Starbucks global expansion

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I wrote this for MY international business course back in 2004 so this should give you a good idea what they were thinking at the time. This should also give you the information you need to complete the 2 to 3 pages on the current state of affairs and why they wanted to expand in China.

INTERNATIONAL EXPANSION

With a stable business in North America, Starbucks plans on extensively expanding abroad. Starbucks' international strategy is to utilize two expansion strategies-licensing and joint-venture partnerships. The success of expanding into foreign markets is dependent on Starbucks' ability to find the right local partners to negotiate local regulations and other country-specific issues.

Currently, Starbucks exists in a few foreign countries in Asia. The company felt that Asia offered more potential than Europe. According to one executive, "The region is full of emerging markets. Consumers' disposable income is increasing as their countries' economies grow, and most of all, people are open to Western lifestyles." Finally, coffee consumption growth rates in Southeast Asia are estimated to increase between 20 percent to 30 percent a year. With this in mind, Starbucks has plans to invest $10 million in developing its Asian operations and up to $20 million with its joint venture partners in Asia.

Starbucks does not have a roasting plant in Asia as of yet. Instead, one shipment of coffee beans arrives in Asia every other week to supply the company's shops in Singapore and Japan.

JAPAN

On October 25, 1995, Starbucks Coffee International signed a joint venture agreement with SAZABY Inc., a Japanese retailer and restaurateur, to develop Starbucks retail stores in Japan. The joint venture partnership is called Starbucks Coffee Japan, Ltd. This alliance proves to be a strong one because it combines two major lifestyle companies that will provide the Japanese consumer a new and unique specialty coffee experience. Under this partnership, Starbucks opened its flagship Tokyo store in the upscale Ginza shopping district in 1996, its first retail store expansion outside of North America and Europe. Since then, the number has grown to 368 stores in Japan.

Japan is an essential part of Starbucks' international expansion plan because the nation is the third largest coffee consuming country in the world, behind the U.S. and Germany. Japan is also an ideal country because it has the largest economy in the Pacific Rim.

Demand for coffee blends in Japan has doubled in the past five years and specialty blends are the fastest growing segment of the industry. One industry analysts said, ''The Japanese have taken to coffee like a baby to milk.'' Gourmet coffee accounts for 2.5 percent of the 1.2 billion pounds of coffee bought by Japan each year. The average per capita consumption among gourmet drinkers in 1997 was 1.5 cups a day from more than a half cup in 1990. The company picked Japan for its first big overseas venture because it is the third-largest coffee-consuming country in the world, but the quality of its coffee products provides a major opportunity for Starbucks' specialty drinks. Japanese vending machines, for instance, dispense $ 1 billion worth of cold, canned coffee drinks. A similar bottled beverage jointly produced by Starbucks and Pepsi is in the process.

Starbucks almost doubled the number of its outlets in 2001 to 289 and it expects to open more stores in Japan. The stores offer the same menu as it does in its U.S. stores, although portions are smaller. The names of items, such as 'tall' and and 'grande' are also the same as the ones used in the U.S. All of the stores will also feature the company's trademark decor and logo. In addition, Japanese customers are able to purchase Starbucks coffee beans, packaged food, coffee-making equipment as well as fresh pastries and sandwiches.

Starbucks' Japanese sales were 25 ...