Question

Can I have an external environmental analysis related to PESTLE or the 5 forces for Starbucks, please?

Answer 1

External environment analysis related to 5 forces for starbucks is given below:

1. Competitive Rivalry - Strong

It determines the number of competitive firms in the external environment which affect the firm.

There are large number of firms which are competitors for Starbucks Inc. It represents a strong force. Variety of firms is moderate hence, a moderate force is experienced. However, the switching cost for customers is low which poses a strong force on the company. The customers are not disadvantageous in switching from one coffee house to another. Hence, overall rivalry can be rated as a strong force for Starbucks.

2. Bargaining Power of Customers - Strong

It is about the influence of individual customers on the business environment. The factors which contribute to the strong force of power of buyers are as given below:

The switching costs are low. Hence, The force is strong.

The availability of substitutes is high due to the presence of other coffee houses such as Barista, Dunkin Donuts etc. Hence, the force is strong.

The size of what customers buy is small, hence, the effect of individual customer is low on the company.

Overall, the bargaining power of buyers poses a strong force on the firm.

3. Bargaining Power of Suppliers - Weak

The influence of supplier on the company and the industry is analyzed in this force. The factors which lead to weak power of suppliers is given below:

High variety of suppliers is available round the globe. Hence, there is a weak force of supplier availability.

Influence of Individual supplier is low as there are many suppliers in the environment of starbucks. Hence, the force is weak.

Iverall, the power of suppliers is termed as weak for Starbucks Inc.

4. Threat of Substitutes - Strong

This force analyses the impact of substitute goods and services on the business environment. Low switching costs, high availability of substitutes and heavy affordability of substitute products poses a strong force on the business of Starbucks. There are a number of substitutes available in terms of Beverages (both hot and cold) various drinks(alcoholic and non-alcoholic) etc are the substitute products for the starbucks inc.

5. Threat of New Entrants - Moderate

This force analyses the threat of new entrants on the business environment and its impact on the industry. It also analyses the barriers which are posed to the new entrant to enter a industry and start a business. Moderate cost of doing business, Normal Supply chain cost and high cost of brand development, which is a strong force takes the overall impact of this fprce to the moderate to low level. The brand value of the already established companies is the result for this force to be lower.