Starbucks SWOT Analysis
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Starbucks Competitive Analysis - SWOT and PESTLE analysis of Starbucks, a popular coffee house chain based in the United States. The analysis covers Starbucks's business strategy and its internal and external environmental factors.
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A Class Divided - Questionnaire
General Reactions
• What did you learn?
• What scene or scenes do you think you will still remember a month from now
and why those scenes?
• Did any part of the film surprise you? Do you think someone of a different
race, ethnicity, or religion would also find it surprising?
Impact of Discrimination
• What did the children’s’ body language indicate about the impact of
discrimination?
• How did the negative and positive labels placed on a group become self-
fulfilling prophecies?
• In the prison seminar, one of the white women asserts that all people face some
kind of discrimination. Another woman challenges her, claiming that whites
can't really know what it's like to face discrimination every minute of every
day. What do you think?
• Both Elliott and her former students talk about whether or not this exercise
should be done with all children. What do you think? If the exercise could be
harmful to children, as Elliott suggests, what do you think actual discrimination
might do?
Looking at the Structures that Nurture Bias
• What features did Elliott ascribe to the superior and inferior groups and how
did those characteristics reflect stereotypes about blacks and whites?
• How did Elliott's discrimination create no-win situations for those placed in the
inferior group? How did she selectively interpret behavior to confirm the
stereotypes she had assigned?
• It's easy to understand why third-graders might not refuse to obey their teacher,
but when the exercise is done with the prison guards, why don't any of the
adults object?
Looking for Answers
• At recess, two of the boys from different groups get in a fight. Elliott asks the
one who was teased if responding with violence made him feel better or made
the teasing stop. What does the answer suggest about the use of violence as a
http://www.pbs.org/wgbh/pages/frontline/teach/divided/postviewing.html
political strategy? At the time, who was using violence for political purposes
and why?
• How is the blue eyes/brown eyes exercise related to the Sioux prayer, "Help me
not judge a person until I have walked in his shoes"?
PA RT S I X
cases 1 AN OVERVIEW
O U T L I N E O F CA S E S
1-1 Starbucks—Going Global Fast
1-2 Nestlé: The Infant Formula Controversy
1-3 Coke and Pepsi Learn to Compete in India
1-4 Marketing Microwave Ovens to a New Market Segment
cat42162_case1_01-016.indd 1 21/10/15 2:49 pm
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago however, the quiet storefront made front
pages around the world. During the World Trade Organization
talks in November 1999, protesters flooded Seattle’s streets, and
among their targets was Starbucks, a symbol ...
CS1−2Starbucks—Going Global FastCASE 1-1The Starbucks co
CS1−2
Starbucks—Going Global FastCASE 1-1
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago, however, the quiet storefront made front
pages around the world. During the World Trade Organization talks
in November 1999, protesters flooded Seattle’s streets, and among
their targets was Starbucks, a symbol, to them, of free-market capi-
talism run amok, another multinational out to blanket the earth.
Amid the crowds of protesters and riot police were black-masked
anarchists who trashed the store, leaving its windows smashed and
its tasteful green-and-white decor smelling of tear gas instead of
espresso. Says an angry Schultz: “It’s hurtful. I think people are
ill-informed. It’s very difficult to protest against a can of Coke, a
bottle of Pepsi, or a can of Folgers. Starbucks is both this ubiqui-
tous brand and a place where you can go and break a window. You
can’t break a can of Coke.”
The store was quickly repaired, and the protesters scattered to
other cities. Yet, cup by cup, Starbucks really is caffeinating the
world, its green-and-white emblem beckoning to consumers on
three continents. In 1999, Starbucks Corp. had 281 stores abroad.
Today, it has about 7,000—and it’s still in the early stages of a plan to
colonize the globe. If the protesters were wrong in their tactics, they
weren’t wrong about Starbucks’ ambitions. They were just early.
The story of how Schultz & Co. transformed a pedestrian com-
modity into an upscale consumer accessory has a fairy-tale quality.
Starbucks grew from 17 coffee shops in Seattle to over 19,000 outlets
in 58 countries. Sales have climbed an average of 20 percent annu-
ally since the company went public, peaking at $10.4 billion in 2008
before falling to $9.8 billion in 2009. Profits bounded ahead an aver-
age of 30 percent per year through 2007, peaking at $673 million,
then dropping to $582 million and $494 million in 2008 and 2009,
respectively. The firm closed 475 stores in the U.S. in 2009 to reduce
costs. But more recently, 2017 revenues rebounded to $22.4 billion
profits with an operating profit of $4.1 billion.
