Starbucks Industry Analysis (Malaysia) Essay Example

entrants since the profit is attractiveness. The intensity of competitive rivalry - medium Starbucks current Malaysia competitors are Coffee Bean & Tea Leaf, Dome Cafe, Gloria Jean’s Coffees, local brand competitor Old Town White coffee, and even some local smaller competitors. Old Town operates over 60 outlets and Coffee Bean with 58 stores in Malaysia 2007. While Starbucks is still the bigger company with its totals 84 stores in Malaysia 2007. However, there is the threat for Starbucks since the competitors have become more and increase the number of stores may affect the consumer choices and frequency of customers visit stores.

In addition, Coffee Bean has operated more stores compare to Starbucks in East Malaysia, Sabah and Sarawak. Coffee Bean with 9 stores compared to Starbucks with only 2 stores. Coffee Bean is 6 years earlier than Starbucks enter into East Malaysia market. Thus, it is important to make the market of consumers accept to the Starbucks brand. In addition, all of these competitors are selling similar products thus the competition is high. Bargaining power of customers - high Normally buyers in the premium coffee industry remain individual consumers and buy small quantity of the product.

Customers who purchase premium coffee such as Starbucks can represent their social status. This makes the buyers less sensitive to the price and its give the industry more control over pricing. This can decrease the bargaining power of the buyer. However, the expansion of the premium coffee industry created a large number of competitors who offered high quality of premium coffee.

In this case, Starbucks may harder to differentiate itself through quality. With some newer entrants and competitors such as Mc Cafe

who claim to offer premium coffee at reasonable price. In this trend, the power of consumers will increase. Bargaining power of suppliers - low There it not much bargaining power of supplier. Starbucks depends upon its relationships with coffee producers and suppliers of green coffee.With green coffee commodity prices at relatively low levels in recent years, Starbucks has used fixed-price purchase commitments in order to get a good quality and certainty cost of green coffee, and paying a fair price to coffee products.

In addition, Starbucks has their own roasting plant. Starbucks uses only its own supply of products and services thus the threat of supplier is less.

References

1. Starbucks 2006 Annual Report - Narrative. Retrieved July 13, 2008, from http://media.corporateir.net/media_files/irol/99/99518/reports/StarbucksAnnualReport.pdf
2. Starbucks corp – SBUX, Quarterly report which provides a continuing view of a company’s financial position. Retrieved July 13, 2008, from http://investor. starbucks. com/phoenix. zhtml? c=99518&p=irol-sec&secCat01.1_rs=11&secCat01.1_rc=10&control_symbol=&control_symbol= July 13, 2008, from http://Starbucks. com. my/en-US/ July 14, 2008, http://www. coffeebean.com. my July 14, 2008, http://www. coffeebeaneastmsia. com.
3. My America’s most admired companies 2007, FORTUNE magazine. Retrieved July 14, 2008, from http://money. cnn. com/magazines/fortune/mostadmired/2007/snapshots/10567.
4. Shannen Wong (2008, February 19), Starbucks opens its 100th outlet. The Star online. Retrieved July 15 2008, from http://biz. thestar. com. my/news/story.asp? file=/2008/2/19/business/20080219163932&sec=business
5. Company profile. Retrieved July 15 2008, from http://www. oldtown. com. my/index.php?option=com_content&task=view&id=17&Itemid=68
6. Schave De Rozario( 2008, July 30). McDonal’s RM300mil upgrade. The Star online. Retrieved July 15 2008, from http://biz.thestar. com. my/news/story. asp? file=/2007/7/30/business/18424351&sec=business