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The Globalization of Starbucks

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  The Globalization of Starbucks  Thirty years ago, Starbucks was a single store in Seattle’s Pike PlaceMarket selling premium-roasted cofee. Today it is a global roaster andretailer o cofee with some !, ## stores, $# percent o which are in %#countries outside o the &nited States. Starbucks set out on its currentcourse in the '(#s when the company’s director o marketing, )owardSchult*, came back rom a trip to +taly enchanted with the +taliancofeehouse eperience. Schult*, who later became /, persuaded thecompany’s owners to eperiment with the cofeehouse ormat0and theStarbucks eperience was born. The strategy was to sell the company’sown premium roasted cofee and reshly brewed espresso-style cofeebe1erages, along with a 1ariety o pastries, cofee accessories, teas, andother products, in a tasteully designed cofeehouse setting. The companyocused on selling 2a third place eperience,3 rather than 4ust the cofee. The ormula led to spectacular success in the &nited States, whereStarbucks went rom obscurity to one o the best-known brands in thecountry in a decade. Thanks to Starbucks, cofee stores became places orrelaation, chatting with riends, reading the newspaper, holding businessmeetings, or 5more recently6 browsing the web.+n ''%, with ## stores across the &nited States, Starbucks beganeploring oreign opportunities. The 7rst target market was 8apan. Thecompany established a 4oint 1enture with a local retailer, Sa*aby +nc. achcompany held a %# percent stake in the 1enture, Starbucks ofee o  8apan. Starbucks initially in1ested 9# million in this 1enture, its 7rstoreign direct in1estment. The Starbucks ormat was then licensed to the1enture, which was charged with taking o1er responsibility or growingStarbucks’ presence in 8apan.  To make sure the 8apanese operations replicated the 2Starbuckseperience3 in :orth ;merica, Starbucks transerred some employees tothe 8apanese operation. The licensing agreement re<uired all 8apanesestore managers and employees to attend training classes similar to thosegi1en to &.S. employees. The agreement also re<uired that stores adhereto the design parameters established in the &nited States. +n =##, thecompany introduced a stock option plan or all 8apanese employees,making it the 7rst company in 8apan to do so. Skeptics doubted thatStarbucks would be able to replicate its :orth ;merican success o1erseas,but by the end o =##' Starbucks had some (%# stores and a pro7tablebusiness in 8apan.;ter 8apan, the company embarked on an aggressi1e oreignin1estment program. +n ''(, it purchased Seattle ofee, a >ritish cofeechain with !# retail stores, or 9($ million. ;n ;merican couple, srcinallyrom Seattle, had started Seattle ofee with the intention o establishing aStarbucks-like chain in >ritain. +n the late ''#s, Starbucks opened storesin Taiwan, hina, Singapore, Thailand, :ew ?ealand, South @orea, andMalaysia. +n ;sia, Starbucks’ most common strategy was to license itsormat to a local operator in return or initial licensing ees and royalties onstore re1enues. ;s in 8apan, Starbucks insisted on an intensi1e employee  training program and strict speci7cations regarding the ormat and layouto the store.>y =##=, Starbucks was pursuing an aggressi1e epansion inmainland urope. ;s its 7rst entry point, Starbucks chose Swit*erland.Arawing on its eperience in ;sia, the company entered into a 4oint1enture with a Swiss company, >on ;ppetit Broup, Swit*erland’s largestood ser1ice company. >on ;ppetit was to hold a ma4ority stake in the1enture, and Starbucks would license its ormat to the Swiss companyusing a similar agreement to those it had used successully in ;sia. Thiswas ollowed by a 4oint 1enture in other countries. ;s it has grown its global ootprint, Starbucks has also embracedethical sourcing policies and en1ironmental responsibility. :ow one o theworld’s largest buyers o cofee, in =### Starbucks started to purchaseCair Trade erti7ed cofee. The goal was to empower small-scale armersorgani*ed in cooperati1es to in1est in their arms and communities, toprotect the en1ironment, and to de1elop the business skills necessary tocompete in the global marketplace. +n short, Starbucks was trying to useits inDuence to not only change the way people consumed cofee aroundthe world, but also to change the way cofee was produced in a mannerthat bene7ted the armers and the en1ironment. >y =##, some %percent o the cofee Starbucks purchased was Cair Trade erti7ed, and thecompany has a goal o increasing that to ## percent by =#%. Case Discussion Questions . Ehere did the srcinal idea or the Starbucks ormat come romF Ehatlesson or international business can be drawn rom thisF=. Ehat dro1e Starbucks to start epanding internationallyF )ow is thecompany creating 1alue or its shareholders by pursuing an internationalepansion strategyFG. Ehy do you think Starbucks decided to enter the 8apanese market 1ia a 4oint 1enture with a 8apanese companyF Ehat lesson can you draw romthisF$. +s Starbucks a orce or globali*ationF plain your answer.%. Ehen it comes to purchasing cofee beans, Starbucks adheres to a 2airtrade3 program. Ehat do you think is the diference between air tradeand ree tradeF )ow might a air trade policy bene7tStarbucksF
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