Resuming internalization at starbucks..In this following questions are answered:
How did the pace, rhythm and scope of Starbucks' internationalization in the coffee industry affect its performance?
how Starbucks approach internationalization?
Was Starbucks too aggressive in its internationalization?
resuming internationalization at starbucksSaurabh Arora
Starbucks Growth
In 2007 Starbucks had a presence in 17 countries through approximately 17000 stores
Revenue grew from $160 million in 1993 to $10 billion in 2009
Starbucks revenue grew on average 30 percent per year between 1993 and 2009 in line with the company’s growth in the number of stores.
In early 1990’s growth in stores was approximately 70 percent
In 1996 & 1997,year on growth increased in foreign stores but declined in domestic stores
Growth of company slowed to approximately 20 percent per year from 2003 to 2008
Global recession, intensifying competition and supply chain pressures further hindered the growth
Internationalization
In early 1990’s Starbucks expanded into Canada
From 1996,company started to enter more distant countries such as Japan, Singapore, Phillipines, Taiwan and Thailand
Company’s performance slowed down with increase in pace of internationalization
Foreign expansion had larger effect on performance than domestic growth
In 1993 pace of Internationalization was moderate whereas in 1997-98 pace was high
Starbucks acquired Seattle coffee company in United Kingdom and opened 252 additional stores
Starbucks entered Thailand and Australia with the opening of 25 and 18 stores respectively
Effect of PACE on Performance
PACE means “Relative growth in foreign stores each year”
Negative association between pace and performance throughout
Exceptions:
1993 – Moderate expansion Low ROA
1997-1998 – High expansion Moderate ROA
2001 – High expansion Above average ROA
Rhythm & Performance
RHYTHM means “Regularity in Internationalization”
Irregular rhythm leads to more volatility and low performance
Regular rhythm leads to high performance and high ROA
Performance was more sensitive to rhythm of foreign expansion than domestic expansion
Starbucks has evolved from a mere seller of coffee products to a full-fledged chain “restaurant”, offering not only coffee products but also other beverages, foods, and merchandise.
Starbucks is still a global leader in the coffee shop chain business
Introduced an online app making it more convenient for customers to locate stores and place orders
Starbucks slogan of “Uniquely Starbucks” continues to play a huge role in company’s success
Starbucks, a leading specialty-coffee brand and coffee store chain based in the US was founded in 1971 by Gerald Baldwin, Gordon Bowker, and Ziev Siegl.
In 2002, Starbucks had achieved a CAGR of 40% since its IPO and owned approx 5000 stores
Its competitors range from small-scale specialty coffee chains to independent specialty coffee shops, and donut and bagel chains.
Further growth in untapped national and international markets and unreached saturation levels.
Report done by David Mc Guinness, Selim Öztürk and Zhifeng Qi. Master in Business Strategy.
The main purpose of this report is to analyze Starbucks’ strategy, inquiring the coffee industry, competitors, International expansion, resources and capabilities.
The first Starbucks opened in Seattle, Washington, on March 30, 1971,
By three partners who met while they were students at the University of San Francisco
English teacher Jerry Baldwin
History teacher Zev Siegl, and
Writer Gordon Bowker
The three were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans.
resuming internationalization at starbucksSaurabh Arora
Starbucks Growth
In 2007 Starbucks had a presence in 17 countries through approximately 17000 stores
Revenue grew from $160 million in 1993 to $10 billion in 2009
Starbucks revenue grew on average 30 percent per year between 1993 and 2009 in line with the company’s growth in the number of stores.
In early 1990’s growth in stores was approximately 70 percent
In 1996 & 1997,year on growth increased in foreign stores but declined in domestic stores
Growth of company slowed to approximately 20 percent per year from 2003 to 2008
Global recession, intensifying competition and supply chain pressures further hindered the growth
Internationalization
In early 1990’s Starbucks expanded into Canada
From 1996,company started to enter more distant countries such as Japan, Singapore, Phillipines, Taiwan and Thailand
Company’s performance slowed down with increase in pace of internationalization
Foreign expansion had larger effect on performance than domestic growth
In 1993 pace of Internationalization was moderate whereas in 1997-98 pace was high
Starbucks acquired Seattle coffee company in United Kingdom and opened 252 additional stores
Starbucks entered Thailand and Australia with the opening of 25 and 18 stores respectively
Effect of PACE on Performance
PACE means “Relative growth in foreign stores each year”
Negative association between pace and performance throughout
Exceptions:
1993 – Moderate expansion Low ROA
1997-1998 – High expansion Moderate ROA
2001 – High expansion Above average ROA
Rhythm & Performance
RHYTHM means “Regularity in Internationalization”
Irregular rhythm leads to more volatility and low performance
Regular rhythm leads to high performance and high ROA
Performance was more sensitive to rhythm of foreign expansion than domestic expansion
Starbucks has evolved from a mere seller of coffee products to a full-fledged chain “restaurant”, offering not only coffee products but also other beverages, foods, and merchandise.
