1. “To say Starbucks purchases and roasts high-quality whole bean coffees is very true. That’s the
essence of what we do – but it hardly tells the whole story.”
Since 1971 when the first Starbucks opened in Pike Place Market in Seattle, Starbucks’
heritage is centered on sharing great coffee with friends and making the world a little better. In
1981 Howard Shultz entered the one and only Starbucks and fell in love with it. In 1983 he
traveled to Italy and couldn’t help but notice the extraordinary coffee shop experience .The
coffee bars in Italy brought a sense of community and belonging. In August of 1987 Shultz
purchased Starbucks. He brought to it the connected, and the inclusive feeling that he
experienced in the Italian coffee bars. Starbucks became the “third place between work and
home ... a place for conversation and a sense of community.”(Giovanazzi). Starbucks is a daily
stop for most people in the US and most people around the world. The Colombia tower in
Seattle is one of the largest business centers west of the Mississippi and has three Starbucks
locations within its seventy-five floors. Starbucks is a place that unites generations from different
demographic backgrounds. Today, Starbucks’ mission statement is “to inspire and nurture the
human spirit – one person, one cup, and one neighborhood at a time.” We want to bring
Starbucks to Italy, the country that inspired Shultz to building Starbucks into the global company
that it is today.
Italians take great pride in their coffee culture especially since Angelo Moriondo invented
the first espresso machine in Italy in 1884. According to a report published by the USDA, “Italy
is the 7th largest coffee consumer in Europe [with] 5.8 kilograms per capita or ... approximately
600 cups of coffee per capita per year.”(Giovanazzi). The dominant coffee labels are Lavazza,
KJs/Kraft, Segafredo, Illycaffee, Cafe do Brasil, and Suchard. While other competitors include
private labels, such as supermarket brands. The International Coffee organization reported that
in 2009 Italy imported approximately 7.6 million bags of green coffee.
Italy is a country that appreciates relationships and hospitality, but their coffee bars don’t
seem to reflect these values. People treat coffee bars like pubs, they simply stop there in the
mornings take a shot of coffee and go on with their day, and if by chance they decided to sit
down with a friend and have a coffee they are charged a service fee.
Italy’s economy is dominated by small family owned businesses that account for 70% of
Italy’s GDP (Doing Business Italy). While southern Italy is underdeveloped, there is a high
concentration of industrial activity in the north. This is one of the most industrialized and
prosperous areas in Europe and accounts for more than 50% of the national income. Italy uses
the euro as its currency, which as of November 2015 has an approximate rate of $1.07.
According to the OECD, Italy’s GDP was approximately $2,128,171 million in 2014, with the
annual average household income in northern Italy being between €30,000 and €33,000 (i.Stat).
The most comparable coffee shop to Starbucks in Italy is Arnold Coffee, which took a lot
of inspiration from Starbucks. Starbucks may be more expensive in comparison to some of the
local Italian coffee bars, but Starbucks has a competitive edge. Starbucks is adaptable. From
management, to baristas, to products and prices, Starbucks is ready to adjust on every level.
Starbucks is known for its amazing locations. Placing the first Starbucks in the Golden Triangle
one of the biggest tourist and shopping attractions in Milan will definitely bring in many
customers, Each Starbucks has a different atmosphere, including interior design. It delivers a
very welcoming environment for people to hangout and while having a coffee during work or
even with family. Starbucks is capable of acquiring its competition or even locations where
competitors may be opening up new cafes. Starbucks also has great relationships with its
shareholders. For example, Starbucks in the past has helped collect money for charities and
created scholarships for college students.
Milan, the second largest city in Rome, has a population of 1.3 million and if you include
the surrounding metropolitan area the population is 4 million people. In Italy the ethnic groups
are mainly Italians, with some Germans, French, Slovene-Italians, Albanian-Italians, and Greek-
Italians. The main languages spoken in Italy are Italian, the official language, German, French,

2. and Slovene. The average Italian age in Italy is 45 years old with a life expectancy of 83 years.
13.8 percent of the population is between the years 0-14, 9.8 percent are 15-24, 43 percent 25-
54, 12.4 percent 55-64, and 21 percent of the population is 65 and older. The fertility rate in Italy
is 1.42 children per family. And the male to female ratio is .93. Italy has a literacy rate of 99
percent and ranks 54 out of 215 countries in literacy. They are able to have such a high literacy
rate because of the fact that Italy offers free mandatory education to its citizens. In recent years
they have also been shifting their teaching methods so that they can focus more on creativity
and the application of critical inquiry and higher order of thinking skills.
Italian culture is hospitable and welcoming. According the Geert Hostede model of the
Italian culture, the Italian culture ranks highly on individualism and masculinity. but in fact the
Italian culture is very collectivist, they value relationships, groups and family. High masculinity
means that work has a large gender wage gap with fewer women in management, and family is
very traditional. On the Lewis division of cultures model, Italy is a multi active culture, meaning
that they are warm, emotional, impulsive, and often talk in a roundtable and animated manner
and are very uncomfortable with silence.
