Global Competition

1344 Words Oct 20th, 2013 6 Pages
Global Competition Starbucks is the unquestionable market leader in the U.S. and is in the early stages of an international expansion plan that could lead to more revenue coming from international than domestic locations within the decade ( Starbucks has significant strengths in coffee business. It is the current market leader with over 17000 stores worldwide. It has no debt and uses internal cash flow for expansion. Also since all of its stores are company-owned, it is able to maintain the image and quality. It also spends very less amount on advertising and marketing, and relies primarily on the word of mouth. Starbucks also has strong brand recognition by consumers. It is known for its high quality …show more content…
With these steps Starbucks can manage it supply chain and erode substitute’s products that put caps on industry profits.
The fiscal report of 2010 showed a gradual rebound of store sales growth from 2007 to
2010. Company operated stores that open through the year in 2007, 2008, 2009 made a sales growth of 5 percent, negative three percent, and negative six percent respectively. Starbucks also faces fierce completion from international coffee chains; this was evidenced by its seventy percent profit drop in the first nine month of the year it was introduced in Japan (Burneett,
Starbucks faces the dilemma of demand out weighing the supply of coffee which has led to the increase in coffee prices. The cost of coffee for Starbucks amounts to seventeen percent of the overall cost of goods sold (Data monitor, 2011). The continued rising cost can lead to stall growth for Starbucks in the future due to possibility of increase in its product price. Since
Starbucks rely on third party suppliers for it products, trade restrictions, exchange rate and political unrest can affect the delivery of coffee to it plant and to its final consumers.

However sourcing is still a big challenge for Starbucks in Africa and Asia. Starbucks would have to make changes to accommodate different supply chain. Due to Starbucks international presence the company faces an immediate