Starbucks is still a global leader in the coffee shop chain business
Introduced an online app making it more convenient for customers to locate stores and place orders
Starbucks slogan of “Uniquely Starbucks” continues to play a huge role in company’s success
Starbucks, a leading specialty-coffee brand and coffee store chain based in the US was founded in 1971 by Gerald Baldwin, Gordon Bowker, and Ziev Siegl.
In 2002, Starbucks had achieved a CAGR of 40% since its IPO and owned approx 5000 stores
Its competitors range from small-scale specialty coffee chains to independent specialty coffee shops, and donut and bagel chains.
Further growth in untapped national and international markets and unreached saturation levels.
Report done by David Mc Guinness, Selim Öztürk and Zhifeng Qi. Master in Business Strategy.
The main purpose of this report is to analyze Starbucks’ strategy, inquiring the coffee industry, competitors, International expansion, resources and capabilities.
The first Starbucks opened in Seattle, Washington, on March 30, 1971,
By three partners who met while they were students at the University of San Francisco
English teacher Jerry Baldwin
History teacher Zev Siegl, and
Writer Gordon Bowker
The three were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans.
Foudation of business strategy of starbucks is a word file which talks about how the starbucks positioned themselves and their strategies to fight against competitors.
Starbucks: A Story of Growth - case study presentation for EBS/DBSBrandon J. Murray, PMP
For entry into the EBS European Business School / DBS Durham University Business School - dual Executive MBA programme, I was asked to analyze a case study from Kellogg School of Management at Northwestern University. I then had to write a handful of essays and give a 1-hour presentation consisting of 30 min of briefing and 30 min of Q/A from the EBS faculty audience.
Starbucks Corporation is known world-wide for their specialty coffee innovation and creative business design. Over time Starbucks has built a business around a relaxing, somewhat romantic atmosphere that brings to the customer a European feel and thus provides a strong user experience for its customers. In Starbucks’ earliest days, coffee consumption in the United States (US) was considered nothing special. Most US coffee offered a similar taste and wasn’t offered in a special “European” environment. With this absence of uniqueness, convenience was the dominant criteria used by US consumers to choose their coffee.
Enter Starbucks.
A Fortune 500 company, Starbucks share prices reached its peak in 2006 and declined unexpectedly in 2008. Although its business has picked up in 2011 with an increase in operating profits, Starbucks has lost its market leader position to Costa, a chain coffee shop business owned by Whitbread plc. Starbucks’ strategic issues are its decrease in market share, negative brand perception that was invoked by its competitors and its devalued Starbucks’ Experience that was its competitive advantage. A situational analysis of Starbucks was conducted to indicate possible opportunities and threats. Internal analysis and competitor analysis was conducted simultaneously to identify Starbucks distinctive capabilities and weaknesses against competitors. Strategic options such as Market Penetration, Product Development and Market development were assessed for their suitability, acceptability and feasibility. Strategic choices that unravel three issues that Starbucks is challenged with are presented in the report.
Foudation of business strategy of starbucks is a word file which talks about how the starbucks positioned themselves and their strategies to fight against competitors.
Starbucks: A Story of Growth - case study presentation for EBS/DBSBrandon J. Murray, PMP
For entry into the EBS European Business School / DBS Durham University Business School - dual Executive MBA programme, I was asked to analyze a case study from Kellogg School of Management at Northwestern University. I then had to write a handful of essays and give a 1-hour presentation consisting of 30 min of briefing and 30 min of Q/A from the EBS faculty audience.
Starbucks Corporation is known world-wide for their specialty coffee innovation and creative business design. Over time Starbucks has built a business around a relaxing, somewhat romantic atmosphere that brings to the customer a European feel and thus provides a strong user experience for its customers. In Starbucks’ earliest days, coffee consumption in the United States (US) was considered nothing special. Most US coffee offered a similar taste and wasn’t offered in a special “European” environment. With this absence of uniqueness, convenience was the dominant criteria used by US consumers to choose their coffee.
Enter Starbucks.
