Michael Porters Analysis Of Starbucks

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Michael Porter, a Harvard Professor introduces his ideology of the Five Forces model that shapes the competition in the industry. Each force is interrelated and therefore leads into the other to show the elements directly involved in the further success or ultimate success of the firm. Starbucks Coffee Co. throughout its existence since 1971, with its great management team, innovative style of thinking and strong will to succeed in compliance with its mission and vision statements has and continues to overcome its barriers by recognizing such strategic planning as those included in Porter’s five forces model. The model includes such components as Barriers to Entry, Supplier and Buyer Power, Threat of Substitutions, and most importantly the Industry Competitors. Starbucks throughout its existence has addressed each and every one of Porters forces with a positive edge that has greatly contributed to the success of the company. Starbucks took many risks and spent capital that it really did not have. To build a corporation based on intuition and a trip to Italy has undoubtedly paid off in the long run which is evident throughout the year that Starbucks has been in operation. Howard Schultz, CEO and founder of the company, has stuck to his conviction not to “sacrifice long-term integrity and values for short-term profit.” He knew if he played his cards right and stuck to his guns it would only be a matter of time that Starbucks would become the world largest coffee industry in the world. He wanted the company to become and international outlet for coffee consumers which not only included men and woman but also addresses the needs and wants of those of all ages and nationalities, children, students and any other category of people that have and interest in Starbucks diverse product line. With constant dedication to the company’s vision and mission statement and believing in the value of market share and name recognition and how critical they are to the success of the company, he was able to achieve his goal within a few years. During this time of course he has been able to open a total of 1,100 stores and continues to do so until this day. Starbucks Coffee Co. continues to address the issues introduced in Porter’s Five-Force Model as such: New Entrants (Barriers to Entry i... ... middle of paper ... ...mployees). Starbucks also only acquires companies that comply with the ethical beliefs and standards set forth by the company because it is believed that this is the only way a company merger can survive or be successful in the long-term. When a foreign company does not comply with the standards set forth by them, Starbucks reacts instantaneously. An example of such an instance was in 1995 when they reacted to the neglectful treatment of the workers in Guatemala who were earning less than $3.00 a day, by enforcing a code of minimal working conditions and pay for foreign subcontractors. The company’s guidelines call for overseas suppliers to pay wages and benefits that “address the basic needs of workers and their families” and to only allow child labor when it does not interrupt required education (58-11).” Starbucks can be considered a trendsetter not only in products but also in the area of work ethics by sticking to its mission of the company and applying it whether working domestic or foreign. Starbucks is socially responsible and responsive to not only the issues affecting the company and the employees but also to that of the community through which they are able to exist.

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