Starbucks began in 1971 with one coffee shop in Seattle. By 2006 it had grown to over 12,000 coffee shops globally, with 6,281 company-operated stores generating $7.79 billion in sales. Howard Schultz transformed Starbucks into a global corporation in 1987 through rapid expansion. While North America remains its core market, generating 85% of stores and sales, Starbucks uses a licensing model for most international growth to expand more quickly with less effort abroad.

1. Starbucks
Cami, Gabriel, Akbar, Mitko

2. Summary
 Company’s history
 1971 Seattle
 2006
 12440 coffee shops
 Directly operates 6281 coffee houses
 sales $7.79 bil.
 2009
 16635 coffee shops
 Directly operates 6764 coffee houses
 Sales $9.77 bil.

3. Summary
 1987
 Howard Schultz bought the original Starbucks and transformed
it into Starbucks Corporation
 Rapid expansion of the corporate coffee culture
 Late 90’
 Coffee prices crisis
 oversupply of coffee due to improved production techniques
 Crop boom
 Allegations of not providing a fair price to coffee growers
=> Introduced Fairtrade-endorsed coffee
=> Company was seen as progressive, thus averted the
consumer boycott

4. Summary
 Current situation
 85% of its stores in NA
 US
 80% of revenues are
 99% of operating income

5. Why does Starbucks rely on licensing for most of
its international operations? Does the firm risk the
dissipation of its managerial or technological
advantages?
 Familiarity with the local environment
 Faster expansion with minimal efforts
 Assuming that licensing comes with the
obligation to comply with the licensor’s
rules and standarts, then there would be
no dissipation of managerial or
technological advantages

6. Can you argue the Starbucks is a global company
regardless of the strong dominance of its home
region in terms of sales and locations?
 Yes, Starbucks is a global company,
because it has set up operations in many
countries
 Although most of the foreign operations
are actually licensed
=> Is it the brand that is global or the
organization?

7. What accounts for the discrepancy between
percentage of foreign locations and percentage of
foreign net revenues?
 Because of their licensing strategy
outside of the USA

8. What are some of the reasons why Starbucks
chooses to retain operational control of its
domestic operations?
 Starbucks gains more than 80% of its
revenues from the USA
=> They would like to keep the main
source of their income within tighter
control