Still, the Starbucks name and image connect with millions of
consumers around the globe. Up until recently, it was one of the
fastest-growing brands in annual BusinessWeek surveys of the top
100 global brands. On Wall Street, Starbucks was one of the last
great growth stories. Its stock, including four splits, soared more
than 2,200 percent over a decade, surpassing Walmart, General
Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total returns.
In 2006 the stock price peaked at over $40, after which it fell to just
$4, and then again rebounded to more than $50 per share.
Schultz’s team is hard-pressed to grind out new profits in a
home market that is quickly becoming saturated. The firm’s 12,000 ...
Recommended
httpwww.pbs.orgwgbhpagesfrontlineteachdividedpostview.docx
http://www.pbs.org/wgbh/pages/frontline/teach/divided/postviewing.html
A Class Divided - Questionnaire
General Reactions
• What did you learn?
• What scene or scenes do you think you will still remember a month from now
and why those scenes?
• Did any part of the film surprise you? Do you think someone of a different
race, ethnicity, or religion would also find it surprising?
Impact of Discrimination
• What did the children’s’ body language indicate about the impact of
discrimination?
• How did the negative and positive labels placed on a group become self-
fulfilling prophecies?
• In the prison seminar, one of the white women asserts that all people face some
kind of discrimination. Another woman challenges her, claiming that whites
can't really know what it's like to face discrimination every minute of every
day. What do you think?
• Both Elliott and her former students talk about whether or not this exercise
should be done with all children. What do you think? If the exercise could be
harmful to children, as Elliott suggests, what do you think actual discrimination
might do?
Looking at the Structures that Nurture Bias
• What features did Elliott ascribe to the superior and inferior groups and how
did those characteristics reflect stereotypes about blacks and whites?
• How did Elliott's discrimination create no-win situations for those placed in the
inferior group? How did she selectively interpret behavior to confirm the
stereotypes she had assigned?
• It's easy to understand why third-graders might not refuse to obey their teacher,
but when the exercise is done with the prison guards, why don't any of the
adults object?
Looking for Answers
• At recess, two of the boys from different groups get in a fight. Elliott asks the
one who was teased if responding with violence made him feel better or made
the teasing stop. What does the answer suggest about the use of violence as a
http://www.pbs.org/wgbh/pages/frontline/teach/divided/postviewing.html
political strategy? At the time, who was using violence for political purposes
and why?
• How is the blue eyes/brown eyes exercise related to the Sioux prayer, "Help me
not judge a person until I have walked in his shoes"?
PA RT S I X
cases 1 AN OVERVIEW
O U T L I N E O F CA S E S
1-1 Starbucks—Going Global Fast
1-2 Nestlé: The Infant Formula Controversy
1-3 Coke and Pepsi Learn to Compete in India
1-4 Marketing Microwave Ovens to a New Market Segment
cat42162_case1_01-016.indd 1 21/10/15 2:49 pm
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago however, the quiet storefront made front
pages around the world. During the World Trade Organization
talks in November 1999, protesters flooded Seattle’s streets, and
among their targets was Starbucks, a symbol ...
CS1−2Starbucks—Going Global FastCASE 1-1The Starbucks co
CS1−2
Starbucks—Going Global FastCASE 1-1
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago, however, the quiet storefront made front
pages around the world. During the World Trade Organization talks
in November 1999, protesters flooded Seattle’s streets, and among
their targets was Starbucks, a symbol, to them, of free-market capi-
talism run amok, another multinational out to blanket the earth.
Amid the crowds of protesters and riot police were black-masked
anarchists who trashed the store, leaving its windows smashed and
its tasteful green-and-white decor smelling of tear gas instead of
espresso. Says an angry Schultz: “It’s hurtful. I think people are
ill-informed. It’s very difficult to protest against a can of Coke, a
bottle of Pepsi, or a can of Folgers. Starbucks is both this ubiqui-
tous brand and a place where you can go and break a window. You
can’t break a can of Coke.”
The store was quickly repaired, and the protesters scattered to
other cities. Yet, cup by cup, Starbucks really is caffeinating the
world, its green-and-white emblem beckoning to consumers on
three continents. In 1999, Starbucks Corp. had 281 stores abroad.
Today, it has about 7,000—and it’s still in the early stages of a plan to
colonize the globe. If the protesters were wrong in their tactics, they
weren’t wrong about Starbucks’ ambitions. They were just early.
The story of how Schultz & Co. transformed a pedestrian com-
modity into an upscale consumer accessory has a fairy-tale quality.
Starbucks grew from 17 coffee shops in Seattle to over 19,000 outlets
in 58 countries. Sales have climbed an average of 20 percent annu-
ally since the company went public, peaking at $10.4 billion in 2008
before falling to $9.8 billion in 2009. Profits bounded ahead an aver-
age of 30 percent per year through 2007, peaking at $673 million,
then dropping to $582 million and $494 million in 2008 and 2009,
respectively. The firm closed 475 stores in the U.S. in 2009 to reduce
costs. But more recently, 2017 revenues rebounded to $22.4 billion
profits with an operating profit of $4.1 billion.
Still, the Starbucks name and image connect with millions of
consumers around the globe. Up until recently, it was one of the
fastest-growing brands in annual BusinessWeek surveys of the top
100 global brands. On Wall Street, Starbucks was one of the last
great growth stories. Its stock, including four splits, soared more
than 2,200 percent over a decade, surpassing Walmart, General
Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total returns.
In 2006 the stock price peaked at over $40, after which it fell to just
$4, and then again rebounded to more than $50 per share.
Schultz’s team is hard-pressed to grind out new profits in a
home market that is quickly becoming saturated. The firm’s 12,000 ...
there could be room for even more stores. Given such concen-.docx
there could be room for even more stores. Given such concen-
tration, it is likely to take annual same-store sales increases of
10 percent or more if the company is going to match its historic
overall sales growth. That, as they might say at Starbucks, is a tall
order to fi ll.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Rest-
room of Existing Starbucks.” And even the company admits that
while its practice of blanketing an area with stores helps achieve
market dominance, it can cut sales at existing outlets. “We prob-
ably self-cannibalize our stores at a rate of 30 percent a year,”
Schultz says. Adds Lehman Brothers Inc. analyst Mitchell Speiser:
“Starbucks is at a defi ning point in its growth. It’s reaching a level
that makes it harder and harder to grow, just due to the law of large
numbers.”
To duplicate the staggering returns of its fi rst decade, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates 5,507 international out-
lets, from Beijing to Bristol. That leaves plenty of room to grow.
Most of its planned new stores will be built overseas, represent-
ing a 35 percent increase in its foreign base. Most recently, the
chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profi ts to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s,
the company faces an ominously hostile reception from its future
consumers, the twenty- or thirty-somethings of Generation X. Not
only are the activists among them turned off by the power and
image of the well-known brand, but many others say that Star-
bucks’ latte-sipping sophisticates and piped-in Kenny G music are
a real turnoff. They don’t feel wanted in a place that sells designer
coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be taken
for granted. Starbucks’ growth over the early part of the past de-
cade coincided with a remarkable surge in the economy. Consumer
spending tanked in the downturn, and those $3 lattes were an easy
place for people on a budget to cut back.
Starbucks also faces slumping morale and employee burnout
among its store managers and its once-cheery army of baristas.
Stock options for .
Coca-Cola Brews a Hot Acquisition Costa Coffee Case A
Coca-Cola Brews a Hot Acquisition: Costa Coffee
Case
Author: Ahmed Maamoun
Online Pub Date: January 15, 2020 | Original Pub. Date: 2020
Subject: Marketing, International Marketing, International Strategic Management
Level: | Type: Indirect case | Length: 3624
Copyright: © Ahmed Maamoun 2020
Organization: Coca-Cola Company| Costa Coffee| Starbucks | Organization size: Large
Region: Northern America, Eastern Asia, Northern Europe | State:
Industry: Manufacture of beverages| Retail trade, except of motor vehicles and motorcycles
Originally Published in:
Publisher: SAGE Publications: SAGE Business Cases Originals
DOI: http://dx.doi.org/10.4135/9781529724554 | Online ISBN: 9781529724554
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http://dx.doi.org/10.4135/9781529724554
© Ahmed Maamoun 2020
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion
or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein
shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use
only within your university, and cannot be forwarded outside the university or used for other commercial
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Coca-Cola Brews a Hot Acquisition: Costa Coffee
http://dx.doi.org/10.4135/9781529724554
Abstract
The Coca-Cola Company, created in 1886, is the world’s largest beverage corporation, offering
over 500 brands to consumers in 200 countries. The company’s revenues and profits have
been dwindling over the last decade, due to the shrinking soda market, as consumers are
turning away from sugary drinks, and cities are imposing soda taxes. While carbonated soft
drinks (CSD) sales are declining, coffee consumption is on the rise. In August 2018, Coca-Cola
decided to get a USD 5 billion shot of caffeine, and acquired the British coffeehouse Costa.
The acquisition was finalized in January 2019, and now the U.S. beverage giant has access to
almost 4,000 Costa stores in 32 countries. Coffee is the second most-traded global commodity
after oil, and the United States is the largest coffee market in the world, with 450 million cups
consumed daily. The possibilities are endless with Coke’s new global coffee platform, and the
acquisition is likely to have a ripple effect for major c ...
Coca cola brews a hot acquisition costa coffee case a
Coca cola brews a hot acquisition costa coffee case a
36 Pan 1 Introduction and Overviewc. What would happen if .docx
36 Pan 1 Introduction and Overview
c. What would happen if the US. govern-
mentrequired that flat panel displays sold
in the United States had to also be made in
the United States? On balance, would this
be a good or a bad thing?
tl giobalEOGE
Globalization
Use the globalEDGETM site to complete the following
exercises:
Exercise 1
Your company hasdeveloped a new product that has uni-
versal appeal across countries and cultures. In fact; it is ex-
pected to achieve high penetration rates in all the
countries where it is introduced, regardless of the average
income of the local populace. Considering the COSts of the
product launch, the management team has decided to ini-
tially introduce the product only in countries that have a
sizable population base. You are required to prepare a pre-
liminary report with the top 10 countries in terms of popu-
lation size.A member of management has indicated that a
resource called the "World Population Data Sheet" may be
useful for the report. Since growth opportunities are
Exercise 2
d. What does the example of Vizio tell you
about the .futureofproduction in an in-
creasingly integrated global economy?
What does it tell you about the strategies .
that enterprises must adopt to thrive in
highly competitive global markets?
another major concern, the average population growth
rates should be listed also for management's consideration.
You are working for a company that is considering in-
.vesting in a foreign country. Investing in countries with
different traditions is an important element of your com-
pany's long-term strategic goals. As such, management
has requested a report regarding the attractiveness of al-
ternative countries based on the potential returnofFDL
Accordingly, the ranking of the top 25 countries in
terms of FDI attractiveness is a crucial. ingredient for
your report. A colleague mentioneda potentially useful
tool called the "FDI Cottfidence Index"whichis updated .
periodically. Find this index and provide additional.in-
formation regarding how the index is constructed.
The Globalization of Starbucks
Thirty years ago, Starbucks was a single store in Seattle's
Pike Place Market selling premium-roasted coffee. To-
day it is a global roaster and retailer of coffee with some
16,700 stores, 40 percent of which are in 50 countries
outside of the United States. Starbucks set out on its
current course in the 1980s when the company's director
of marketing, Howard Schultz, came back from a trip to
Italy enchanted with the Italian coffeehouse experience.
Schultz, who later became CEO, persuaded the compa-
ny's owners to experiment with the coffeehouse
format-and the Starbucks experience was born. The
strategy was to sell the company's own premium roasted
coffee and freshly brewed espresso-style coffee beverages,
along with a variety of pastries, coffee accessories, teas,
and other products, in a tastefully designed coffeehouse
setting. The company focused on selling "a third place
experience,.
overall sales growth. That, as they might say at Starbucks, is.docx
overall sales growth. That, as they might say at Starbucks, is a tall
order to fill.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Restroom
of Existing Starbucks.” And even the company admits that while
its practice of blanketing an area with stores helps achieve market
dominance, it can cut sales at existing outlets. “We probably self-
cannibalize our stores at a rate of 30 percent a year,” Schultz says.
