· 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.
Consequently, substitutes are accessible if Starbucks searches for a new price
range because of the high competitiveness of the market. Furthermore, with the
disadvantages of isolated placements 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.