Overall we could determine that the quick service coffee industry is an attractive industry to the incumbent firm because of the lower power of both suppliers and buyers and low threat of entrants. 2.2 VRIO Analysis 2.2.1 Brand Image “Coffee for the Average American” Dunkin’ Donuts focuses on their product and prices that are preferred by and appeal to the working middle class American. DD able to sells more than 30 cups of freshly brewed coffee each second and serving nearly 1 billion coffee by the cup each year or approximately 2.7 million cups a day (dunkindonuts.com, 2014).
The low price good quality pricing strategy that establish by DD has separates them from other competitors like Starbucks as Starbucks implement high quality and high price pricing strategy (PRABHAVA UPADRASHTA, 2012).
The everyday American on their commute, who stops for a cup of coffee and a breakfast donuts, pays the menu price and continue on their way.
DD will not only option for consumer to get a cup of coffee because all of these competitors have use same kind of strategy like offers coffee, breakfast and even added various flavors of coffee such as latte, cappuccino, frapp’s which is competitive with these market. [Online] Available at: https://sites.google.com/site/starbucksversusdunkindonuts/vrio-analysis [Accessed 30 July 2014].
Continuously, DD also has combine the food with coffee with lower price to provide good quality of coffee and food like sandwich, tuna fish on a toasted balgel with cheaper price.
Therefore, there will still don’t have another Starbucks or DD in the market because the market in U. If new competitors would want to enter market, they will need to provide good quality coffee and also with reasonable price because the demand of market has changed since DD has provide variety product with cheaper coffee. [Online] Available at: files.pomona.edu/jlikens/Senior Seminars/Likens2012/reports/[Accessed 30 July 2014].
2.1.4 Threats of Substitutes In this industry, there are higher level of threat of substitutes because there are many alternatives to this product include Starbucks Coffee, Mc Donald’s Coffee, tea and those is store-bought coffee or snacks.
S with their products and price its offer and have many franchises located around, therefore, it is very valuable as its help company to gain market share.
According to annual report 2013, the revenue has been increased from 2.29m (2012) to 2.49m (2013). S is also rare because most of the coffee chain only have fewer location and not compare to the share size and abundance of Dunkin’ Donuts in the eastern U. However, franchises business model is susceptible to imitation by other companies as there are many other quick service restaurant like Starbucks, Mc Donald who have become experts in franchising their own business model.
Therefore, DD has offer store-bought alternatives in order for customer to seen as a substitutes that poses a threat of profit even though the profit margin on these product are low.
2.1.5 Rivalry among Industry There are few most prominent rivals of Dunkin’ Donuts such as Starbucks, Mc Donald. [Online] Available at: https://sites.google.com/site/starbucksanddunkindonuts/business-strategy/vrio-analysis [Accessed 30 July 2014]. Dunkin' Donuts procurement goes national, United State: supplymanagement.