Adds Lehman Brothers Inc. analyst Mitchell Speiser: “Starbucks is
at a defining point in its growth. It’s reaching a level that makes it
harder and harder to grow, just due to the law of large numbers.”
To duplicate the staggering returns of its first decades, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates more than 7,000 interna-
tional outlets, from Beijing to Bristol. That leaves plenty of room
to grow. Most of its planned new stores will be built overseas, rep-
resenting a 35 percent increase in its foreign base. Most recently,
the chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profits to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s, the
company faces an ominously hostile reception from its future con-
sumers, the twenty- or thirty-somethings. Not only are the activists
among them turned off by the power and image of the well-known
brand, but many others say that Starbucks’ latte-sipping sophisti-
cates and piped-in Kenny G music are a real turnoff. They don’t
feel wanted in a place that sells designer coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be
taken for granted. Starbucks’ growth over the early part of the past
decade coincided with a remarkable surge in the economy. Con-
sumer spending tanked in the downturn, and those $3 lattes were
an easy place for people on a budget to cut back.
To be sure, Starbucks has a lot going for it as it confronts the chal-
lenge of regaining its fast and steady growth. Nearly free of debt, it
fuels expansion with internal cash flow. And Starbucks can maintain
a tight grip on its image because most stores are company-owned:
There are no franchisees to get sloppy about running things. By re-
...
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there could be room for even more stores. Given such concen-.docx
there could be room for even more stores. Given such concen-
tration, it is likely to take annual same-store sales increases of
10 percent or more if the company is going to match its historic
overall sales growth. That, as they might say at Starbucks, is a tall
order to fi ll.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Rest-
room of Existing Starbucks.” And even the company admits that
while its practice of blanketing an area with stores helps achieve
market dominance, it can cut sales at existing outlets. “We prob-
ably self-cannibalize our stores at a rate of 30 percent a year,”
Schultz says. Adds Lehman Brothers Inc. analyst Mitchell Speiser:
“Starbucks is at a defi ning point in its growth. It’s reaching a level
that makes it harder and harder to grow, just due to the law of large
numbers.”
To duplicate the staggering returns of its fi rst decade, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates 5,507 international out-
lets, from Beijing to Bristol. That leaves plenty of room to grow.
Most of its planned new stores will be built overseas, represent-
ing a 35 percent increase in its foreign base. Most recently, the
chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profi ts to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s,
the company faces an ominously hostile reception from its future
consumers, the twenty- or thirty-somethings of Generation X. Not
only are the activists among them turned off by the power and
image of the well-known brand, but many others say that Star-
bucks’ latte-sipping sophisticates and piped-in Kenny G music are
a real turnoff. They don’t feel wanted in a place that sells designer
coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be taken
for granted. Starbucks’ growth over the early part of the past de-
cade coincided with a remarkable surge in the economy. Consumer
spending tanked in the downturn, and those $3 lattes were an easy
place for people on a budget to cut back.
Starbucks also faces slumping morale and employee burnout
among its store managers and its once-cheery army of baristas.
Stock options for .
Coca-Cola Brews a Hot Acquisition Costa Coffee Case A
Coca-Cola Brews a Hot Acquisition: Costa Coffee
Case
Author: Ahmed Maamoun
Online Pub Date: January 15, 2020 | Original Pub. Date: 2020
Subject: Marketing, International Marketing, International Strategic Management
Level: | Type: Indirect case | Length: 3624
Copyright: © Ahmed Maamoun 2020
Organization: Coca-Cola Company| Costa Coffee| Starbucks | Organization size: Large
Region: Northern America, Eastern Asia, Northern Europe | State:
Industry: Manufacture of beverages| Retail trade, except of motor vehicles and motorcycles
Originally Published in:
Publisher: SAGE Publications: SAGE Business Cases Originals
DOI: http://dx.doi.org/10.4135/9781529724554 | Online ISBN: 9781529724554
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http://dx.doi.org/10.4135/9781529724554
© Ahmed Maamoun 2020
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion
or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein
shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use
only within your university, and cannot be forwarded outside the university or used for other commercial
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Page 2 of 10
Coca-Cola Brews a Hot Acquisition: Costa Coffee
http://dx.doi.org/10.4135/9781529724554
Abstract
The Coca-Cola Company, created in 1886, is the world’s largest beverage corporation, offering
over 500 brands to consumers in 200 countries. The company’s revenues and profits have
been dwindling over the last decade, due to the shrinking soda market, as consumers are
turning away from sugary drinks, and cities are imposing soda taxes. While carbonated soft
drinks (CSD) sales are declining, coffee consumption is on the rise. In August 2018, Coca-Cola
decided to get a USD 5 billion shot of caffeine, and acquired the British coffeehouse Costa.