As an intensively urbanized city, Milan has a highly developed infrastructure that allows
its commerce sector and society to thrive. With an integrated transport system that includes: an
extensive rail, road and motorway networks, and very developed transport system that transport
about 328 million passengers each year. When it comes to communication infrastructure, Milan
is “the most cabled city in Italy and Europe, with 2,700 kilometres of cabled streets and 300,000
kilometres of laid fibre optic cable”.
Italy is a democratic republic and part of the European Union; therefore, it follows
several EU regulations in the business sector. It is important that when selling food or
beverages, that EU regulations be looked at closely since they relate to Italy directly. Starting a
business in Italy takes approximately 5 procedures in the span of 5 days, ranking it at a 48 on its
ease of doing business in 2015 (Ease of Doing Business Italy). The most recommended form of
entry into any industry in Italy is through joint ventures. The U.S. government advises that joint
ventures are the best option because it reduces major risks and provides the American
business with local knowledge in a country that isn’t very transparent; in other words, a country
that is corrupt. In 2014, Italy was ranked the 69th country out of 175 in terms of transparency
(Transparency).
In Italy price reflects quality. In food products, coffee, atmosphere, customer service etc.
the price determines the quality you will get. Starbucks coffee is famous for satisfying its
customers with its taste and aroma. The price maybe higher than other coffee brands in Italy,
but for two or three euros extra, people have a place to sit down and enjoy their coffee, meet up
with a friend, or even hang out at and get some work done with the free Wi-Fi. Keeping price in
mind, Starbucks will aim to target price conscious consumers by doing deals such as $4.00
coffee and pastry or half priced Frappuccino’s over the summer time, bringing in more
customers into a nice air conditioned cafe while enjoying a nice cold drink to get away from the
hot Italian sun.
In order to accommodate the Italian taste, Starbucks will have to make some
adjustments. First, Starbucks will start getting its pastries through the popular local bakery
Pasticceria Angelo Polenghi in order to bring in a variety of customer favorites that go along with
their coffees. Second, Starbucks will have to reduce the sweetness in most of its drinks since
most Italians drink their coffee with little to no sugar. Starbucks will create new flavors on their
menu, such as Tiramisu flavored frappuccinos. Starbucks will also focus recreating the Italian
favorite using its machinery such as cappuccinos, espresso, cafe latte etc. As mentioned before
Starbucks is very adaptable, it will recreate its menu to a list of the many coffee beans, milks,
sweeteners, temperatures, and drink sizes that the customer can choose from. Third, Starbucks
will start having a lunch menu offering different types of paninis made by Panini Durini, one of

3. the top rated Panini makers in Milan. Lastly, like many Italian cafes that serve alcohol as well as
coffee, Starbucks could serve alcoholic beverages from 12pm-10pm.
In order to attract more customers in Milan, Starbucks will have to incentivize the
customers. In order to get customer feedback to adapt to its customers needs, they can do in
person questionnaires conducted in the cafe for a free refill or a free drink. To increase sales
Starbucks can also encourage the use of the Starbucks app. Since Milan is the fashion and
finance capital people are always on the go and they do not want to come in line to order their
drink and wait for it, that would approximately take ten to fifteen minutes. In this case Starbucks
can advertise using the mobile app to be able to order and pay through their phone and the
customer would simply walk into the cafe grab their order and go. Customers using the app can
also enjoy many benefits such as becoming a Starbucks member and receiving a gold card with
their name on it. With the Starbucks card people can receive free refills on coffees and teas, as
well as receiving free treats on their birthday. As part of its promotion, Starbucks can target its
health conscious customers by providing the nutrition facts and calories on its foods and drinks.
Starbucks is well known for their customer service, from the second the customer walks
through the door until they leave the cafe Starbucks wants the customer to have a unique and
enjoyable experience. In order for Starbucks baristas to build better relationships with their
customers, they will focus quality versus quantity. Although the cafes have long lines sometimes
and they need to speed up the process, Baristas will have to provide a unique experience with
each customer and have a conversation with them, in order to create a “regular”.
We want to place Starbucks Milan in the Golden Triangle. The golden triangle Milan, is a
famous shopping street, similar to Via del Corso in Rome. The golden triangle is home to the
country’s famous designer shops. With such a touristy and popular location, people won’t help
but to go into Starbucks and enjoy a cup of coffee while walking around the shopping area. We
will also place a Starbucks in the Milan- Malpensa airport. Starbucks locations at airports
provide a nice and friendly atmosphere for people coming through from all over the world,
whether flying in/out, or connecting to their next destination. In order to accommodate for the
Italian multi active culture, Starbucks will have to have roundtables that can accommodate a
group between 8-10 people. The setting has to be very inviting and comfortable. Starbucks’
target market is people between the ages of 25-40. Many of these people are college students
or people in the workforce. Starbucks provides great benefits to its customers by giving them
free Wi-Fi and large seating areas, so they can have meetings, group projects or even a place
to hangout and work on homework.
