Market Expansion. A Couple Years Ago Starbucks Found Themselves

With time the small industry of coffee has modernized into a multibillion dollar industry that surrounds the world. With the growth of the industry there has been many world wide changes. Over the past 30 years coffee shops have jumped to the front of the public culture. New coffee shops have changes the face of American cities along with British, German, Colombian, Kenyan and Indonesia towns to name few. (Coffee a comprehensive guide to the bean, the beverage, and the industry) Around the world coffee has become part of the daily culture and coffee shops have grown to accommodate the massive demand that people ask for. Without the growth of the industry there would be a shortage of the product and many would have to go without their beloved beverage. In the United States alone there has been a massive increase in the number of coffee shops. In 1980 the number of coffee shops was a year 2,000 and by 2008 there was an astonishing 27,715. (Coffee a comprehensive guide to the bean, the beverage, and the industry) This was an increase of over ten times in the short time. 11,000 of those stores, almost half, were Starbucks one of the biggest coffee brands in the worlds. The growth of Starbucks is due to the work of Howard Schultz a worker for the company before they became as massive as they are today. Starbucks started very small in Seattle, Washington in the mid 1970’s. Howard bought out the owners and then went on to turn the small company into a massive corporation. (Coffee a

42). Training doesn’t stop there, however. Baristas can expose themselves to additional training if they desire to become Coffee Masters, Shift Supervisors, or Store Managers. In fact, Michelli (2007) reports, “Starbucks consistently spends more on training than it does on advertising” (p. 282). The Starbucks corporation feels that the Starbucks Experience starts with their employees. If their employees are happy, their employees create better experiences for their customers. This creative approach to the management of people shows. Michelli (2007) highlights that the turnover rate at Starbucks is much lower than at other similar establishments, “120 percent less than the industry average” (p. 282). He further goes on to mention that “employees have an 82% job-satisfaction rate” (p. 282). This deep desire to treat employees fairly stems from Schultz’s ideals. He himself mentions, “As a business leader, my quest has never been just about winning or making money; it has also been about building a great, enduring company, which has always meant trying to strike a balance between profit and social conscience” (Schultz, p. 107). Many believe his deep sense of empathy stems from his early childhood where his father was ill and could not hold a job. This is reflected today in his treatment of his employees. All

Starbucks is one of the leaders in coffee industry. Starbucks has entered into many new markets and today it has more than 16,000 outlets across the globe (Johnson, Scholes and Whittington 2011). Due to unlimited business opportunities, Starbucks Corp has set strategies to enter India as it is next major hub for development in near future. Previously Starbucks has gained wide success in China and Japan due to high consumption of coffee and tea. Since its inception, Starbucks has tapped the major markets across the world, India was left untapped. In India, Starbucks has setup alliances with TATA Global Beverages which is a unit of TATA Group of Companies. Starbucks along with TATA has started with an investment of $80 million and plans to open 50 coffee shops in a year. Currently few coffee shops has been setup by Starbucks, however in near future, it is expected that the company will achieve its target in capturing Indian market (Lamb2009). Thus, besides sourcing coffee beans from TATA, Starbucks can now explore more Asian markets (Hitt, Ireland and Hoskisson 2012).

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

Coffee which is a simple product has been turned it into a commodity in our lifestyle, it no longer just a drink but an event in itself, instead of just buying a cup of coffee companies have led us to believe that we are buying an experience. Companies have discovered how to sell out big money for a simple product; consumers are willing to buy $5 and up for a cup of coffee, not just because of the taste but because buying that cup makes consumers feel like part of something. According to Kate Macdonald a coffee chain such as Starbucks gets 14 million customers a day or more. It also has become one more of the global and cultural icons such as Coca-Cola and McDonalds. It very likely to find a Starbucks coffee shop in any major city around the globe; this make sound good for any coffee producers, but the reality is that coffee trade is full with ironies. As consumers steps up to the register and order their cup of coffee, it is more likely that they will not think of the more than “25 million people around the world (that) base their livelihoods on its production (Watson and Achinelli

Starbucks has an advantage over its competitors because of their strong, distinctive competencies. According to the article on NASDAQ "Starbucks targets a more affluent demographic of coffee drinkers that typically exhibit strong brand loyalty (Trifis Team, 2014)." This distinctive competency derives from the company 's philosophy to have a "commitment to the highest quality coffee in the world, to the way we engage with our customers and communities to do business responsibly (Starbucks, 2016)." The organization is committed to an excellent training program that reinforces staff competencies and engagement to the company culture. Starbucks CEO Howards Schultz, states in his book, Onward, "[Employees] are the true

Starbucks grew so much in the last couple years. The company now has over 21,537 stores in 64 different countries. They have 12,000in the United states, 1716 in the country of China, 1330 in the country of Canada and 808 in the United Kingdom, this is just a small list of countries that have Starbucks in their country there are many more countries. Starbucks partners with other brands and companies to keep themselves relevant in their industry. (Loxel 2015) The brands in which they’ve partnered with include Teavana, Tazo, and Seattle’s Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks employees over 182,000 employees and has an estimated revenue of $14.89 billion. Over the last 20 years, the company has expanded rapidly with an average of two new stores opening every day.

Starbucks advertises two essential mission statements. First and foremost, it strives to “establish [ourselves] as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while [we] grow(s).” (Starbucks) Reflective of its mission, Starbucks bases its strategic campaign and communications on six indispensable philosophies; structuring a pleasant work environment in which employees are treated with “respect and dignity,” incorporating diversity in all business aspects, purchasing, roasting and delivering fresh coffee, retaining satisfied customers, giving back to the community and environment, and developing

Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty

Starbucks is a unique organization with a unique structure (Gallos, 2012), "Starbucks is an amazing success story. In the 1990’s, it was opening a new store almost every day and is now the world’s largest coffeehouse company with more than 18,800 stores in 55 countries and more than 10 billion U.S. dollars in annual revenues ” (1). Our company

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.

In early 1970s the company named Starbucks Coffee Company was set up, and it expanded rapidly in the late 1980s and 1990s. The business was started with a single store of a roaster and retailer of whole bean and ground coffee, tea and variety of species. Nowadays, Starbucks has over 19,000 retail stores in more than 60 countries and has over 160,000 employees (Starbucks, Company profile, 2014; Forbes, 2013). With that number of employees, thus available workplaces, Starbucks won the second place award for the “Best Company to Work For” in January, 2005.

India, like many other Asian countries, has a tea drinking culture, but the coffee market is catching up and growing fast. This case talked about the stories of Café Coffee Day (CCD), the Indian coffee industry market leader, along with its competitor Starbucks from USA. CCD was founded in 1996 and by April 2013 it had around 3,000 stores within the Indian market. CCD had not faced any severe threat up till 2012 when Starbucks made its entry into the Indian market through a joint venture with Tata. As the world’s largest coffee chain company, Starbucks wanted to get a slice of the cake. In 2013, it opened 11 stores in Delhi and Mumbai.

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.

Starbucks is successful in terms of its revenue growth. Its revenue has increased from $14,892 million in 2013 to $19,163 in 2015 (Startbucks, 2015). The growth of revenue can be seen in the graph below: