Starbucks began in 1971 as a small coffee shop in Seattle owned by three partners. In the 1980s, the company expanded and was sold to new investors. By the late 1980s, Starbucks had over 4,000 stores across North America. As the US market became saturated, Starbucks looked to expand globally. However, entering new international markets presented both controllable and uncontrollable challenges related to price, product, promotion, and local economic, competitive, cultural, and political forces. To improve profitability and manage risks, Starbucks could diversify products, enhance the in-store experience, improve employee satisfaction, and refine its global expansion strategy. In Japan specifically, Starbucks may consider reducing prices or increasing employee benefits to better adapt to

1. Prepared By: Dobaria Rohit Senta Arvind Kidecha Hitesh

2. In 1971, three coffee-lovers named Jerry Baldwin, Zev Siegl, and Gordon Bowker, open a small shop. Sold fresh roasted coffee beans and brewing equipment. 1983, Schultz was testing the idea by selling coffee by the cup. 1987, decided to sell their coffee business, as well as the Starbucks name, to a group of local investors for $3.7 million. Schultz believed that they could open 125 outlets within the following five years.

3. 4,247 stores scattered across the United States and Canada. 1 store/1250 Sq. ft.. Saturation of United States market within 2 years. By going global it reduces the profit to 20-50%. Problems of changing generation. Dissatisfaction among Employees on odd hours and low-pay.

4. Maintaining the growth rate. All company owned outlets. 1% of revenue in Ad. Design and open a store in 16 weeks. Recovering the initial investment in 3 years.

5. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.

7. Price Higher price in Italy. Product Italy serves non-coffee items too. Promotion In local Word of mouth. 1% of revenue on Advertisement of new launches.

8. Economic Force. Economy down turn results by 14%.(Japan) Competitive Force. Similar fare by local rivals.(Japan) Imitators Coming in to grab the market share.(England) Cultural Force. The youth is more enthusiastic in embracing new things.(Vienna) Political/legal Force. Secret regulations and Labor Benefits.(France)

9. What are the major sources of risk facing the company and discuss the potential solutions?

10. Saturation of United States market within 2 years. Problems of changing generation. Dissatisfaction of odd hours and low-pay.

11. Offer news products i.e. non-coffee items. Also position it as royal experience. New facilities like net-connection, etc.. So that is seems reasonable to pay $ 3 per cup. Improve the employee satisfaction. So, the quality of service as well coffee increases. Go global.

12. Critique Starbucks overall corporate strategy.

13. Eight cities in US and Canada remained untapped. More the outlet = More Sales. Low Ad spending although it is going global. Low pay to employees. “ Predatory Real Estate” strategy.

14. How might starbucks improve profitability in Japan?

15. Reduce Price / Increase Benefits. Online ordering for busy Japanese.