Starbucks should use a specific market entry strategy to enter the Italian market and
then build off of it in order to expand. To start off, Starbucks will use a licensed format to open
locations in Milan. The most appropriate locations are the main international airport, Malpensa,
and the Golden Triangle. This will require a minimum investment on Starbucks’ behalf and limits
the risk the business is exposed to in the new foreign market. In order to increase profits and
expand, Starbucks will establish joint ventures with the company's licensees and with several
other bakeries in the area. Starbucks will also begin to expand to other popular cities like Rome,
Florence, and Venice. As its business in Italy expands, Starbucks will seek to saturate the
market and conduct an acquisition of one of its chain competitors in Milan and Florence: Arnold
Coffee. While remaining a joint venture allows Starbucks to share the risk and sustain valuable
local in-depth knowledge from its partner, it will eventually seek full ownership of all its business
operations in Italy. Having full ownership will give Starbucks the most profits and full control of
all the business operations, which will then allow it to continue growing and eventually develop a
global market strategy, not just a multinational strategy anymore.
Starbucks fulfills customer's stated needs which is to have an inexpensive cup of coffee.
It satisfies the customer real needs by providing a wide spectrum of drinks in different sizes as
well as pairings such as food or pastries at different prices. Starbucks aims to satisfy the
customer’s unstated needs by providing consistent top notch customer service every time the

4. customer enters one of its cafes anywhere in the world. Starbucks also satisfies the customer’s
delight and secret needs by providing them with different promotions such as package deals,
half price off drinks, or a free drink on the customer’s needs to make them feel special and
satisfied and that they are a part of this worldwide American based brand.
The biggest concern about entering the Italian market is profitability. Without its
guarantee, no move can be made into any market. By completing a SWOT analysis, it has been
concluded that Starbucks will be profitable in Northern Italy by opening with the proper
execution. Northern Italy is the prime point of entry. Looking at the external half of the SWOT
Analysis, there seems to be more helpful attributes than harmful. For one, Northern Italy
accounts for over fifty percent of the country’s GDP despite the fact it contains just under half of
the population, providing a stable economic environment to move into. This dampens the
concern on price, as many have pointed out that the Starbucks espresso costs more than the
average Italian one. In a wealthy area, a 50 cents to one euro difference will not dissuade a
regular consumer from buying his or her coffee, which leads to the next positive attribute.
Demand for coffee products are so much higher in Italy than the U.S. that it might even drive
Starbucks’ prices and costs down. There are about 24,000 coffee shops (including Starbucks
cafes) in the U.S., which has a population of around 320 million. Italy has a fifth of the amount of
people and nine times as many coffee shops
There are also many tourist destinations in Northern Italy alone. We expect a large portion of
consumers to be foreigners in the beginning. With an easily identifiable logo, tourists seeking a
quick espresso will easily be able to recognize a Starbucks out of the corner of their eye without
having to search up and down streets trying to find a cafe. Northern Italy borders with four
countries: France, Switzerland, Austria, and Slovenia. Because of this there are over a dozen
major train stations with travelers from all over, as well as local citizens. Northern Italy also has
nine airports, with the main one being MXP in Milan. Airports and trains stations would be the
optimal locations for opening up the first Starbucks. First of all, transportation stops always have
high traffic, and there are never enough places to grab a coffee; especially when you’re in a
hurry to catch a plane or train. Profitability is dramatically increased in an airport or central train
station simply due to the higher number of people as opposed to any city. Secondly, the rights
to open a Starbucks cafe in Italy have been sold to Autogrill: a company that specializes in
opening company locations in airports. By combining Starbucks’s and Autogrill’s marketing
strategies, Starbucks can obtain a much wider consumer base than it could on its own.
By: Silvia Ochoa, Sara Iskandar, Jacob Kunnassery

5. Sources:
"Città Metropolitana di Milano" ["Province of Milan"]. Città Metropolitana. N.p., 4 May 2015.
Web. 18 Nov. 2015.
<http://www.cittametropolitana.mi.it/international/en/provincia/index.html>.
"Corruption by Country/ Territory." Transparency International. N.p., 2015. Web. 18 Nov.
2015. <http://www.transparency.org>.
"Doing Business in Italy: 2012 Country Commercial." U.S. Commercial Service (2012): n.
pag. Print.
"Ease of Doing Business in Italy." Doing Business. World Bank Group, 2015. Web. 18 Nov.
2015. <http://www.doingbusiness.org/data/exploreeconomies/italy#close>.
"Population and Households." I.Stat. OECD, May 2011. Web. 18 Nov. 2015.
<http://dati.istat.it/?lang=en&SubSessionId=69f1abe2-7797-4632-908c-
fb264c3a606f&themetreeid=-200>.
50 Giovanazzi, Silvia, “The Italian Coffee Market 2010,” USDA Foreign Agricultural Service
GAIN Report, December 03, 2010,
http://gain.fas.usda.gov/Recent%20GAIN%20Publications/The%20Italian%20Coffee%
54 Company Information, Starbucks, http://www.starbucks.com/about-us/company-
information
59 Faris, Stephan, “Grounds Zero: A Starbucks-Free Italy,” Bloomberg Business, February
09, 2012, http://www.bloomberg.com/bw/magazine/grounds-zero-a-starbucksfree-italy-
02092012.html#p2