Risk Management Analysis for Starbucks: Market Development and Penetration Threats
Overview
This document presents a comprehensive risk analysis for Starbucks focusing on market development and market penetration threats. It evaluates three major threats under each category—including competition from cheap retailers, established competitors, product imitation, policy limitations, and third-party supplier dependencies—and assesses mitigation strategies through avoidance, sharing, control, and prevention approaches.
What this case study covers
- Market Development Threats: Analysis of competition from cheap coffee retailers, established companies, and product imitation with probability assessments and risk values
- Market Penetration Threats: Examination of policy limitations, third-party supplier risks, and associated management strategies
- Risk Management Options: Evaluation of four mitigation approaches (avoid, share, control, prevent) for each identified threat with explanations
Preview
Market Development
Threat 1
Description | Type | Probability of Event | Cost Event | Risk Value |
Competition from cheap coffee retailers | Competition | Moderate | $25,000,000 | $25,000,000 |
Manage the Risk | Yes | No | Explanation |
Could you avoid the risk? | Yes | The risk could be avoided by enhancing marketing strategies and promoting Starbucks services across different marketing channels. | |
Could you share the risk? | Yes | Risk sharing can be attained by diversifying the product portfolio and ensuring that there are different prices for different customer segments. | |
Could you control the risk? | Yes | The risk can be controlled by buying out emerging retailers offering cheap prices. | |
Could you prevent the risk? | No | It is impossible to prevent the risk because there are many people interested to enter the sector |
Threat 2
Description | Type | Probability of Event | Cost Event | Risk Value |
Competition from established companies and outlets | Competition | High | $60,000,000 | $60,000,000 |
Manage the Risk | Yes | No | Explanation |
Could you avoid the risk? | No | Big and established companies have the wherewithal to make massive investments and compete with Starbucks. | |
Could you share the risk? | Yes | Diversifying the products could reduce the risk. | |
Could you control the risk? | Yes | Risk control can be controlled through mergers and purchase of competitors. | |
Could you prevent the risk? | No | The risk can never be prevented because there are many companies within the sector |
Threat 3
Description | Type | Probability of Event | Cost Event | Risk Value |
Imitation | Competition | High | $20,000,000 | $20,000,000 |
Manage the Risk | Yes | No | Explanation |
Could you avoid the risk? | No | Imitation arises from other companies as they seek to overcome the competitive advantage of Starbucks. | |
Could you share the risk? | Yes | Diversifying products and opening centers in new regions would share the risk. | |
Could you control the risk? | Yes | The main strategy to control the risk is buying out competitors and copyrighting products to avoid replication without permission. | |
Could you prevent the risk? | No | There is no way the risk could be prevented because it originated from the external environment. More Business samples |