Starbucks

Reference List:

Geereddy, N n.d., Strategic Analysis of Starbucks Corporation, [Online] [Accessed October 16, 2014] Available URL: http://scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_analysis.pdf

Lingley, R 2009, Marketing Strategy and Alliances Analysis of Starbucks Corporation, [Online] [Accessed October 16, 2014] Available URL: http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1005&context=busi_fac_pubs

Wardhana, F 2012, Strategic Management of Starbucks, [Online] [Accessed October 16, 2014] Available URL: http://www.academia.edu/6692996/Strategic_Management_of_Starbucks_Company

Warrington University n.d., Starbucks Coffee Company, [Online] [Accessed October 16, 2014] Available URL: https://warrington.ufl.edu/centers/retailcenter/docs/TeachRetail_CaseNoteExample.pdf

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Any Questions?

MGMT389

Presented by:

Hanisha Kumar

Nataliya Shmat

Atabay Atabayev

Dzhafar Sayid

5.0 International Market Entry Strategy and Motives

The Globalization of Starbucks

Starbucks grew from a single store to more than 16,700 locations in over 50 countries.

8.0 Ethics and CSR: Fair trade vs Free Trade

BUT! Data shows a different picture

"We take a holistic approach using responsible purchasing practices, farmer loans and forest conservation programs." -Starbucks.com

This strategy has increased shareholder wealth, diversified company earning's base, and increased profits

Free trade: trade without barriers

Fair trade: non-exploitative and environmentally sound growing policies

Why entry was undertaken via Joint Venture?

7.0 Starbucks as a force for Globalization

Joint Venture allows companies to capitalize and grow on the basis of:

1. More resources

2. Access to new markets

3. New and improved Technology

4. Use of existing marketing arrangements or existing distribution network of one of the party is possible.

5. Access to improved resources like experienced technicians, experienced staff, greater capacity, financial resources etc. are possible through joint venture business.

6. Sharing of costs and risks with partners.

7. Diversification of business by producing new products or new area of business.

8. Increased productivity and grater profits.

9. Exchange of Products: Joint venture companies can offer their existing product to sell through the partners network and share the profit.

6.0 Entry into the Japanese Market: Joint Venture

Reasons to enter Japanese market

Criteria by which Starbucks chose partners in Asia

• As Starbucks, Sazaby Inc. is a lifestyle company based in Japan
• Japan is the third largest coffee consuming nation after U.S. and Germany
• It has the largest economy in the Pacific Rim
• Demand for coffee blends has doubled in Japan
• Specialty blends are the fastest growing segment in the industry
• Quality of coffee products in Japan are high

• Similar philosophy to Starbucks in terms of shared values, corporate citizenship, and commitment to be in the business for the long haul
• Multi-unit restaurant experience
• Financial resources to expand the Starbucks’ concept rapidly to prevent imitators
• Strong real-estate experience with knowledge about how to pick prime real estate locations
• Knowledge of the retail market, and
• The availability of the people to commit to our project

3.0 Situation Analysis

INTERNAL: SWOT

2.0 Introduction And Portfolio

Weaknesses

Strengths

Product Portfolio

• High visibility locations to attract customers
• Valued and motivated employees, good work environment (Stock options)
• Customer base loyalty
• Widespread and consistent
• Knowledge based

• Lack of internal focus (too much focus on expansion)
• Ever increasing number of competitors in a growing market
• Self cannibalization
• Cross functional management
• Product pricing (expensive)

External Analysis: PESTLE

1.0 Case Overview

Threats

Opportunities

• Tazo Tea (USA)
• Coffee Concepts (Hong Kong)
• Evolution Fresh Inc (USA)
• Olympic Casualty Insurance Co (USA)
• Seattle Coffee Company (USA)
• Seattle's Best Coffee (USA)
• Coffee Equipment Company (USA)
• La Boulange Bakery Bread (USA)

• US market saturation
• Coffee price volatility in developing countries
• Negative publicity from poorly treated farmers in supplying countries
• Consumer trends toward more healthy ways and away from caffeine
• Corporate behemoth image
• Cultural and Political issues in foreign countries

• Technological advances
• New distribution channels (delivery)
• New products
• Distribution agreements
• Brand extension
• Emerging international markets
• Continued domestic expansion/domination of segment

Economic

Political

Technological

Environmental

• ■Buying power of consumers
• ■Local currency exchange rates
• ■Local economic environment within each market Starbucks operates
• ■Taxation level

Socio-Cultural

• ■Emergence of innovative technology
• ■Biotechnological developments
• ■Developments in agriculture

• ■Industry-specific rules and regulations
• ■The level of relationships between USA and countries that produce coffee beans
• ■The level of political stability within a country

• ■Environmental rules and regulations
• ■Environmental disasters in countries producing coffee beans
• ■ Global warming and other environmental issues in a global level

• ■Changing family patterns in USA and Europe
• ■Consumer preferences
• ■Changing work patterns
• ■Changes in lifestyles of population
• ■The level of education of population in local markets
• ■Changing values among population

4.0 Origin of Concept

Outline:

PESTLE

Legal

• ■Introduction of policies and regulations by health authorities about caffeine production and consumption
• ■Introduction of tougher customs and trade regulations
• ■Licensing regulations related to the industry.

Opportunities for business exist everywhere

Starbucks is integrating its operations on a global scale.

First target market for international strategy was Japan. (Via joint venture)

Focus is on selling a "Third Place Experience"

Significant focus on employee training to maintain a unified corporate culture.

CEO Howard Schultz took a concept that has been famous in Italy for decades and successfully duplicated it in the USA

1.0 Case Overview

2.0 Starbucks Introduction and Portfolio

3.0 Situation Analysis: Internal (SWOT) and External (PESTLE)

4.0 Origin of Concept

5.0 International Market Entry Strategy and Motives

6.0 Entry into the Japanese Market: Joint Venture

7.0 Starbucks as a force for Globalization

8.0 Ethics and CSR: Fair trade vs Free Trade

9.0 Reference List

Cross-cultural communication