The development of coffee machine forecasting the expansion in the home-brew market, which has negative impact in the revenues of coffee shop. [F/-] P9p1

Economic



Global industry profitability has come under pressure from a variety of sources, including rising coffee prices. [H/-] P7p7
The world price of coffee has risen sharply in the past few years due to growing demand and supply shortages. [H/-] P7p7
Key retailers in the industry have experienced the rising cost in wages, electricity and insurance. [F/-] P7p8
As coffee is a non-essential product, it was one of the first and hardest hit products due to the GFC impact. [H/-] P8p3
Global market has matured, the demand and expectation of
high-quality coffee has fuelled competition. [H/-] P7p8






Overall: The economic environment has a negative impact in this industry as the increasing cost and supply shortages.



Social




The industry has benefited from social trends
 Busier lifestyles
 Heavier work loads
 Longer working hours
These factors have boosted demand for ready-made food and have presented opportunities for cafes serving. [H/+]] P7p4
Public concern about health and nutrition has leading to increased scrutiny of the amount of fat, sugar and salt in foods. [H/-] P7p5 The consumption of coffee has shifted towards more expensive, premium blends of coffee. [H/+] P7p7

Overall: The social trends and demand from customers will have a positive impact to lead the whole industry focus on innovation to capture the growth opportunities.
Environment Adverse weather in some of the world’s primary growing areas has also placed a strain on supply. [F/-] P7p7
Political, Legal N/A
US


Economic



The decline in disposable income in most developed world would has a negative impact in coffee consumption as coffee is a non-essential product, it was one of the first and hardest hit products due to the GFC impact. [F/-] P8p3

Factors affect income level such tax and unemployment level also has a negative impact in the growth of industry. [F/-] P8p3

Social



Approximately 855of coffee drinkers prefer to make their own coffee at home. This trend may decline sales in coffee shop. [F/-] P9p1

Technology



The development of coffee machine forecasting the expansion in the home-brew market, which has negative impact in the revenues of coffee shop. [F/-] P9p1
Environment, Political, Legal N/A
China

Social





China is a predominantly tea-drinking nation, which people prefer tea rather than coffee. This trend may block the development of coffee industry. [H/-] P10p1
Compare with the Europe and North America countries have over 400 cups annual coffee consumption and 200 cups in Japan, China has less than 5cups per year. This figure indication the industry has a blank market to growth. [F/+] P10p1

Economic, Technology, Environment, Political, Legal N/A
Australia
Social



The strong independent coffee culture in Australia, which places an emphasis on quality instead of quantity, has restricted the influence and growth of coffee chain stores. [H/-] P11p1
Economic, Technology, Environment, Political, Legal N/A

Five forces:
1. New entrants-low and decreasing, positive impact to future and historical profitability.
In the caféand coffee shop industry, high capital requirements including exporting coffee bean, rent, wages for the processing the value chain make the industry relatively difficult to enter by multiple smaller operators.(figure 2 and P.7 vain chain) In addition, the global industry profitability has come under pressure from a variety of sources, including rising coffee prices, wages,...
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