· Low. With its scale of company,

Rivalry among
existing competitors: Moderate. The fixed expenses related
to Starbucks are high, as well as the retreat barriers because of the expenses
of assets and resources they have obtained. The switching costs to buyers are
low since there are many other coffee options, and the prices of Starbucks are
the highest. The increase of competition in Iceland from direct competitors is
rising from Dunkin Donuts with promotions on social media and opening 16 stores
all throughout the country. With Iceland’s lack of big commercial chains like
Starbucks and McDonald’s, smaller businesses have had a chance to blossom (Te
& Kaffi, Mokka, Stofan Cafe).

Bargaining power of
suppliers: Low. With its scale of company, Starbucks certainly has a
competitive edge in comparison with other rivals in the market. Though Starbucks
is able to buy its input goods from any supplier, the company spent 26% more
than the market price for all of its coffee in fiscal year 2014 report. Starbucks’
suppliers are comparatively limited, despite of the power Starbucks holds due
to the amount of goods demanded. For the input markets that are consisted of dairy
farmers and coffee bean plantations, price is decided by supply and demand.

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Consequently, substitutes are accessible if Starbucks offers for a new price
range because of the high competitiveness of the market. Furthermore, with the
disadvantages of isolated warehouses and low retail abilities, 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 the
present prices at other competing businesses. With the concept of higher
quality is based upon perception, the products of Starbucks are able to sell at
a higher price range. Therefore, prices are non?debatable as the consumers have no bargaining power with

Threat of new entrants: Low
to Moderate. The threat of newcomers
for Starbucks in Iceland is moderate. The saturation’s status in the field is comparatively
high. The starting investment to establish a coffee brand is not genuinely high
and the barriers are not high either. Newcomers in Iceland can challenge brands
like Starbucks at a local level. Although, their chance of being successful
stays low to moderate. Still, it gets lessened to an abundant extent by several
elements such as market share, brand loyalty and brand image. It is worth
mentioning that Starbucks has an advantage with its own network of suppliers
and high quality materials. With all aspects considered such as corporation’s
size and potential to purchase, it is no doubt that Starbucks has access to
better quality coffee and an enormous amount of suppliers worldwide. All these
elements act to moderate the amount of threat caused by the newcomers. Nevertheless,
Starbucks does not neglect the possibility of competition and has taken
adaptation into action. For example, the firm had renovated its coffee line to
provide small-scale, cheaper cups while utilizing new machines that create