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GLOBAL MANAGEMENT - CASE STUDYStarbucks International Operations

a presentation

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GLOBAL MANAGEMENT - CASE STUDYStarbucks International Operations

a presentation

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STARBUCKS

First store opened in Seatle in 1971165 Outlet in 1992 when company issued its initial shares of public stocksgenerates $4 billion per year in revenueServes more than 33 million customer each weekPartners with Albertson’s, Barnes & Nobles, Hyatt, Kraft, Marriot, Pepsi, United Airlines

facts and figures

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STARBUCKS

First store opened in Seatle in 1971165 Outlet in 1992 when company issued its initial shares of public stocksgenerates $4 billion per year in revenueServes more than 33 million customer each weekPartners with Albertson’s, Barnes & Nobles, Hyatt, Kraft, Marriot, Pepsi, United Airlines

facts and figures

For Year 2002...... 1310 Stores in more than 30 countries around the

world

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STARBUCKS

First store opened in Seatle in 1971165 Outlet in 1992 when company issued its initial shares of public stocksgenerates $4 billion per year in revenueServes more than 33 million customer each weekPartners with Albertson’s, Barnes & Nobles, Hyatt, Kraft, Marriot, Pepsi, United Airlines

facts and figures

Country Store

Japan 397

Taiwan 99

China 88

South Korea 53

Arab Emirat 23

Lebanon 11

Spain 5

Indonesia 5

New Zealand 34

Hawai 30 0

375

750

1,125

1,500

1995 1996 1997 1998 1999 2000 2001 2002

1,310

929

524

278

128

175

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STARBUCKS

Provide a great work environment and treat each other with respect and dignity

Embrace diversity as an essential component in the way we do business

Apply the highest standard of excellence to the purchasing, roasting, and fresh delivery of our coffee

Develop enthusiastically satisfied customers all of the time

Contribute that profitability is essential to our future success

business philosophy

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STARBUCKSsuccess

factor

Customer Service ExcellenceProduct QualityAccessibilityEmerging Corporate ResponsibilityFinancial ResourcesBrand Recognition

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STARBUCKSbusiness

model

A new Starbucks open in restroom of existing Starbucks.......!!!

Headline in The Onion, a Satirical Publication

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STARBUCKSbusiness

model

Cluster Strategy

Disadvantage : the new stores will often canibalize one another’s business and capture about 30 % of the sales of a nearby starbucks

Advantage : cut down on delivery and management , shortens customer lines, increases foot traffic in an area, brand awareness.

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STARBUCKSbusiness

model

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STARBUCKSbusiness

model

33

STARBUCKSbusiness

model

4

STARBUCKSexpansion

strategy

4

STARBUCKSexpansion

strategy

Advantage• low development cost and risk.• fast market access• Avoids regulations and tariffs

