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Starbucks global expansion strategy
Starbucks global expansion strategy
Starbucks global expansion strategy
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1. Starbucks, according to the information provided in the case, has an array of products generally associated with coffee products. Starbucks started in 1971 selling gourmet coffee. Then Starbucks expanded its product mix into different types of products lines, most likely, to better meet the needs and wants of a wider target market and thus hopefully increase sales. Starbucks new product lines included more than 30 blends and single-origin coffees, handcrafted espresso and blended beverages, Tazo teas, a line of bottled Frappauccio coffee drinks, and Starbucks DoubleShot. All things considered, by Starbucks expanding the product mix it is, most likely, trying to segment the market further in hopes of creating a long term customer relationships, which should result in sustainable increase in sales.
Further expanding its market Starbucks broadened its product offerings into exclusive lines of Starbucks products. Some of the new products included, Barista home espresso machines, coffee brewers and grinders, freshly baked pastries, a line of ice cream, chocolate, sandwiches, salad, coffee mugs, and compact discs. All things considered, Starbucks has created different products that should capture different segments of the market and increase sales.
Further adding to the product mix is Starbucks new licensing agreements for its products with a number of other companies. Generally, the main purpose of creating the licensing agreements is to improve distribution and production methods of Starbucks products. The agreement with Pepsi-Cola Company to produce and distribute bottled Starbucks products in grocery and warehouse club stores is an excellent example of this type of licensing agreement. This new product mix should ...
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...stic with today’s market, catering towards diversity by stating that the company, “embrace diversity as an essential component in the way we do business.” All things considered, the mission statement has most, if not all, of the characteristics of a good mission statement.
The mission statement and supporting principles suggest a good deal about the company. Some of which has been described in the previous paragraph. The mission statement suggests that Starbucks is a for profit organization that wants to provide the best coffee possible to it patrons. Starbucks environmental mission statement strongly indicates that Starbucks is committed to having a role in protecting the environment in all of the fascists of its business. On the whole, according to the mission statement, Starbucks is, among other things, a well balanced, responsible, and innovative company.
Additionally, it states the expression of their values, which is to create a society of warmth and having a place, where everybody is welcome. Being available, connecting with transparency, dignity and respect. Delivering the absolute best in whatever they do. And finally, stating they are performance driven, through the viewpoint of humankind. These sentiments are aligned with things I appreciate in a business.
Besides, starbucks is serving more than 70 different types of drinks to their worldwide customers and they not only known for selling brewed coffee, but also best sellers for other hot and cold beverages such as espresso beverages, chocolate beverages, Frappuccino blended coffees, Frappuccino blended crème, blended juice drinks, brewed tea, iced shaken teas. They’re real delicious drinks that loved mostly by today’s adults and especially teenagers. Besides that, they also are selling drinks, smoothies, bottled drinks and fresh fruit juices as a additional
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.
Emphasis on quality, Starbucks Experience, brand image, and important suppliers to dispute lower price contributions to competitors hence increasing profits
The key to its success lies not only in the quality of its products but also the ability to differentiate itself from the competition. With Starbucks, it has always been about quality. The company manages stringent quality control measures for sourcing the finest coffee beans, roasting processes as well as customer service and ancillary products. Furthermore, differentiation is key to market control and Starbucks is unquestioningly the most differentiated specialized coffee brands in the world. From the design of its coffee shops to the music played to the types of products offered, everything has a touch of uniqueness.
Opportunities available to Starbucks include growth of its supplier range, expansion to emerging economies, increased diversification of its product offerings and the growth of its retail operations; which are aimed at growing Starbucks’ profitability and market presence.
Starbucks Coffee, Tea, and Spice opened its first store in April 1971 in the Pike Place Market in Seattle, by owners who had a passion for dark-roasted coffee that was popular in Europe, but hard to find in the U.S. (Harrison et al., 2005; Venkatraman & Nelson, 2008). The company’s mission was to provide Seattle with the best access to dark-roasted coffee, and sought to educated customers about the product. As a matter of customer education and acceptance of the product, Starbucks grew and expanded into the successful domestic market it is today. Much of this success can be attributed to a focus on the total customer experience and s...
