Starbuck's experience

GLOBAL MANAGEMENT - CASE STUDY Starbucks International Operations a presentation 1

First store opened in Seatle in 1971 165 Outlet in 1992 when company issued its initial shares of public stocks generates $4 billion per year in revenue Serves more than 33 million customer each week Partners with Albertson’s, Barnes & Nobles, Hyatt, Kraft, Marriot, Pepsi, United Airlines STARBUCKS facts and figures 2

First store opened in Seatle in 1971 For Year 2002...... 13101992 initial 165 Outlet in company issued its when Stores in more than public stocks shares of 30 countries around the billion per year in generates $4 revenue world Serves more than 33 million customer each week Partners with Albertson’s, Barnes & Nobles, Hyatt, Kraft, Marriot, Pepsi, United Airlines STARBUCKS facts and figures 2

1,500 Country Store 1,310 First store opened in Seatle in Japan 397 1971 Taiwan 99 1,125 165 Outlet in 1992 when China 88 company issued its initial 929 South Korea 53 shares of public stocks 750 generates $4 billion per year in Arab Emirat 23 revenue Lebanon 11 524 Serves more than 33 million Spain 5 customer each week 375 Indonesia 5 Partners with Albertson’s, 278 Barnes & Nobles, Hyatt, Kraft, 128 New Zealand 34 Marriot, Pepsi, United Airlines 5 17 Hawai 30 0 1995 1996 1997 1998 1999 2000 2001 2002 STARBUCKS facts and figures 2

Provide a great work environment and treat each other with respect and dignity Embrace diversity as an essential component in the way we do business Apply the highest standard of excellence to the purchasing, roasting, and fresh delivery of our coffee Develop enthusiastically satisﬁed customers all of the time Contribute that proﬁtability is essential to our future success STARBUCKS business philosophy 3

Customer Service Excellence Product Quality Accessibility Emerging Corporate Responsibility Financial Resources Brand Recognition STARBUCKS success factor 3

A new Starbucks open in restroom of existing Starbucks.......!!! Headline in The Onion, a Satirical Publication STARBUCKS business model 3

Cluster Strategy Disadvantage : the new stores will often canibalize one another’s business and capture about 30 % of the sales of a nearby starbucks Advantage : cut down on delivery and management , shortens customer lines, increases foot trafﬁc in an area, brand awareness. STARBUCKS business model 3

STARBUCKS business model 3

STARBUCKS expansion strategy 4

Advantage • low development cost and risk. • fast market access • Avoids regulations and tariffs LICENSING Disadvantage • Lack of control over the licence ‘s activities and performance STARBUCKS expansion strategy 4

Advantage • insider access to market • share cost and risk • leverage partner’s skill base technology • local contact Disadvantage • Lack of controll over technology • Inability to engage in global strategic coordination JOINT • Inability to realize location and VENTURE experience economic STARBUCKS expansion strategy 4

Advantage WHOLLY • Protection of technology and skill OWNED base Disadvantage • High cost and risk SUBSIDIARIES • Full authority of revenue and controll STARBUCKS expansion strategy 4

Country Partner Agreement Ownership Stores 2002 Stores 2003 Australia Majority Own 90% 29 60 Japan Sazaby Inc JV-public 40% 357 570 China (Beijing) Mei Da Coffee Licence 26 45 China (Shanghai) President Coffee JV 5% 25 45 Germany KarstadtQuelle JV 19,5% 0 21 Thailand Majority Owned 97% 26 37 Middle East M.H.Alshaya Co Licence 65 98 Indonesia PT.Mitra A Licence Advantage 0 5 WHOLLY Grup Vids Spain JV • Protection of technology and skill 2 18% 13 OWNED President Coffee Taiwan JV base5% 91 Disadvantage 137 • High cost and risk SUBSIDIARIES United Kingdom wholly owned • Full authority of 297 100% revenue and controll 470 Source : Merryl Lynch STARBUCKS international ops and partnership 4

Partner first, Country second Fundamental qualification is expected of its potential partner Criterien included financial solvency, knowledge of local market condition, prior retail experience, and creative ability 13 weeks training in Seattle CRITICAL FACTOR Partner Selection

Partner first, Country second Site Attractiveness Fundamental qualification is expected of its potential partner Teritorial Intelligence Criterien included Actual Environment financial solvency, knowledge of local market Factor condition, prior retail experience, and creative Regional and ability Community 13 weeks training in Acceptance Seattle CRITICAL FACTOR Environment Assesment

Competitive Environment first, Partner • Local Competition Country second • Copycat Site Attractiveness • Untapped MarketFundamental qualification is expected of its potential partner Teritorial Intelligence Negative perception of an American representative inincluded Criterien overseas Actual Environment financial solvency, knowledge of local market Factor condition, prior retail Local Culture barrier experience, and creative Regional and ability Community 13 weeks training in Acceptance Seattle CRITICAL FACTOR Challenge of Global Expansion

CASE STUDIES Starbucks goes to China

CASE STUDIES Starbucks goes to China CONTRA Coffee is not the main mainstream beverage in China Rigid business policies

CASE STUDIES Starbucks goes to China CONTRA Coffee is not the main mainstream beverage in China Rigid business policies PRO The fastest growing and the most powerfull marketplace in the world First mover advantage

CASE STUDIES Starbucks goes to China TARGET CONSUMER Young and afﬂuent Status conscious Business executives People who were educated abroad Expatriates PARTNERSHIP Mei Da Coffee (Licencing) President Coffee (Joint Venture)

Entry Phase Conducting research to the Chinesse environment Testing its Coffee for free in major restaurants and hotels in Beijing First store was opened in 1999. Country Development Building brand awareness Stores opening in China’s major City GLobal Integration Deepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai ENTRY STRATEGY Expansion Phase

Entry Phase Conducting research to the considered as social event than Chinesse environment daily necessity. Testing its Coffee for free in major restaurants and hotels They can sit for hours in Beijing First store was opened in 1999. mostly cannot drink coffee Country Development alone, it must go with the food Building brand awareness Stores opening in China’s Starbucks does most of its major City business during afternoon and GLobal Integration night time Deepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai ENTRY STRATEGY Chinese’s Coffee Drinking Behaviour

Entry Phase them self as “third Promoting living space”research home Conducting beside to the considered as social event than and office environment Chinesse daily necessity. Testing its Coffee for free in Increase the size of the store major restaurants and hotels around 2000 square feet in Beijing They can sit for hours First store was opened in Providing foot including 1999. mostly cannot drink coffee Country Development cookies traditional chinesse alone, it must go with the food Building brand awareness Stores opening in China’s Starbucks does most of its major City business during afternoon and GLobal Integration night time Deepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai ENTRY STRATEGY Implementing “Starbucks Experience” in China

QUESTION....?

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Starbuck's experience

by Mohamad Faried Aguslemi on Feb 14, 2008

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Starbuck’s experience — Presentation Transcript