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VietNam entry mode of Starbuck
- 2. Table of Content STARBUCKS MODE OF ENTRY IN VIETNAM MARKET OVERVIEW OF STARBUCKS COMPANY 01 02 EVALUATION AND LESSON LEARNT FROM STARBUCKS 03
- 4. Starbucks Company ● Starbucks corporation – an America global company based in Seattle Washington ● Largest coffee-house company in the world with more than 30,000 stores in more than 60 countries (2021) ● Place high value on ethnic behavior and company wide diversity
- 5. Mission and Vision • “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” Mission • To establish Starbucks as a premiere purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow Vision • Perseverance • Teamwork • Integrity • Respect for culture Value
- 7. Starbucks world map – Starbucks stores in the world
- 8. Starbucks ranked 7th in the top 10 chains with the most stores Starbucks in Vietnam Entering Vietnam market since 2013, Starbucks has opened 77 stores across Vietnam (2021) Penetrating Developing
- 10. - Jan 03, 2013 - Maxim Group - Jan 31, 2013 - First store in Vietnam - Operated by Coffee Concepts Starbucks’ Mode of Entry in Vietnam - Sourcing long-term Arabica coffee beans from VN - Working closely with the locality Coffee Concepts (VN) 1st store in Ho Chi Minh City Purchase Arabica coffee in VN Licensing
- 11. 315,000 USD / store 500,000 USD / store Starbucks’ Mode of Entry in Vietnam 700,000 USD 4 stores / year 20 stores / 5 years Licensing Fee Cost of Store Opening Liquid Assets Requirement No. of Stores Opened
- 12. Conditions & Responsibilities of Coffee Concepts Vietnam - Coffee Concepts must attend and require their employees to attend professional training courses before the store comes into operation. - Coffee Concepts Vietnam can only offer products approved by Starbucks and must offer a full menu set by the company, sourcing from suppliers approved or designated by the company. - Coffee Concepts Vietnam must agree to refurbishment according to the company's standards. - Coffee Concepts Vietnam has no right to change to the company's proprietary mark or system other than those granted in the agreement and Coffee Concepts Vietnam can not sublicense.
- 13. Benefits for Starbucks’ licensed stores in VN - Starbucks will support Coffee Concepts Vietnam in finding suitable locations - Starbucks will adjust the operation process for Coffee Concepts Vietnam - Experts and marketing managers will work directly with the Vietnam branches - All stores will be provided with ongoing expertise, consulting and support including onsite visits - Provide Starbucks’ licensed stores in Vietnam with the equipment they’ve already approved for use
- 14. UK Spain Vietnam Entry Mode Wholly-owned Subsidiary (M&A) Joint Venture License Culture Distance High High High Global Management Efficiency Requirement High degree of internationalization Springboard to Euro market Fast internationalization High speed inernationalization Resource commitment / Firm size Starbucks’ large capital Commit Great Quantity Limited available resources Few resource comitted Limited available resources Management Risk Attitude High management risk Middle Minimize holding + Share financial risk Low Minimize international investment Market Potential Great market potential Yet-to-mature market Great market potential Already mature market Low degree Competitive Intensity High High Low Starbucks’ Different Entry Modes
- 15. Evaluation and lessons learnt from Starbucks' entry in Vietnam 03
- 16. Success in Viet Nam Source: Euromonitor international from official statistics, trade associations, trade press, company research, trade review, trade sources Market share Number of stores Set the stage for success 9.1% market share in 2016 28 stores in 2017 Meeting the Vietnamese’s young people’s needs for Western culture experiences GBN brand shares in chained café/bars: % food service value (2013-2016) Regular customer’s base 90.000 – 100.000 VND (2021) % value Global Brand Owner 2013 2014 2015 2016 Highlands Coffee Viet Thai International JSC 28.8 21.8 23.6 24.6 Vulvuzela Beer Club Golden Gate Trade & Services JSC 7.5 17.9 19.5 16.1 Starbucks Starbucks Corp 3.1 8.0 8.8 9.1 Trung Nguyen Trung Nguyen Corp 13.4 10.0 7.8 5.7 Coffee Bean & Tea leaf International Coffee & Tea Co Ltd 6.4 4.7 3.2 2.1 Phuc Long Phuc Long Coffee & Tea Co Ltd 2.1 2.2 2.3 2.1 McCafé McDonald’s Corp - 0.7 1.2 1.6 Hoa Huong Duong Hoa Huong Duong Co Ltd 4.2 2.4 1.6 1.0 Angel-in-us Coffee Lotte Group 2.6 2.3 1.5 1.0 Gloria Jean’s Coffees Retail food group Ltd - 1.7 1.3 0.9 Bud’s Dean Foods Co 1.0 0.7 0.5 0.5 TapioCup VinaFranchise Corp 2.1 0.6 0.4 0.2 Gloria Jean’s Coffee Jireh International Pty Ltd 3.2 - - - Others Others 25.5 27.0 28.3 35.1 Total Total 100.0 100.0 100.0 100.0
