A tiny homework assignment for Strategic Management class on the reason behind Starbucks' global success.

1. Hien Le
Strategic Management – Homework Assignment
Why is Starbucks so successful?
On Feb 1 2013, when Starbucks opened its first Viet Nam store in the downtown of Ho Chi Minh City,
locals queued up in line for more than three hours just to have a cup of coffee. By July 2014, Starbucks
had total 11 stores in Viet Nam, with 8 in HCMC and 3 in Ha Noi. However, the success of Starbucks in
Viet Nam market is not an exceptional story by no means. As of February 2014, Starbucks is present in
65 countries and territories with more than 21,000 stores. In this paper, we will briefly discuss the
strategic reasons behind Starbucks’ global success.
Unique Identity
Starbucks has an exclusive ambience that differentiate themselves from other regular coffee shops. A
Starbucks interior in Los Angeles won’t look and feel too different from one in Ha Noi — a rich warm
color scheme, jazz and alternative music, clean set of coffee brewing equipment, and happy baristas
who seems like really enjoy their works in green aprons.
The cups are iconic and recognizable with customers’ first name in it, eventually become their mobile
advertising billboards. Starbucks is obsessive about conducting customer surveys on everything from the
music to the décor to the toilets.
Howard Schultz, Starbucks’ CEO and chairman, makes sure to have Starbucks stay updated on the latest
technology, often times being the first to introduce the newest advancements to its customers. For
example, Starbucks was one of the first companies to adopt location-based promotions and mobile
payments.

2. Hien Le
Strategic Management – Homework Assignment
High value at moderate cost
Starbucks has a superlative range of products: from its on-site beverage to all kinds of coffee package.
They also introduce fresh, new initiatives, including a new product line of hot sandwiches and breakfast
food and new drinks such as coffee liqueurs.
Starbucks was the first company introducing the concept of ‘coffee snobbery’, where customers can
customize their orders the precise way they want. US customers seemed to love the exotic and
complicated coffee drinks you could get, instead of the ordinary cup of filtered coffee that everyone
have. They also maintain strict quality controls in its coffee sourcing as well as in its customer service
and peripheral products to justify its costs, and customers are always willing to pay more to enjoy high
quality products and services.
Extensive distribution strategy
When Starbucks went public in 1992, it had only 165 stores spread throughout Seattle and its
neighboring states. Their main strategy that enabled them to become a global phenomenon is hard to
believe at first: they decide to saturate the market. Howard Schultz decided that the Starbucks strategy
would be to blanket an area completely. Instead of worrying about stores eating up each other’s
business, the Starbucks strategy focused on heavily increasing the foot traffic in one specific part of
town. Clustering its stores in one area helped Starbucks quickly achieve market dominance. With over
20 million regular customers per week, no other American retailer can claim a higher frequency of
visiting customers.
As a matter of fact, store design, planning and construction are also part of the strategy. Locations are
designed for customers to meet, relax or simply enjoy a peaceful interlude in their day.
Starbucks continues to keep its customers happy and rely on non-traditional means of attracting new
customers: that is the Starbucks strategy.

3. Hien Le
Strategic Management – Homework Assignment