Starbucks going global fast

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Starbucks going global fast

  1. 1. Prepared By: Dobaria Rohit Senta Arvind Kidecha Hitesh
  2. 2. <ul><li>In 1971, three coffee-lovers named Jerry Baldwin, Zev Siegl, and Gordon Bowker, open a small shop. </li></ul><ul><li>Sold fresh roasted coffee beans and brewing equipment. </li></ul><ul><li>1983, Schultz was testing the idea by selling coffee by the cup. </li></ul><ul><li>1987, decided to sell their coffee business, as well as the Starbucks name, to a group of local investors for $3.7 million. </li></ul><ul><li>Schultz believed that they could open 125 outlets within the following five years. </li></ul>
  3. 3. <ul><li>4,247 stores scattered across the United States and Canada. 1 store/1250 Sq. ft.. </li></ul><ul><li>Saturation of United States market within 2 years. </li></ul><ul><li>By going global it reduces the profit to 20-50%. </li></ul><ul><li>Problems of changing generation. </li></ul><ul><li>Dissatisfaction among Employees on odd hours and low-pay. </li></ul>
  4. 4. <ul><li>Maintaining the growth rate. </li></ul><ul><li>All company owned outlets. </li></ul><ul><li>1% of revenue in Ad. </li></ul><ul><li>Design and open a store in 16 weeks. </li></ul><ul><li>Recovering the initial investment in 3 years. </li></ul>
  5. 5. <ul><li>Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets. </li></ul>
  6. 7. <ul><li>Price </li></ul><ul><ul><li>Higher price in Italy. </li></ul></ul><ul><li>Product </li></ul><ul><ul><li>Italy serves non-coffee items too. </li></ul></ul><ul><li>Promotion </li></ul><ul><ul><li>In local Word of mouth. </li></ul></ul><ul><ul><li>1% of revenue on Advertisement of new launches. </li></ul></ul>
  7. 8. <ul><li>Economic Force. </li></ul><ul><ul><li>Economy down turn results by 14%.(Japan) </li></ul></ul><ul><li>Competitive Force. </li></ul><ul><ul><li>Similar fare by local rivals.(Japan) </li></ul></ul><ul><ul><li>Imitators Coming in to grab the market share.(England) </li></ul></ul><ul><li>Cultural Force. </li></ul><ul><ul><li>The youth is more enthusiastic in embracing new things.(Vienna) </li></ul></ul><ul><li>Political/legal Force. </li></ul><ul><ul><li>Secret regulations and Labor Benefits.(France) </li></ul></ul>
  8. 9. <ul><li>What are the major sources of risk facing the company and discuss the potential solutions? </li></ul>
  9. 10. <ul><li>Saturation of United States market within 2 years. </li></ul><ul><li>Problems of changing generation. </li></ul><ul><li>Dissatisfaction of odd hours and low-pay. </li></ul>
  10. 11. <ul><li>Offer news products i.e. non-coffee items. </li></ul><ul><li>Also position it as royal experience. </li></ul><ul><li>New facilities like net-connection, etc.. So that is seems reasonable to pay $ 3 per cup. </li></ul><ul><li>Improve the employee satisfaction. So, the quality of service as well coffee increases. </li></ul><ul><li>Go global. </li></ul>
  11. 12. <ul><li>Critique Starbucks overall corporate strategy. </li></ul>
  12. 13. <ul><li>Eight cities in US and Canada remained untapped. </li></ul><ul><li>More the outlet = More Sales. </li></ul><ul><li>Low Ad spending although it is going global. </li></ul><ul><li>Low pay to employees. </li></ul><ul><li>“ Predatory Real Estate” strategy. </li></ul>
  13. 14. <ul><li>How might starbucks improve profitability in Japan? </li></ul>
  14. 15. <ul><li>Reduce Price / Increase Benefits. </li></ul><ul><li>Online ordering for busy Japanese. </li></ul>

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