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Starbucks' global strategy

One of the benefits when a business moving from a domestic to an international strategy is the firm can earn a greater return on its investments. This means the firm can realize many advantages on resources and capabilities over its rival.

In 1995, because of the saturation of the United States market, Starbucks, an international coffee house chain, started to expand its business overseas. Starbucks first tested the Japanese market by establishing joint ventures with local retailers. By 2001, Starbucks had more than 150 stores and plans to continue its success at a brisk pace. The company began by entering into joint ventures with local businessmen that allowed Starbucks to retain control and have the benefits of a local operating partner, Starbucks was able to embark on an aggressive expansion campaign, and successfully opened in foreign markets by 2001. This plan made the opening of over 600 stores located out of the United States possible. The decision to expand internationally gave Starbucks the ability to reach a larger market and meet its stated growth goals. more than 200 units in other countries, including China, Japan, Kuwait, Lebanon, New Zealand, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand.

(Source: http://www.fundinguniverse.com/company-histories/Starbucks-Corporation-Company-History.html)

Prepare explanations of the following as they relate to the International Business Strategy of Starbucks:

* Mission Statement
* Product Strategy
* Distribution Strategy
* Pricing Strategy

Describe the global environment and the markets that are being targeted, including:

* Competitive Environment
* Target Market
* Communication Strategy

Include an explanation of of the impact that culture has on Starbucks' activities around the world.

Finally, identify the key management issues that Starbucks faces.

Solution Preview

Starbucks Mission Statement

To inspire and nurture the human spirit- one person, one cup and one neighborhood at a time
Product Strategy

Psychographics

Changes in the social and economic structure of the country are resulting in higher levels of disposable income and a greater interest in Starbuck products and merchandise. At the same time, other coffee shops are trying to tap in on the fad created by Starbucks. There are many competitors trying to become successful selling franchises for competitors to Starbucks. Starbucks senior management realized some time ago that there was no real difference between the qualities of their coffee to that sold in competitor companies. Instead, the ubiquitous cup of Starbucks' coffee is a prop for many people. It makes a statement about the amount of disposable income and individual may have.

Marketing Strategy Using the Internet

In 1998 and 1999, Starbucks moved boldly, acting as if the Internet presented a can't-miss opportunity. Then the company stumbled again and again, as high-profile initiatives led to costly write-downs. Now Starbucks is pursuing what may be its wisest online strategy yet. No longer is the company trying to redefine its business in radical ways around the Internet.
This time, Starbucks is tying its online efforts closely to its central mission: building customer loyalty around cappuccinos, lattes, and other fancy beverages. "We aren't in the business of selling Internet access," says Darren Huston, senior vice president for new ventures. "Our job is to sell more coffee."

On its Web site, Starbucks now runs a simple, easy-to-use store that sells coffee beans, mugs, brewing machines -- and not much else. Gone are the dreams that the company once harbored of involving itself in the online merchandising of everything from furniture to videocassettes. And while the company is currently rolling out high-speed wireless connections in its physical stores, it's doing so in a way that minimizes any disruption of the traditional cafe experience.

Retail Strategy

Starbucks' retail strategy is designed primarily to maintain loyalty and repeat business among its target market (upscale coffee drinkers) encompasses hiring and training knowledgeable counter servers, called baristas (bartenders) to educate customers about starbucks' specialty coffee drinks and associated products, and to provide customers with an opportunity to take a break from their busy lives in a relaxing atmosphere. The company has also entered some creative partnerships to put its cafes in Nordstrom and Barnes & Noble and serve its coffee on United Airlines. Licensing the brand name for other food products such as ice cream and soft drinks also increases its brand awareness.

Retail Mix

Like every retailer, Starbucks supports its strategy with its retail mix.
With regard to location, individual sites are selected in the most highly visible places possible, and centralized cities serve as hubs or regional centers (clustering) for roll out expansion into nearby markets.

Its merchandize assortment based on sales distribution is composed of coffee beverage (58 percent), whole bean coffee by the pound (17 ...

Solution Summary

This solution looks into Starbucks' mission, product, distribution, and pricing strategies. It also discussion the survival technique applied by the company in facing global business challenges.

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