Should Starbucks lower its prices as advised by some market analysts in order to prevent McDonald's' from making significant inroads in Starbucks' business? If you conclude that Starbucks should not lower its prices, what would you suggest that the company do instead?

1. What is Starbucks' generic competitive strategy? Explain.
2. What activities in Starbucks' value chain seem to be essential to effectively implement its strategy?
3. What resources and capabilities does Starbucks possess?
4. What sources of sustainable competitive advantage does Starbucks have? Explain.