LO+10

LO 10 - Explain the basics of foreign and domestic Competition
The competitive environment encompasses the number of competitors a firm must face, the relative size of the competitors, and the degree of interdependence within the industry. Declining population growth, rising costs, and shortages of resources have heightened domestic competition. Yet with an effective marketing mix, small firms continue to be able to compete with the giants. Meanwhile, dwindling international barriers are bringing in more foreign competitors and offering expanding opportunities for U.S. companies abroad. Competitive Factors Starbucks faces many Competitors. Gas stations, and McDonalds are some of Starbucks’ competitors but they also face coffee shops in Lancaster like Square One and The Prince Street Café. Home-Brewed Coffee brands like Maxwell House and Folgers are also very important competitors. While McDonalds is a large Company, there are just as many Starbucks in Lancaster as there are McDonalds and in most cases they are located very close to each other. Gas Stations like WAWA, Turkey Hill and Sheetz are also very large competitors for Starbucks. The smaller coffee shops in Lancaster like Square One and The Prince Street Café can’t compete in size with the larger chains, although they can compete with product quality and price.
 * The Number of Competitors a Firm must face ||
 * The Relative Size of the Competitors ||
 * Degree of Interdependence within the Industry ||

Causes of the Increase in Competition v Companies now must work harder to maintain profit and market share v Effective marketing mixes are solutions to increased competition Ø They help smaller businesses compete with larger ones In order to keep up with th e changing economy, Starbucks is changing the way they do business. They have just released a new instant coffee called VIA that will be sold in Starbucks stores as well as in grocery stores like Costco and target. The new instant coffee will cost $9.95 for a 12 pack which will equal out to cost less than a dollar a cup. Starbucks has also started to introduce breakfast deals for $3.95 which include coffee cake or a ham and egg sandwich with a cup of coffee. Starbucks hopes that the new coffee will bring in new customers looking for value as well as keep the old customers that don’t mind buying a $4 cup of coffee. Starbucks CEO has also announced that he will not be taking a salary this year.
 * Decline in Population Growth ||
 * Rising Costs ||
 * Shortages of Resources ||

Easy Access to Countries Worldwide U.S Companies Abroad || Starbucks has stores located worldwide. Starbucks is also heavily involved in global competition due to the fact that most coffee is grown outside of the U.S. Starbucks currently offers coffee made with beans grown from Latin America, Africa and South America.
 * Increase in Foreign Competitors || Offering more Opportunities to
 * Ex: Textiles, Watches, Televisions || Cheaper costs of labor ||
 * Have switched emphasis from low cost to quality || More resources ||

Citations [] [] [] = = __ http://harding.edu/slwilliams/mkobj03.htm __