The acquisition was finalized in January 2019, and now the U.S. beverage giant has access to
almost 4,000 Costa stores in 32 countries. Coffee is the second most-traded global commodity
after oil, and the United States is the largest coffee market in the world, with 450 million cups
consumed daily. The possibilities are endless with Coke’s new global coffee platform, and the
acquisition is likely to have a ripple effect for major c ...
Coca cola brews a hot acquisition costa coffee case a
Coca cola brews a hot acquisition costa coffee case a
36 Pan 1 Introduction and Overviewc. What would happen if .docx
36 Pan 1 Introduction and Overview
c. What would happen if the US. govern-
mentrequired that flat panel displays sold
in the United States had to also be made in
the United States? On balance, would this
be a good or a bad thing?
tl giobalEOGE
Globalization
Use the globalEDGETM site to complete the following
exercises:
Exercise 1
Your company hasdeveloped a new product that has uni-
versal appeal across countries and cultures. In fact; it is ex-
pected to achieve high penetration rates in all the
countries where it is introduced, regardless of the average
income of the local populace. Considering the COSts of the
product launch, the management team has decided to ini-
tially introduce the product only in countries that have a
sizable population base. You are required to prepare a pre-
liminary report with the top 10 countries in terms of popu-
lation size.A member of management has indicated that a
resource called the "World Population Data Sheet" may be
useful for the report. Since growth opportunities are
Exercise 2
d. What does the example of Vizio tell you
about the .futureofproduction in an in-
creasingly integrated global economy?
What does it tell you about the strategies .
that enterprises must adopt to thrive in
highly competitive global markets?
another major concern, the average population growth
rates should be listed also for management's consideration.
You are working for a company that is considering in-
.vesting in a foreign country. Investing in countries with
different traditions is an important element of your com-
pany's long-term strategic goals. As such, management
has requested a report regarding the attractiveness of al-
ternative countries based on the potential returnofFDL
Accordingly, the ranking of the top 25 countries in
terms of FDI attractiveness is a crucial. ingredient for
your report. A colleague mentioneda potentially useful
tool called the "FDI Cottfidence Index"whichis updated .
periodically. Find this index and provide additional.in-
formation regarding how the index is constructed.
The Globalization of Starbucks
Thirty years ago, Starbucks was a single store in Seattle's
Pike Place Market selling premium-roasted coffee. To-
day it is a global roaster and retailer of coffee with some
16,700 stores, 40 percent of which are in 50 countries
outside of the United States. Starbucks set out on its
current course in the 1980s when the company's director
of marketing, Howard Schultz, came back from a trip to
Italy enchanted with the Italian coffeehouse experience.
Schultz, who later became CEO, persuaded the compa-
ny's owners to experiment with the coffeehouse
format-and the Starbucks experience was born. The
strategy was to sell the company's own premium roasted
coffee and freshly brewed espresso-style coffee beverages,
along with a variety of pastries, coffee accessories, teas,
and other products, in a tastefully designed coffeehouse
setting. The company focused on selling "a third place
experience,.
overall sales growth. That, as they might say at Starbucks, is.docx
overall sales growth. That, as they might say at Starbucks, is a tall
order to fill.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Restroom
of Existing Starbucks.” And even the company admits that while
its practice of blanketing an area with stores helps achieve market
dominance, it can cut sales at existing outlets. “We probably self-
cannibalize our stores at a rate of 30 percent a year,” Schultz says.
Adds Lehman Brothers Inc. analyst Mitchell Speiser: “Starbucks is
at a defining point in its growth. It’s reaching a level that makes it
harder and harder to grow, just due to the law of large numbers.”
