The Broadway Cafe - Assignment Example

As part of developing a new business strategy for Broadway Cafe, Porter’s five forces will be used in examining the external environment of the business. Eventually, the Cafe’s critical success factors that contribute to the development of its comparative advantage will be identified and tackled in details. External Environment of Broadway Cafe New Entrants Establishing a coffee shop business requires very minimal capital requirement. Therefore, coffee is widely sold within the neighborhood not only by large-scale restaurants but also the local fast food chains and grocery stores.

Since the threat for new business entry is very high, market competition within the coffee industry is very tight. Rivalry among Existing Competitors The threat of product substitution and barriers to entry is high. In line with this, we should consider that Broadway Cafe is selling specialized coffee products which are incomparable to instant coffee products or other brand-less brewed coffee sold in supermarkets, grocery stores, and fast food chains. In the absence of Starbucks Coffee operating within the neighborhood, rivalry among existing competitors is low. . Aside from competing with Starbucks, coffee drinkers could also decide to simply purchase low-cost instant coffee that are readily available from the local supermarkets and grocery stores.

Bargaining Power of Buyers Considering the options that buyers have when it comes to purchasing coffee products, the bargaining power of buyers against Broadway Cafe is very high. In case Broadway Cafe’s valued customers becomes less satisfied with the coffee quality and services delivered to them, each one of them has the advantage to decide on purchasing their coffee either from the local fast food chains that offers coffee or directly from Starbucks. Bargaining Power of Suppliers As a result of globalization, the bargaining power of suppliers is low because Broadway Cafe has the business advantage of purchasing its coffee products from highly competitive supplier who could offer the company with high quality coffee beans at a discounted price.

As a result of purchasing coffee bean products by bulk, Broadway Cafe could easily sell a wide-range of coffee flavors at the lowest possible price. Comparative Advantage and Critical Success Factors of Broadway Cafe over Starbucks In relation to high coffee bean quality, affordable coffee prices, and reliable customer service, the critical success factors of Broadway Cafe include the company’s strong brand equity and brand image (Bennett & Rundel-Thiele, 2005; Yoo, Donthu & Lee, 2000). In line with this, keeping the customers satisfied is one of the strength of Broadway Cafe.

Over the years, the company managed to deliver what its customers want. Since Broadway Cafe was able to monopolize the coffee business within the neighborhood for a long