Starbucks Coffee: Standardization and Adaptation Strategy Essay

1598 WordsNov 8, 20107 Pages
Starbucks Coffee: Standardization and Adaptation Strategy Introduction Starbucks’ Business Concept and History When academics Jerry Baldwin, Zev Siegel, and Gordon Bowker established Starbucks Coffee Company in 1971, their vision of Starbucks was that of a local business specialising in “selling fresh roasted whole beans in ...specialty stores.” (Darguste et al., 2006 p.655). Fearing commoditization of the brand, the founders were opposed to the idea of broadening the appeal of Starbucks coffee. Howard Schultz, a marketer who eventually acquired Starbucks in 1987, made selling brewed coffee to a wider market the bedrock of Starbucks (Darguste et al., 2006 p.655). The concept, “inspired by the Italian espresso bars,” transformed…show more content…
(Euromonitor 2008, p.5) High control market entry strategies allow Starbucks to maintain the premium quality of its products, to ensure continuity of supply of its raw materials by working directly with multiple suppliers (Busch 2010) and to achieve economies of scale and scope . However, the strategies are costly and risky (Kotabe and Helsen 2008, p.284). For example, high cost of rentals in Tokyo has negative impact on Starbucks profitability in Japan (Darguste et al., 2006 p.658) Licensing is a low control strategy used by Starbucks to enter international markets. It is less costly and therefore fits into Starbucks’ aggressive expansion strategy. Licensing allows Starbucks to adapt to market conditions, for example, to customer tastes, local competition and government regulations (Darguste et al., 2006. p.657). The disadvantage of licensing is that Starbucks has less control on the value chain and therefore there is no guarantee that the quality and consistence of service will prevail. The licensing model may not be consistent with a premium proposition and can dilute the brand to the point where it gets commoditized (Euromonitor 2009, p.25). Cultural Adaptation: Standardisation and Customization- The Contingency Approach According to Griffin (2008, p.58) cultural adaptation involves “finding the optimal mix between standardization and customization of local
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