Case Study Analysis Report 1: Starbucks: Going Global Fast

Starbucks has reinvented itself numerous times over the past 40 years and continues to experience substantial growth and contractions. They started as a small company, with its first location in Seattle’s historic Pike Place Market in 1971, and today, “there are more than 21,000 stores in 66 countries.” They have grown from not only selling coffee, but also offer a wide selection of teas, specialty drinks, pastries and an assortment of sandwiches for breakfast, lunch or dinner. They have also diversified their product offerings to include a wider variety of coffee beans, drink ware, and equipment to make coffee or tea at home.

1) Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.

Starbucks is a well respected brand of coffee that is known globally. As they dominate the market in United States, they have realized the potential growth in overseas markets and open its doors to going global. However, competing internationally is not easy for every company that’s why Starbucks has encountered certain challenges and issues as it enters foreign markets and grows globally.

*Starbucks pay does not come close to match the work load of their employees that created dissatisfaction among them affecting sterling service and even the coffee itself.

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

All of this gives me confidence that Starbucks—unlike many other retailers—has what it takes to endure as a vital part of the fabric of every community and neighborhood where we do business. In fiscal 2008, we invested in the Starbucks Experience and what we know our customers are looking for when they visit our stores. We put a significant emphasis on coffee—starting with the launch of Pike Place™ Roast, our new everyday brewed coffee. This emphasis included the introduction of the ™ Starbucks Mastrena, our new, lower-profile espresso machines, and the purchase of the company that

Starbucks’ story began in 1971 with a single outlet in Seattle, USA. From the onset, Starbucks set out to be pioneer in coffee industry and it offered one of the finest roasted coffee beans. Now, Starbucks operates in 67 countries and has opened over 22,000 stores. Currently, it is the largest coffeehouse chain in the world. It is estimated to have an operating income of $3 billion and employees around 191,000 people around the world. (Starbucks Company Profile | Starbucks Coffee Company, n.d.)

Starbucks, founded in 1971, is now the leading coffee retailer in the world with more than 23,000 retail stores in 67 countries. The company has been operating successfully in five major parts of the world. When the company was first formed, they had just one store in Seattle’s Pike Place Market where they used to roast and retail of coffee and tea. Starbucks Corporation incorporated themselves under the State of Washington laws in 1985. They became a public limited company on June 26, 1992 at $17 per share. Since then, the company’s common stock has been seen on NASDAQ.

Starbucks Corporation is an international coffeehouse chain based in Seattle, Washington, United States. Starbucks is the largest coffeehouse company in the world, with 21,000 stores in 49 countries, including around 11,000 in the United States, followed by nearly 1,000 in Canada and more than 800 in Japan. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks, and items such as mugs and coffee beans. Through the Starbucks Entertainment division and

The Starbucks Company is a purveyor of gourmet coffee that was founded in 1971 at Seattle’s Pike Place Market (Retrieved March 10, 2015, from http://www.starbucks.com/about-us/company-information). At that time Starbucks was a single storefront that offered premium, fresh roasted whole bean coffees. Since opening that single store Starbucks has grown to an international presence with branding that is recognizable worldwide. In addition, Starbucks has increased their product line beyond hot and cold coffee beverages to include hot and cold teas, packaged whole bean and ground coffees, high quality, fresh foods and coffee making equipment and supplies. Starbucks operates a total of 19,767 company operated and licensed stores and operates in 62 countries. In addition to the Starbucks’ brand the company also owns and operates other well-known brands such as Teavana and Seattle’s Best Coffee. (Retrieved March 10, 2015, from http://news.starbucks.com/uploads/documents/Starbucks_Fiscal_2013_Annual_Report_-_FINAL.PDF)

The start up capital requirement of accessing a foreign market is another impact to be considered for organisation (Alon, 2004). Eventhough, as we all known, Starbucks is a giant in coffee industry, it does not mean they can handle all the problem of capital in any country. The initial outlay of international orientation could be too high, even if the potential for potential profit is great.

In recent occurrence for Starbucks, the company business has gained exceptional growth. Howard Schultz who is the chairman and CEO of Starbucks stated that “Starbucks Q3 fiscal 2015 stands as among the strongest and most remarkable quarters in our over 23 years as a public company.” (Starbucks Corporation 2015, 1) Starbucks “net revenue $4.9 billion in Q3 FY15, which is an increase of 18% over Q3 FY14.” (Starbucks Corporation 2015, 1) Part of the increase revenue for the company was due to global expansion in the China/Asia Pacific area. Within a year time frame, Japan opened “1,592 new stores.” The impact sales from Japan help “increase the company income about 22% to $938.6 million in Q3 FY15.” (Starbucks Corporation 2015, 1) Safe to

Factors in the global environment provide both opportunities and strengths for Starbucks. Opportunities such as increased revenues, further expansions, and achieving their goal of becoming the most respected brand worldwide. Starbucks also faced threats. These threats include dealing with growing antiglobalization overseas and their huge risk of less return on each overseas store, this deriving from overseas operations being run by local partners instead of Starbucks

Starbucks’ retail entry model in the United States does not have the same strategy as their international model. In the states Starbucks holds great control as a corporation, but in international territory, country partnerships, cultural, government laws and politics play a very important role in Starbucks’ entry strategy. Starbucks has set it sights globally since the coffee market has come close to saturation in the U.S. which will give them the opportunity to continue to expand without fierce competition. Starbucks has looked to countries like India and other emerging markets with great growth potential to set down new roots. Starbucks recognizes India as a great choice to expand business internationally but also recognizes the complexity in the same market after several attempts to enter without success.