- 17. Factors contribute to the success of Starbucks’ in Vietnam Localized coffee and goods Young people are influenced by Western culture and receptive to new experiences Western atmosphere - Launch Vietnamese coffee called Cafe sua da and Asian Dolce latte - > adaptibility and humble attitude - Special cup adorned with Ao dai 01 02 Barista’s training Target young customer and generate demands by means of scarcity -> large queues in their flagship store 04 03 Location & Distribution strategy Train barista to maintain international quality standard -> show long-term vision and lower turnover-rate
- 18. Starbucks’ limitation Starbucks has far less coverage than in the regional countries Source: CNBC
- 19. Starbucks’ limitation Lost its core brand value and commoditization due to rapid expansion Its rigidity in entering a new market -> not fit with local culture and habits
- 20. High price: A Robusta coffee sold in local coffee shops may cost only $0.50 while Starbucks coffee can cost up to $3 Reasons for their limitations Different in coffee tatstes: Vietnamese people prefer Robusta coffee – stronger bitter taste and higher caffeine content compared with Arabica of Starbucks Coffee Price Fierce competition - Large direct competitors including family-owned café to street coffee stores. - 540,000 coffee shops - 430,000 sidewalk coffee shops
- 21. Lessons learnt from Starbucks 01 02 03 Analysis of external and internal environment How local conditions affect consumers’ perception of the brand Understand cultural differences - Adapt to the tastes of different cultures - Changes in the brand’s colors and appearance => Localization Understand competitors Categorize and evaluate competitors to understand their strengths and weaknesses
- 22. CREDITS: This presentation template was created by Slidesgo, including icons by Flaticon, infographics & images by Freepik and illustrations by Stories Thanks https://tuonggodocdao.com/
- 24. Political Environment Vietnam is considered a country with a stable political background. That is reflected in 3 aspects: ● Government system ● Diplomatic relations ● Civil rights Vietnam has very favorable political conditions for foreign enterprises who want to penetrate the market.
- 26. Social Environment Vietnam population pyramid by age group, 2012 Demography Education Awareness of coffee culture As of 2013, the total population of Vietnam is about 90 million people. Every year, more than 400,000 people graduate from universities and colleges in the country. The habits and types of coffee of Vietnamese are different from Western countries 10 5 0 5 10 15 0-4 05-09 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65 above Female Male
- 27. PESTLE TECHNOLOGICAL FACTORS Transfer of technology to coffee farmers Increasing adoption of mobile technology for online purchases Rising availability of specialty coffee machines for home use LEGAL FACTORS Increasing of employment regulations Product safety regulations and the developing GMO regulations ENVIRONMENTAL FACTORS The increasing availability of sustainable business processes Environmental issues: growth of coffee suffers from insects, diseases, climate, or natural disasters
- 28. Vietnam’s coffee market analysis Central Highlands Majority of Robusta coffee Mixed - Concentrated Northerner’s preference Sipping & Thinking Vietnamese’s style of enjoying coffee Bold, Bitter, Fragrant Almond, Earthy Coffee taste preference Iced Coffee Southerners’ preference Coffee-to-go New Potential Unclear
- 30. SWOT analysis Further expansion in developing markets. Higher business diversification to include operations related to food, beverages, and merchandise. Stronger market position through additional partnerships or alliances. T O W S Threats Competition with low-cost coffee sellers Imitation of name, design, or recipes Independent coffeehouse movements Opportunities Weaknesses Pricing strategy for high price points Generalized standards for most products Imitability of products, especially beverages Strengths Strong coffee and coffeehouse brand image. Effective capabilities for managing a global supply chain of coffee and related materials. Moderate diversification through various subsidiaries and products, including merchandise.