A Fortune 500 company, Starbucks share prices reached its peak in 2006 and declined unexpectedly in 2008. Although its business has picked up in 2011 with an increase in operating profits, Starbucks has lost its market leader position to Costa, a chain coffee shop business owned by Whitbread plc. Starbucks’ strategic issues are its decrease in market share, negative brand perception that was invoked by its competitors and its devalued Starbucks’ Experience that was its competitive advantage. A situational analysis of Starbucks was conducted to indicate possible opportunities and threats. Internal analysis and competitor analysis was conducted simultaneously to identify Starbucks distinctive capabilities and weaknesses against competitors. Strategic options such as Market Penetration, Product Development and Market development were assessed for their suitability, acceptability and feasibility. Strategic choices that unravel three issues that Starbucks is challenged with are presented in the report.
Management 315: International Management, Professor In Hyeock Lee
Loyola University Chicago Spring 2013
This case study analyzes Starbuck's overall performance as a multinational enterprise using the company's revenue data, 4 distances, firm specific advantages, country specific advantages, foreign direct investment, and much more.
Den här presentationen använde jag då jag presenterade förstudien jag gjorde för Riksantikvarieämbetet under studier vid Medieinstitutet våren 2011. Innehållet baserat på bilder från http://www.flickr.com/groups/recreateculture/ som jag och Karl Nilsson startade hösten 2010, under min praktik på Riksantikvarieämbetet.
Presentation made by Carme Rodríguez and Teresa Andrés on the projects done by the Foreign Language Department of Ins Enric Borràs (Comenius and PELE) part I.
Starbucks India or it can be called as Tatabucks. As Starbucks Corporation and Tata Global Beverages announced 50:50 joint venture called Tata Starbucks Ltd. in January 2012 which operate and own outlets branded Starbucks “A Tata Alliance”. An agreement was also signed between Starbucks and Tata coffee that coffee would 100% locally sourced and roasted
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2. Q(a). How did the pace,
rhythm and scope of
Starbucks'
internationalization in the
coffee industry affect its
performance?
3. Pace… relative growth in foreign stores each year
• Negative association between pace and performance
• Seemingly no relationship between pace and ROA
Rhythm… regularity in internalization
• Irregular rhythm more volatility lower performance
• Regular rhythm higher ROA (exception: 1994-97)
• Performance more sensitive to rhythm of foreign
expansion than domestic expansion
Scope… growth of number of countries entered
into over a period of time
• Negative relationship between scope and returns
• Exceptions: 1998, 2000, 2008-09 (economic recession)
6. Yes, Starbucks was too aggressive because:
• 56 countries, approx. 17,000 stores
• Created a joint venture with a reputable and
capable local company with retailing know-how
in the target host country
• Targeting local demands & Culture in the host
country, for instance; serving tea in Japan, China
omitting the Siren from the logo in Muslim
countries
7. The other side of the coin…
• Focusing more on expansion and not on
improving customer service
• ROA was declining in spite of foreign operations
• Involvement of child labor in their operations
• Decreased product quality
• Problem in retaining their core service and
product offerings
8. Q(c). How should Starbucks
approach internationalization
going forward?
9. • The company should recognize the problem and the
need to make a decision
• The company had been too concerned with competitors
and had focused on expansion instead of improving
customer service
Identification
phase
• A solution is formed to solve the problem identified in
the previous phase
• Need to slow the pace of U.S. store growth and renew
its focus on the store-level unit and also determine a
way to deal with extreme competition as well as build a
name with their customers again
Development
phase
• During this phase, a decision is chosen
• Launching a cheaper alternative to the market,
Starbucks Via, an instant coffee
• Should also launch a program for all of its stores to
help with the customer service issues
• Should train all the store managers and employees to
deal with customers in a uniform way
• Community outreach programs to build their
reputation with customers again
Selection
phase
Incremental decision model should be used to evaluate their
current situation and move forward
10. • “Slow and Steady wins the race”
As experienced from past, Starbucks should not rush in opening new
stores, rather it should focus in improving the customer service and
satisfaction, as suggested by Howard Schultz.
• Enter in only those countries who seem to have been less affected by
the economic slowdown and where a steady economy is forecasted in
future.
• Should try to enter new markets only with local partners as the local
partners will have thorough knowledge of the market and risk will
also be divided.
• Should have a flexible rate structure from country to country without
compromising with the quality i.e. each country has varying
affordability and willingness to pay. A country like India can give
Starbucks huge business but people here hesitate to pay heavy
charges just for coffee.
11. • Invest in only those assets where they expect high return.
• Try more to create a difference between Starbucks and its
competitors.( In India, may be a customer will go to
Starbucks once to try it because of its reputation, but that
does not mean he will keep on coming again and again.
He might instead got to CCD where he will get a good
ambience , good coffee and that too at a cheaper price.)
• Try building strong bonds with the customers for
customer retention.
• Should take corporate responsibility very seriously, as it
will give a very good face to Starbucks in new markets