· Rivalry amongexisting competitors: Moderate. The fixed expenses relatedto Starbucks are high, as well as the retreat barriers because of the expensesof assets and resources they have obtained. The switching costs to buyers arelow since there are many other coffee options, and the prices of Starbucks arethe highest.
The increase of competition in Iceland from direct competitors isrising from Dunkin Donuts with promotions on social media and opening 16 storesall throughout the country. With Iceland’s lack of big commercial chains likeStarbucks and McDonald’s, smaller businesses have had a chance to blossom (Te& Kaffi, Mokka, Stofan Cafe). · Bargaining power ofsuppliers: Low. With its scale of company, Starbucks certainly has acompetitive edge in comparison with other rivals in the market. Though Starbucksis able to buy its input goods from any supplier, the company spent 26% morethan the market price for all of its coffee in fiscal year 2014 report.
Starbucks’suppliers are comparatively limited, despite of the power Starbucks holds dueto the amount of goods demanded. Consequently, substitutes are accessible ifStarbucks searches for a new price range because of the high competitiveness ofthe market. Furthermore, with the disadvantages of isolated placements and low retailabilities, suppliers can not forwardly take actions by themselves. Basically,Starbucks possesses all the power in the connections it has with its suppliers.
· Bargaining power of buyers: Low. The price ranges of Starbucks’beverages is determined based on the price elasticity of its customers and thepresent prices at other competing businesses. With the concept of higherquality is based upon perception, the products of Starbucks are able to sell ata higher price range. Therefore, prices are non?debatable as the consumers have no bargaining power withStarbucks.
