Starbucks Case.

I believe that Starbucks have to understand the employment rules and regulations at the host government, one example which show that how much critical to understand the

(3a): What trade-offs has Starbucks made? What different activity choices has it made from its rivals?

Starbucks lose its uniqueness when baristas used to grind beans throughout the day whenever a new pot of coffee had to be brewed which was at least every eight minutes. Many baristas began to grind all of the day’s coffee beans in the morning and store the rest of the day. Baristas now use push-button machines to make espresso drinks. That stores no longer smell like coffee and that every store looks cookie-cutter.

Many multinational corporations in the coffee industry have succeeded tremendously such as Starbucks. Each of these corporations has strategies that helped them continue to expand to nations of different cultures, ethnicities, governmental practices, and locations.

1. Where did the original idea for the Starbucks format come from? What lesson for international business can be drawn from this?

Starbucks utilizes a differentiation business model by offering an overall unique and high quality experience for the consumer. From the high-quality food and drink options, to the uniquely roasted coffee and supreme customer service, Starbucks aims to provide an experience unobtainable anywhere else. Starbucks also focuses heavily on rapid expansion by seeking out profitable geographical areas and overcrowding those areas with stores in order to exploit profits and slow down competitors. Starbucks’ compliments this with its horizontal acquisition strategy, extending their product line through acquisition of competitors. This provides Starbucks with a differentiation strategy focused on providing a diversified product mix

Maturity of Starbucks comes in United States stores where it is hard for Starbucks to extend the company

Even so, just two weeks earlier Howard Schultz announced that the company will be expanding internationally. The plan is to open more than 1500 stores in Germany, France, and Britain over a 3-year span (Forbes, 2008). It is estimated that this expansion will boost revenue by more than 20 percent (MSN Money, 2008). In spite of Starbucks’ struggle among its love-hate relationship between customers and protesters, one thing that Starbucks

from a small local store to its current global enterprise. Starbucks has strategic partners all over

1. In the beginning, how was Starbucks different from other coffee options for coffee drinkers in the United States? What activities and assets did Starbucks leverage to differentiate itself from

These partnerships have led to a meaningful increase in profits. Licensed stores, another type of partner for Starbucks, make up a greater portion of the corporation than company-operated stores. According to Starbucks’ Fiscal 2009 Annual Report, licensed stores make up 39% of total Starbucks stores in the US and 62% of Starbucks stores worldwide.

Starbucks has a reputation for new product development and creativity. But new ideas can not come so often and even if they do they may not be on target. Moreover, almost the ¾ of their shops are located in the U.S. which means they are depended too much on one country. They need to spread into another group of countries in order to spread the business risk. Also organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.

Following its success in the United States, Starbucks ventured overseas and quickly became a globalization icon. With its rapid globalization strategy, Starbucks expanded from about 5000 stores to an estimated 15,000 stores in 2000 (Groth, 2011). By mid-2000s, Starbucks’ supply chain faced many issues, resulting with challenges of having to fulfill expansion strategies yet minimizing escalating operation expenses. By 2008, Starbucks’ stocks fell by 42% (Schultz, 2011). The rapid expansion took a toll on the sales growth and stretched the limits of the existing supply chain, which then rippled down to erode the customer-valued ‘Starbucks experience’ (Gibbons, 2011).

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 wanted to expand its company into India but it also needed to find a mode of entry. Functioning as a corporation with great control, available cash and a aggressive U.S. retail strategy, wasn’t going to help Starbucks in India. When exploring their options for the best mode of entry, a partnership or joint venture with a local Indian company seemed like the best fit. The joint venture would provide lots of advantages for Starbucks and the other company; both firms would share cost and risk as well as the benefits. Having a local partner would provide Starbucks with first hand knowledge of culture, political and economic issues