With that store being there to help support new stores that would be entering the region. The goal was to have around 20 stores after two years of entering a market and have those stores expand even further into smaller cities and suburban locations. They also started to add drive-through because it made it more convenient for parents with small children. Some of the drawbacks of drive-through were that it took away from impulse buys and sometimes created bottlenecks in the line. Licensing the brand was also a great way that they expanded their business; by putting Starbucks in airports in malls they create a lot of foot traffic lead to successful stores. Starbucks carefully considered their image and the image they wanted to uphold when choosing licensees. The international market is now where Starbucks has the most potential to grow. As of right now Starbucks has plans to open 1,400 new stores in China. That’s more than half of the store it already has in China. The growth technique that I was most impressed with was that having two locations so close to each other would not saturate the market. The first store would see a drop in sales at first but would bounce back and the new store would grow. I notice we have that here, at Target in uptown you can actually see the Starbucks across the street while you are in line. Both seem pretty busy most of the time too.
As mention earlier Starbucks has many opportunities of which it can take advantage. These include a joint venture with McDonald’s, where the restaurant giant would supply its customers with Starbucks coffee. Another is the bottled Frappuccino product that Pepsi and Starbucks have created. This has had a very positive response in the test markets and posses to be a lucrative option. Starbucks could also look at the vertical integration possibility of producing its own beans. This could prove to be very successful if they can capture a significant amount of the production they could become a price setter in the coffee commodities. Also because small coffee retail outlets are so trendy it is possible for them to set ...
With a council in place and clear ethical guidelines established, we are sure that Starbucks will reconsider its current position on coffee trademarks and make way for new and improved trade between us and the whole world.
The ad never mentions the price of the products, the place where Starbucks stores are usually located or the promotions to attract consumers. The existence of competition pushs marketers to make changes and be more creative (Jobber, 2013, p742). It is necessary for a business to survive with competitive advantage (Dibb& Simkin& Pride& Ferrell, 2012, p57). Michael Porter (quoted in Kotler& Wong& Saunders& Armstrong, 2005, p504) came up with three competitive strategies. Maybe Starbucks just applies two of the three strategies. One of the competitive strategies that Starbucks coffee applies is differentiation. Differentiation is the approach that the business uses to make its own products or services attractive, distinctive and different from its rivals (Dibb& Simkin& Pride& Ferrell, 2012, p57). Starbucks is a very creative company, because as the advertisement shows, an artisan roast is roasting coffee beans very carefully. The speaker says consumers’ favourite beverage signature espresso roast is developed uniquely by Starbucks. In fact Starbucks also creatively develops some other popular coffee like Frappuccino and Cappuccino. The other competitive strategy is focus. Focus means that a business targets at a certain group of market segments instead of facing the whole market (Kotler& Wong& Saunders& Armstrong, 2005,
There is speculation that the company was pouring too much capital into its complex system of joint ventures and licensing agreements, and could not get a hold of its operational costs. They decided to source some of their merchandise and disposables to less expensive suppliers as an immediate cost-cutting measure. They also decided to cut back on the number of new stores and shut down unprofitable ones. Starbucks has had to learn the hard way that external forces go far beyond a society's taste in coffee, and that too much growth can have negative effects.
Although these companies sell a similar product which is coffee, there is a lot of product differentiation. Each company is different in terms of what they offer their customers. Starbucks specializes in specialty coffee and sells its products at high market prices compared to other retailers in the market. The competition can be stiff and Starbucks has been a casualty to the existing industry rivalry. For instance, while Harrison & Hoole successfully entered the market with the support of Tesco, Starbucks exited the Australian market for failing to gain a considerable market share.
According to Investopedia website, “a technique that reduces risk by allocating investments among various financial instruments, industries and other categories is known as diversification. Diversification is the most important component of reaching long-term financial goals while minimizing risk” (“Investopedia”, 2011). “Fundamentally, this strategy is about creating new products with new product life cycles and making existing ones obsolete” (Olsen, n.d.). With diversification, Starbucks would be able to enter new markets with new products. By having a diversification strategy enforced, this will create a path for effective growth for the business. As with any company considering new products in new markets, there are risks associated with it and Starbucks would need to be prepared to respond accordingly.