Gourmet Coffee Market Model

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The economic market has always been fluctuating and the world has witnessed the fall of many mega empires. Various financial institutions have been phased out and others being bailed out by governments. However, these situations can be overcome by proper economic evaluations and strategies. This proposal will focus on how a new firm can penetrate in the gourmet coffee market and the strategies it can follow for better sustainability and profitability. 2.0 MARKET STRUCTURE There are four basic types of market structure namely, perfect competition, monopoly, oligopoly and monopolistic. Perfect Competition: is the market where no participants have the full power to take over the market and it involves many firms which produce homogenous…show more content…
It is always easy to penetrate and exit from the market. 2.1 PORTER’S FIVE FORCES MODEL Michael Porter introduced a framework that classified industry as being influenced by five forces. These five forces or factors help determine whether or not a business can be profitable based on other competitors in the industry. These five forces are: 1. Competitive Rivalry: It examines how strong the competition is in the market which is determined by the number of competitors and their specialties. Rivalry is high when there are few firms selling a product and when consumers easily switch to competitors offering for lower cost. For example: the new firm penetrating into the gourmet coffee market will face intense competition from quick service restaurants and specially coffee shops like Starbucks, Coffee Beans, The Illy, Green Mountain Coffee Inc., Dunkin’ Donuts which also offers small latte, cappuccino and espresso…show more content…
supplies beans from Latin America, Indonesia and Africa. 3. Bargaining Power of Customers: It evaluates the power of buyer to affect the price of the products. Customers have power when there are less customers compared to the large number of suppliers and when there are choices to switch from one product or service to another. This force lowers the profitability by bargaining for more services with higher quality. Starbucks server over five million customers a week. 4. Threats of New Entrants: This examines the easiness or difficulty for a new firm to penetrate into a particular market. The easier for a firm to join the marketplace, the higher the risk of a business’s market share being depleted. Barriers to entry include economies of scale, government policies, patents and proprietary knowledge, capital requirements, switching costs and so

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