Starbucks case for Aol

McDonalds Corp. has recently announced that it was determined to increase sales of coffee beverages, which it deems a profitable and relatively underexploited opportunity. McDonalds Corp. plans to achieve its goals by further reducing the prices of its specialty coffeeswhich are already much cheaper than those at coffee chains such as Starbucks.

Several market analysts have suggested that Starbucks should react with major price cuts to its own offerings, even though it is unlikely that it could reach prices as low as those offered by McDonalds. However, other analysts have criticized this recommendation, noting that it, in order to lower its prices Starbucks will have to also engage in significant cost reductions. Starbucks main cost drivers are the cost of its high quality beans, labor and rent.

What is Starbucks generic competitive strategy? Explain.

What activities in Starbucks value chain seem to be essential to effectively implement its strategy?

What resources and capabilities does Starbucks possess?

What sources of sustainable competitive advantage does Starbucks have? Explain.

Based on the six dimensions of the general environment, identify and evaluate the impact of major trends affecting the coffee business.

Identify key issues in Starbucks industry environment that the company should closely monitor.

How strong is Starbucks competitive position?

How would you evaluate Starbucks performance to date, on the basis of the information available?