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Competitive Strategies Case Study

Case Title:

The Coffee War: McDonald’s vs Starbucks

Publication Year : 2008

Authors: Shweta Nagar, Joel Sarosh Thadamalla

Industry: Retailing


Case Code: COM0217A

Teaching Note: Available

Structured Assignment: Available

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McDonald’s the fast food giant and Starbucks the coffee behemoth had built large empires over the years, creating strong brands with their core competencies. The name of McDonald’s had become synonymous with hamburgers and represented all American values, while Starbucks had created a unique coffee shop experience. The confrontation between Starbucks Corp and Mc Donald’s once seemed improbable but McDonald’s set out to poach Starbucks consumers when it announced plans to roll out coffee at nearly 14,000 U.S. locations in 2006. Hailing from very different corners of the restaurant world, the two chains gradually encroached on each other’s turf. Starbucks added drive-thrus and breakfast sandwiches and in doing so encroached on McDonald’s turf. The overlap between the two caused concerns among the investors and promoters about the commoditisation of brands and the question now was to retain the core competencies. The case highlights the issues of brand dilution and whether both retailers be able to deliver the same kind of experience they had built over the years in their new product offerings

Pedagogical Objectives:

  • To analyse the dynamics of the food service industry of the US
  • To analyse the core competencies of McDonald’s and Starbucks
  • To understand the rationale of Starbucks and McDonald’s expansion
  • To highlight the challenges involved in product offering enhancements
  • To discuss how McDonald’s and Starbucks would retain their core competencies.

Keywords : Food Service Industry US; Fast Food Industry US; Coffee Shops; Starbucks Experience; Convergence; Speciality Coffee; Howard Schultz; Baristas; Brand Dilution; Competitive Strategies Case Study; Product Offering Enhancements; Core Competencies; Breakfast Segment

'Contents : 
The Starbucks Experience
McDonald’s –The Fast food Giant
Starbucks - Number of Retails Stores
Coffee Consumption Pattern

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