· 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. For the input markets that are consisted of dairyfarmers and coffee bean plantations, price is decided by supply and demand.Consequently, substitutes are accessible if Starbucks offers for a new pricerange because of the high competitiveness of the market. Furthermore, with thedisadvantages of isolated warehouses and low retail abilities, suppliers cannot forwardly take actions by themselves.
Basically, Starbucks possesses allthe power in the connections it has with its suppliers.