To duplicate the staggering returns of its first decades, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates more than 7,000 interna-
tional outlets, from Beijing to Bristol. That leaves plenty of room
to grow. Most of its planned new stores will be built overseas, rep-
resenting a 35 percent increase in its foreign base. Most recently,
the chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profits to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s, the
company faces an ominously hostile reception from its future con-
sumers, the twenty- or thirty-somethings. Not only are the activists
among them turned off by the power and image of the well-known
brand, but many others say that Starbucks’ latte-sipping sophisti-
cates and piped-in Kenny G music are a real turnoff. They don’t
feel wanted in a place that sells designer coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be
taken for granted. Starbucks’ growth over the early part of the past
decade coincided with a remarkable surge in the economy. Con-
sumer spending tanked in the downturn, and those $3 lattes were
an easy place for people on a budget to cut back.
To be sure, Starbucks has a lot going for it as it confronts the chal-
lenge of regaining its fast and steady growth. Nearly free of debt, it
fuels expansion with internal cash flow. And Starbucks can maintain
a tight grip on its image because most stores are company-owned:
There are no franchisees to get sloppy about running things. By re-
...
Similar to Starbucks SWOT Analysis (10)
there could be room for even more stores. Given such concen-.docx
there could be room for even more stores. Given such concen-.docx
Coca-Cola Brews a Hot Acquisition Costa Coffee Case A
Coca-Cola Brews a Hot Acquisition Costa Coffee Case A
Coca cola brews a hot acquisition costa coffee case a
Coca cola brews a hot acquisition costa coffee case a
36 Pan 1 Introduction and Overviewc. What would happen if .docx
36 Pan 1 Introduction and Overviewc. What would happen if .docx
overall sales growth. That, as they might say at Starbucks, is.docx
overall sales growth. That, as they might say at Starbucks, is.docx
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Starbucks SWOT Analysis
- 1. Starbucks: Issues faced due to competition both at home and abroad. Founded in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker, Starbucks Corporation is an American coffeehouse or café chain which began its journey in Seattle Washington. As of today, Starbucks owns and operates 28,218 cafés all over the world with 14,000 outlets in the home country itself. Since its beginning, Starbucks has dominated the “third place” concept which is also an important reason for their huge success along with the wide variety of hot and cold beverages they serve along with breakfast items, snacks and desserts. However, Starbucks is facing the heat for several reasons which all point towards the fact that Starbucks has lost its competitive advantage and perhaps lost their place in this market. There are many reasons for this occurring which we shall look into. Firstly and expectedly, as the Starbucks SWOT and PESTLE Analysis points out within the last decade, this Starbucks-style model has been adopted, adapted and replicated both in the US and countries all over the world creating problems for Starbucks both at home and abroad. These competitors have been coming up with a more advanced model better suited to local taste and culture and often at cheaper prices. Chains such as Mikel Coffee Company, Luckin Coffee, Costa Coffee, Barista, Caffè Nero and Cafe Coffee Day to name a few have launched hundreds of stores each in their home countries and abroad which have substantially affected Starbucks’ business. Also, each of these have replicated the “third place” model and offer wider, locally-preferred options in both beverages and food items which have soon replaced Starbucks as the go-to cafe. In this age of cafe hopping culture, starting cafés is a highly lucrative market which has been substantially tapped into. For example, Mikel Coffee Company has itself opened 185 stores in 10 years since its founding in 2008 in Greece, Middle East and the UK. Aside from competition from outside, Starbucks is facing an intrinsic problem whereby it is already facing market saturation which has led to store cannibalism. This refers to the fact that Starbucks has opened stores in all potential locations, especially within the US, which has led to Starbucks outlets to compete with each other which are located, sometimes, on the same street. As a result, Starbucks has announced they will be closing 150 stores in the US in 2019 alone. If we look at statistics, within the first half of 2018, Starbucks’ stock was down to 11.38% while the overall market was up by 4.10%. Similarly, in the third quarter of 2018 Starbucks was expecting only a 1.0% growth in their stores which has been recorded as their worst performance in 9 years. In order to maintain their position in the race, Starbucks need to up their game fast. The collective group of small coffee chains have together become a huge problem for Starbucks. To make a comeback in the market, they plan on moving into suburban areas with fewer coffee shops to compete with. Also, Starbucks SWOT and PESTLE Analysis stands true in their suggestion that global presence and international expansion has always been Starbucks’ forte. They plan to open 12,000 new stores in Asia by 2021 with particular focus on China.