Starbucks Global Strategy De Wit and Meyer (1998) refer to market tendency towards homogeneous variety and tighter international linkages as globalization. The need for global strategy is outlined by the fact that companies are subject to global forces and consumer demands. As a consequence, firms are faced with a challenge of modifying their existent strategies to gain and sustain their competitive advantage in a rapidly changing environment. A well-designed global strategy can help a firm to gain a competitive advantage, that as identified by Sumantra Ghoshal of INSEAD can arise from Efficiency, Strategy, Risk, Learning and Reputation (Appendix1). Therefore, to create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition. I would like to proceed with my analyses of the global market place, with examination the young but already well recognized brand world wide ? Starbucks. In my research I will explore on changes in the product, operations, and strategies at Starbucks influenced by the changes in the global marketplace. Due to word limitation on the essay, please refer to Appendixes for more detailed information. Starbucks Corporation "There is untapped potential to grow our company internationally," Schultz said. Headquarters: Seattle, Washington www.starbucks.com Ownership: Starbucks is publicly traded -- shares are widely held 150 million shares have been authorized, of which 59.6% are on the market. History: Howard Schultz, 42, is the founder of the Company and has been chairman of the board and chief executive officer since its start in 1987. The Company originated with eleven Seattle stores and less than one hundred employees. Since them the company has grown to a half billion-dollar company serving millions of cups of coffee per week in one thousand stores throughout the country, and in 17 countries internationally. Schultz believes his company will succeed well into the twenty-first century. He states, "One of the things that you can't measure on a balance sheet or on a financial statement is the soul of Starbucks." The Company holds approximately 39 federal trademark registrations in the United States. They have approximately 44 additional applications pending in the U.S. The Company currently owns one patent in the U.S. for its coffee on tap system and has several patent applications pending. Starbucks prides itself on being a "good citizen" locally and in the various coffee producing countries. They make significant contributions to local charities that focus on children, the environment, the homeless, and AIDS research/support.
In 1982 the president and CEO Howard Schultz, joined the company. He had just returned from a trip to Italy in 1983, and invasion a new way to serve coffee in the United States. He wanted to bring the way of Italian coffeehouse here. Nevertheless, this was not until 1987 where he would come in with several local investors to purchase Starbucks and rebrand. Opening their doors here in Chicago. In 1991, Starbucks took off and was the first companies to offer full and part time employment with benefits. They also were able to take the lead in the coffee world by offering Frappuccino’s. Their success landed a partnership in 1995 Pepsi-Cola. This help them market to consumers a ready-to-drink Frappuccino that was available for purchased through local grocery stores or convenient stores. It was also in 1996 that Starbucks opened its first store outside of North America, which expanded a branch in Japan. In 1998, this offer Starbuck to acquired Tazo Tea Company. This lead to collaboration with Conservation International in 1999, to promote environmentally responsible methods for growing coffee. Starbucks has continued to grow over the years, launching its VIA™ Ready Brew coffee in 2009 (Starbucks Timeline, 2010). They have continued to work aggressively to serve the public as of today Starbucks has more than 15,000 stores in 50 countries, and have taken their name to be known as the world’s premier
If you had the chance to enjoy the Starbucks experience, then you will appreciate their mission statement, which is , According to starbucks.com, it states, that it is “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”.
In 1971, three former University of San Francisco students opened the first Starbucks coffeehouse in Seattle, Washington to simply sell freshly roasted coffee beans. The continued success over the course of the next twelve years, attracted current owner Howard Schultz. As Marketing Director,
The company started its activity in 1971 as small coffee shop located in Seattle specialized in selling whole arabica coffee beans. After being taken over by Howard Schultz in 1982, following a rapid and impressive growth, by mid 2002 the company was the dominant specialty-coffee brand in North America, running about 4,500 stores, 400 international stores and 930 licenses.
Founded in 1971 at Seattle’s Pike Place Market, Starbucks Coffee, Tea and Spices, as it was originally called, has been “brewing-up” its famous blends in over 43 countries, including the United States. Now called Starbucks Coffee Company, business isn’t just about the coffee and tea anymore. Starbucks has its own line of bottled water, handcrafted beverages, fresh food, entertainment, merchandise and a Starbucks Card. The company has received numerous awards for their outstanding business practices. Fortune Magazine has ranked them as one of “The Best 100 Companies to Work For” in 1998, 2000, 2002, and 2008 (Starbucks, 2008). The Starbucks Experience provides consumers and the general public a direct line a of business communication. From friendly baristas to press releases from CEO Howard Schultz, Starbucks keeps its “partners” informed.
