Porters Analysis

Answer 1: Porter's five forces analysis suggest that the market in which Dunkin Donuts and Starbucks operate is competitive. According to his force Industry competition, the rivalry in between the coffee stores is fierce. Where Starbucks open stores across the street from the other coffee shops, McDonalds have started giving coffee for a dollar, any size. Other local coffee shops are also there which provide a variety of coffee and people are getting used to it. So the competition is not only amongst the chain stores but is with the local shops also. Although according to Porter's second rule of new entrants, at first it seems a new entrant competition is not so important but when looked into detail, there are local shops who are providing a different taste of coffee and are gaining popularity. Other food chains such as Subway and McDonalds have also started giving coffee and have recently come into the coffee market. I personally am kind of bored of the flavors of Starbucks and Dunkin Donuts and prefer local coffee shops over the chain shops to experience a new flavor. According to Porter's third force of substitute products or services, many companies have started giving a variety of flavors and are also giving the option of tea including Iced tea, Chinese tea, English tea, herbal tea and many more. People are becoming conscious of the amount f caffeine they are taking in and thus are looking into other options. In this area also, the market is very competitive. The bargaining power of suppliers and customers are also the very important forces that drives the market. Nobody wants to go to a dining place and order an expensive coffee every day. They would prefer a place where coffee is more affordable and the service is fast. Believe it or not, in the morning everybody is in rush and do not want any delays. The suppliers now know there is not one buyer for their coffee. If one company stops taking it, they can sell it to some other company. The demand for