Starbucks' internationalization, analysis and personal point of view

1. Starbucks’case
The internationalization of the company
Lorenzo Ferretti

2. Agenda
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•
•
•
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Why go abroad
How
Where
Porter’s Diamond Model (Three examples)
My personal opinion
• To be or not to be…
aggressive in the foreign market

3. Why go abroad?
• In 1996 the marked had been already saturated
• Undisputed leader in the states
• Tea-drinking countries to convert

4. How?
• Internationalization theories:
 Uppsala Model
 Dunning’s OLI paradigm
 Internalization theory
• Entry modes:
 Wholly-owned stores
 Joint Ventures
 Licensing

5. Where?
Workforce
Skilled
workforce
English
skills.
telecommu
nication
Stability of
government
First and immediate
factors

6. But every country has its “reasons”
• Let’s analyze some example using the Porters’
“Diamond Model”

7. Japan, successful entry
Firm strategy, structure and rivalry:
-The profitable agreement with Sazaby
Factor conditions:
-No factor problem in Japan, which has basic work force and
also advanced work force
-Also modern and comfortable infrastructure…maybe a bit
expansive
Demand condition:
-Eagerness among the young people to imitatate the US lifestyle
-For the most a tea-drinking country, but the speciality blends
marketing were growing
Relating and supporting industries:
-No problems with transporting industries

8. Italy…better don’t
Firm strategy, structure and rivalry:
-Very strong competitors…but different kind
of
Factor conditions:
-Skilled workforce and unskilled
-Financial capitals
-Good infrastructure
Demand condition:
-Totally different culture (coffe while
walking, plastic cups)
Relating and supporting industries:
-No problem with the supporting
industries of suppliers or
transporting

9. But…my personal opinion is different
Italian coffee culture
has changed, and as it,
also Starbucks
• How we (Italians) look
at
Starbucks…everything
but coffee
• «Hang out» place
• The combination
Coffee-MacBook or
Coffee-Book which...
• The “Hipster way”

10. Evidence in support of my thesis
• The success of the competitors:
Does it look
familiar?

11. So…
• Hurry up Starbucks, or
there will be no more
space!

12. Next step…India?
Firm strategy, structure and rivalry:
-Competitors: Café Coffee Day, the Qwiky’s and the Barista
-Impossibility (for the moment) to find a suitable partner
-Economic reforms
Factor conditions:
Demand condition:
-Good availability of workforce and skilled workforce
-Fourth largest economy in terms of purchasing power parity
-Cheap cost of labor
-About 250 million people belonged to the middle class
-Good English language skills
-The fastest growing consumer group was the age group of 20-Excellent ratio between cost and quality of telecom
45 (Starbucks’ target)
infrastructure
-India had the youngest population of the world
Relating and supporting industries:
-India is the tenth most industrialized country

13. To be or not to be…
aggressive in the foreign market
Good
• Ward off competitors
• Sell premium coffee at higher price
• Whole world has became aware of
Starbucks
• avoid traditional advertising channels
Bad
•
•
•
•
•
No control
Quantity instead of quality
Public criticism
Decrease product quality
Drive out small independent stores
•
Bad image
• Too many and too near stores

14. Thanks for your attention