Consider a local coffee shop, a Starbucks store, and a retail gas station that offers fresh coffee in its convenience stores.Required:Characterize these stores according to the Porter strategy framework.

Question

What will be an ideal response?

Answer 1

While student answers will vary, discussions of the value proposition and the demands that this places on the organization should be included in the answer.

For example:
Local coffee shop:
Porter Framework: Probably best considered a focused competitor - focusing on regional or local coffee preferences while delivering a consistent product and service experience.

Starbucks coffee shop:
Porter Framework: At least at the outset, Starbucks was a product differentiation-based competitor delivering on a unique, branded coffee shop experience. More recently, they have to focus on delivering a consistent product and service experience and on 'efficiency' as local and regional competitors have entered the market. This has resulted in the closure of many stores.

Retail gas station convenience store:
Porter Framework: The retail gas station is a focused competitor in the sale of coffee. It addresses a niche market of customers who seek a 'one stop' shopping experience and who have an immediate need to be alert (i.e., drivers who consume coffee as a deterrent to drowsiness). The coffee is typically not of a quality to warrant 'branding' (although collaborations with branded coffees such as Starbucks occurs), and the price, while not high by branded coffee standards, can be set above cost because of the convenience that is offered.