PACE α 1/PERFORMANCE
led to second
75% Of pace
price of coffee
REGULARITY α PERFORMANCE
ROA of 2002-05 economic
SCOPE α 1/PERFORMANCE
THREE MOTIVES TO GO ABROAD
•Industry-based view: increase profitability, and the target countries
chosen usually have real potential in size of population and with high
(western nations had great impact on
Resource based view: purchasing only the highest quality of coffee
beans from ideal coffee- producing climates. ( upgrading its SCM) it
makes starbucks price and quality more competitive ( differentiation
strategy) in the new markets and world wide coffee industry.
Unique strategy of key locations helps to attract foreigners. This
promotes starbucks brand image and raises prominence.
Institution bases view: shareholders expectations for high returns, as
domestic market is saturated , the managers are pressurized by the
shareholders to internationalize thus analyzing coffee industry in order
to leveraging their core competence.
reaching saturation point in U.S
High potential of new emerging markets
Brand recognition in many countries
Customer loyalty and security in the SCM
STARBUCKS- TOO AGGRESSIVE ????
One of the best ways to increase market share is to internationalize (
started doing when the home market become saturated in 1996)
Lots of countries lots of shops
lots of countries many shopsless countries less shops
But, after fast internationalization starbucks always back off to slow the
pace, rhythm and scope to do its market penetration in existing markets
and market development in new markets.
Localizing starbucks provides new products to cater different cultures of
countries by product development strategy.
But, strabucks is criticized for growing too fast which led to decrease in
product quality and company image, cannibalizing turnover in closely
located stores, driving out small independent competitors
How should Starbucks approach
internationalization going forward ?
Mergers and collaboration for expansion proved beneficial in the
past. We recommend that Starbucks continue to work with
McDonald’s to prevent cannibalization. Improve the service and
experience within each existing store instead of focusing on
Need to explore countries with the highest per capita coffee
Consider penetrating the hospitality markets globally through hotel
chains (Marriot, Hilton) which offer in room brewing as well as
hospitality counters in the main foyers. Already have a presence in
many airport terminal locations and could continue to expand in this
When entering a foreign market, Starbucks' strategy was to retain its
core service and product offering as much as possible, while
adapting to local demands in the host country. I think this is a good
way to survive in foreign markets. They have to follow this policy.