Case Activity how starbuck use to manage its operational strategies while competing globally world wide

3. International Marketing
Submitted To:
Mr. Babar Hameed
Submitted By:
• Shahroz Ali
• Syed M.Hashir

4. CASE STUDY
STARBUCKS—GOING GLOBAL FAST

5. SUMMARY
Starbucks is one of the largest chains of coffee shops in the world. There
are many topics that arise throughout the case with Starbucks Corporation.
Starbucks Coffee is located worldwide and there are many different ways
to look at this situation. The company offers a unique range of coffee,
lattes, espressos, and café style drinks. The company intended to reach a
specific target audience, but has ended up in many different markets and
has been growing rapidly. Starbucks has greatly used the “youth appeal”
strategy to gain entrance into new markets. However, such enthusiasm
cannot be counted on indefinitely; other strategies are always in the works.
Over time Starbucks has been able to acquire a solid brand reputation and
has a world renowned company logo.

6. There have been some distinguished controllable and uncontrollable elements Starbucks
has encountered when entering global markets. The strategies of any company’s goals are
vital to its success. This is one area Starbucks has excelled in, just as McDonald’s has in
recent years. Starbucks has paralleled its branding with the actions found at any Starbucks
across the world. They have an excellent company vision, which they stick to, which in turn
assists their brand image. Starbucks’ image has been achieved not only through this and
their massive global entrance, but through their ability to provide honest quality service. In
recent years there was a time that Starbucks saw the opportunity to go global and jumped
on it.

7. Questions:
1. Identify the controllable and uncontrollable elements that Starbucks has
encountered in entering global markets.
2. What are the major sources of risk facing the company? Discuss potential
solutions?
3. Critique Starbucks’ overall corporate strategy.
4. How might Starbucks improve profitability in Japan?

8. Answer No. 1
The Controllable Elements are:
1. Product: Starbucks provides a variety of products of very high quality. Their
product includes coffee, tea, pastries, Frappuccino beverages and smoothies.
2. Price: Starbucks Charges $1.5 for an espresso in USA, in northern Italy the price is
67 cents and in south just 55 cents.
3. Channel of Distribution: Starbucks channel of distribution is very strong as it is
the largest coffeehouse company in the world, with 20,891 stores in 62 countries,
including 13,279 in the United States, 1,324 in Canada, 989 in Japan, 851 in China
and 806 in the United Kingdom.
4. Promotion: Starbucks promote their coffee by relying on mystique and word of
mouth, the company saves a bundle on marketing costs. Starbucks spends just $30
million annually on advertising, or roughly 1% of revenues.
5. Research: Starbucks tries to bring innovation or new things in its products or
services through research.

9. The Uncontrollable Elements are:
1. Culture: Starbucks faces difficulty because of cultural differences. For instance once
Schultz caused uproar among Palestine supports.
2. Competition: Starbucks faced competition in Italy, France, Japan and in many other
foreign countries.
3. Economic Conditions: The economic conditions are not the same in all countries.
So Starbucks makes its strategy accordingly to each country’s economic conditions.
Answer No. 2
The major sources of risk that Starbucks faced:
1. The home market is becoming saturated.
2. The company is facing an ominously hostile reception from its future consumers, the
twenty or thirty something of generation X.
3. Starbucks is becoming a far less special place for its employees.

10. The potential solutions could be:
1. As Starbucks is facing fierce competition, they need be better than the
competitors. They can lower their prices, better products and services, bring
innovation in their operation or they can incase their product line.
2. There needs to be a comprehensive research and bring a new strategy for its
generation X consumers.
3. They need to restructure their employees’ working schedule, increase their
salary and other benefits to ensure employee satisfaction.

11. Answer No. 3
Critique of Starbucks overall corporate strategy:
1. Starbucks is making less money on each overseas store because most of them are operated
with local partners.
2. The workers are not paid well for overtime or over duty.
3. Its pricing policy is not suitable for generation X.
4. Starbucks only spends $30 million annually on advertising, or roughly 1% of its revenues.
5. There are eight states in U.S. with no Starbucks store.
Answer No. 4
Japan has a very competitive and lucrative market. To improve their profitability in
Japan, they need to position their products and services matching the culture of
Japan. They can lower their products prices, design its stores using Japanese symbols
or designs, free Wi-Fi and other technological facilities and they also should increase
their advertising budget to stay in the competition.