Starbucks’ opened its first store in 1971, at Pike Place Market in Seattle, by three partners Zev Siegel, Jerry Baldwin and Gordon Bowker. Starbucks opened with the intent of being a gourmet coffee bean retailer and coffee equipment seller. The Starbucks name and logo came from two influences; a character named Starbuck in the classic book, Moby Dick, and a mining camp on the base of Mt. Rainier called Starbo. These two influences were combined to create Starbucks. In 1982, entrepreneur and current chairman, Howard Schultz, joined the company. When Schultz joined the company, he wanted to change the company’s focus away from in home coffee production and coffee bean retailing, to also …show more content…
Bargaining Power of Buyers
Porter’s next force is Bargaining Power of Buyers. Starbucks’ customers are the buyers. The Preferred Office Coffee Provider is a plan developed by Starbucks in which companies can buy the ingredients and tools necessary to brew “the perfect cup of Starbucks Coffee,” in large quantities for their offices. This is the only opportunity found in Starbucks.com for a customer to buy large quantities of their products. Starbucks’ typical customer buys small quantities of their products. Products purchased at Starbucks are highly differentiated and unique. At Starbucks.com, it is possible to buy a large number of products, from coffees, ice cream, to music and coffee mugs. This is an opportunity for Starbucks. Customers will face no switching costs in switching premium coffee suppliers from Starbucks, to, for example, Seattle’s Best. This is a threat to Starbucks. Another threat to Starbucks is that their customers have the ability to brew their own coffee. Starbucks has tried to offset this threat by offering Preferred Office Coffee Providers as well as directions on how to make the perfect cup of Starbucks Coffee at home.
Bargaining Power of Supplier
Porter’s fourth industry force is bargaining power of suppliers. Coffee is the world’s second largest traded commodity. South and Central America produce the majority of coffee traded in the world. Starbucks depends upon both