From the very beginning Starbucks has been driven to higher standards and to be known for their commitment to the environment as well as their delicious coffee. They call it “corporate citizenship”. Since 2001 Starbucks has been assessing their environmental footprint and making the results known to the general public in the hopes of inspiring others in a report called the “Shared Planet” report. From the time they opened their first store in 1971 the company has developed and committed itself to programs in ethical sourcing, environmental stewardship, community involvement, coffee purchasing & farmer support, recycling & reusable cups, energy & water conservation, and “green” building.
According to IBIS World Report the major players in the US coffee and snacks retail market are Starbucks and Dunkin’ Brands at 36.7% and 24.6% market share respectively with other competitors occupying the remaining market share of 38.7%. The industry is at the mature stage of its life cycle, has low barriers to entry and intense competition and rivalry between the players. The regulation and technological change within the industry is medium (IBIS world report)
Coffee is a worldwide cash crop of which demand has exponentially increased over the years. “Coffee is (after oil) the world’s second most important traded commodity” (Cleaver 61). Competing coffee brewing companies wage war on offering the freshest, best tasting coffee the market has to offer. With such stiff competition there must be enough coffee beans deemed to be good enough in quality to supply the increasing demand. Starbucks can be considered one of today’s top competitors if not thee top coffee manufacturer presently in business. This successful company has had a huge impact on the coffee industry as well as the world. They have gone through great length to provide consumers with an excellent product as well as create a legacy that shows how to best go about running a massive corporation while keeping the environment clean and healthy.
Gordon Bowker, Jerry Baldwin and Ziv Siegl founded Starbucks in 1971. Their goal was to sell the finest quality whole beans and ground coffees (Starbucks timeline and history, 2004). In 1982, Starbucks had grown to five stores and started serving coffee to restaurants and espresso bars. Harold Schultz was employed as the director of retail operations and marketing. Harold Schultz convinced the founders of Starbucks to open a downtown Seattle coffee bar, which opened in 1984. With the success of Seattle coffee bar, Schultz left Starbucks to start his own company named Il Giornale. In 1987, Il Giornale acquired Starbucks retail operations for 4 million dollars. In addition, Il Giornale changed its name to Starbucks Corporation and opened locations in Chicago and Vancouver, B.C. (Starbucks timeline and history, 2004).
Shah, A. J., Hawk, T. F., & A, T. A. (2011). Starbucks' Global Quest in 2006: Is the Best Yet to Come. In A. A. Marcus, Management Strategy: Achieving Sustained Competitive Advantage (pp. c468-c495). New York: McGraw-Hill.
This paper will provide an argument for diversification to be presented to board of directors for Starbucks. A strategy for diversification indicating the products and industries for diversification and how synergies may be gained will be provided. The identification and the discussion of the foreign market Starbucks should enter will be presented, along with the strategy it should use to enter the market. Challenges Starbucks may face in the foreign market will be discussed, as well how it might respond strategically to minimize the impact of these challenges.
Starbucks Financial Analysis Company Overview Starbucks is the world’s largest specialty coffee retailer, with more than 16,000 retail outlets in more than 35 countries. Starbucks owns more than 8,500 of its outlets, while licensees and franchisees operate more than 6,500 units worldwide, primarily in shopping centers and airports. The outlets offer coffee drinks and food items such as pastries and confections, as well as roasted beans, coffee accessories, teas and a line of compact discs. The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products.
Schultz has had a lot of success with Starbucks, not only in revenue but he has continued to expand the brands in their portfolio, increase store locations and reach all new highs. Starbucks is now an international company with more than 21,000 stores in over 65 countries (Starbucks Coffee International, n.d.). Starbucks believes their global success has a lot to do with their international partners. Schultz explained it nicely when he said, “We remain highly respectful of the culture and traditions of the countries in which we do business. We recognize that our success is not an entitlement, and we must continue to earn the trust and respect of customers every day” (Starbucks Coffee International, n.d.). Schultz continually sees opportunity and the ability for growth, with an increase in locations across the globe every year and the ability to keep up with the latest in technology (websites, online shopping, a Starbucks application with the ability to pay and reload loyalty cards on your smart phone), etc.
I will briefly summarize and examine issues facing Starbucks. Starting from there I will pick the most important issue and study it from different positions. In the end of my I will try to suggest what steps should be made to keep the company in continuing its quest to become one of the most recognized and respected brands in the world.