This strategy creates new business opportunity for Starbucks. By increasing the efficiency of the baristas in terms of delivering the order of its valued customers within the shortest period of time possible and maintaining the cleanliness and friendliness of the staff who are working within Starbucks coffee shops also creates competitive advantage for the company.
Almost a decade ago, Starbucks has been focused on saturating the domestic market in the U.S. Since the company has already saturated the U.S. market, Starbucks began expanding its business within the global markets. Since anybody can easily establish their own coffee shop, competition within the coffee industry is very tight.
As explained by Porter (1998, p. 1), competitive advantage is referring to the “search for a favorable competitive position within a particular industry”. Using the four major assumptions we have mentioned earlier, Starbucks management was able to successfully develop a competitive advantage in terms of improving the quality of services the company has been extending to its valued customers.
There is a very tight market competition with regards to domestic and global markets of coffee products. In line with this, rivalry within the coffee industry is tight due to the fact that the capital requirements in putting up a coffee shop are not so expensive. This makes barriers to entry within the local and international coffee industry low. Since anybody can easily sell brewed coffee, the threat for substitute products is very high.
Improving Starbuck’s services increases its market share within the coffee industry. Therefore, the company has gained more power over its suppliers. Since the company is able to purchase its raw materials by bulk, Starbucks is able to purchase its raw materials at a relatively low price. Considering that there are a lot of existing coffee shops around