Disadvantage• Lack of control over the licence ‘s

activities and performance

LICENSING

4

STARBUCKSexpansion

strategy

JOINT VENTURE

Advantage• insider access to

market• share cost and risk• leverage partner’s

skill base technology

• local contact

Disadvantage• Lack of controll

over technology• Inability to engage

in global strategic coordination

• Inability to realize location and experience economic

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STARBUCKSexpansion

strategy

WHOLLY OWNED

SUBSIDIARIESDisadvantage• High cost and risk

Advantage• Protection of

technology and skill base

• Full authority of revenue and controll

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STARBUCKS

WHOLLY OWNED

SUBSIDIARIESDisadvantage• High cost and risk

Advantage• Protection of

technology and skill base

• Full authority of revenue and controll

Country Partner Agreement Ownership Stores 2002 Stores 2003

Australia Majority Own 90% 29 60

Japan Sazaby Inc JV-public 40% 357 570

China (Beijing) Mei Da Coffee Licence 26 45

China (Shanghai) President Coffee JV 5% 25 45

Germany KarstadtQuelle JV 19,5% 0 21

Thailand Majority Owned 97% 26 37

Middle East M.H.Alshaya Co Licence 65 98

Indonesia PT.Mitra A Licence 0 5

Spain Grup Vids JV 18% 2 13

Taiwan President Coffee JV 5% 91 137

United Kingdom wholly owned 100% 297 470

Source : Merryl Lynch

international ops and partnership

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STARBUCKS

WHOLLY OWNED

SUBSIDIARIESDisadvantage• High cost and risk

Advantage• Protection of

technology and skill base

• Full authority of revenue and controll

Country Partner Agreement Ownership Stores 2002 Stores 2003

Australia Majority Own 90% 29 60

Japan Sazaby Inc JV-public 40% 357 570

China (Beijing) Mei Da Coffee Licence 26 45

China (Shanghai) President Coffee JV 5% 25 45

Germany KarstadtQuelle JV 19,5% 0 21

Thailand Majority Owned 97% 26 37

Middle East M.H.Alshaya Co Licence 65 98

Indonesia PT.Mitra A Licence 0 5

Spain Grup Vids JV 18% 2 13

Taiwan President Coffee JV 5% 91 137

United Kingdom wholly owned 100% 297 470

Source : Merryl Lynch

international ops and partnership

4

STARBUCKS

WHOLLY OWNED

SUBSIDIARIESDisadvantage• High cost and risk

Advantage• Protection of

technology and skill base

• Full authority of revenue and controll

Country Partner Agreement Ownership Stores 2002 Stores 2003

Australia Majority Own 90% 29 60

Japan Sazaby Inc JV-public 40% 357 570

China (Beijing) Mei Da Coffee Licence 26 45

China (Shanghai) President Coffee JV 5% 25 45

Germany KarstadtQuelle JV 19,5% 0 21

Thailand Majority Owned 97% 26 37

Middle East M.H.Alshaya Co Licence 65 98

Indonesia PT.Mitra A Licence 0 5

Spain Grup Vids JV 18% 2 13

Taiwan President Coffee JV 5% 91 137

United Kingdom wholly owned 100% 297 470

Source : Merryl Lynch

international ops and partnership

Partner first, Country second

Fundamental qualification is expected of its potential partner

Criterien included financial solvency, knowledge of local market condition, prior retail experience, and creative ability

13 weeks training in Seattle

CRITICAL FACTORPartner Selection

Partner first, Country second

Fundamental qualification is expected of its potential partner

Criterien included financial solvency, knowledge of local market condition, prior retail experience, and creative ability

13 weeks training in Seattle

CRITICAL FACTOREnvironment Assesment

Site Attractiveness

Teritorial Intelligence

Actual Environment Factor

Regional and Community Acceptance

Partner first, Country second

Fundamental qualification is expected of its potential partner

Criterien included financial solvency, knowledge of local market condition, prior retail experience, and creative ability

13 weeks training in Seattle

CRITICAL FACTOR

Site Attractiveness

Teritorial Intelligence

Actual Environment Factor

Regional and Community Acceptance

Challenge of Global Expansion

Competitive Environment • Local Competition• Copycat• Untapped Market

Negative perception of an American representative in overseas

Local Culture barrier

Partner first, Country second

Fundamental qualification is expected of its potential partner

Criterien included financial solvency, knowledge of local market condition, prior retail experience, and creative ability

13 weeks training in Seattle

CRITICAL FACTOR

Site Attractiveness

Teritorial Intelligence

Actual Environment Factor

Regional and Community Acceptance

Challenge of Global Expansion

Competitive Environment • Local Competition• Copycat• Untapped Market

Negative perception of an American representative in overseas

Local Culture barrier

Partner first, Country second

Fundamental qualification is expected of its potential partner

Criterien included financial solvency, knowledge of local market condition, prior retail experience, and creative ability

13 weeks training in Seattle

CRITICAL FACTOR

Site Attractiveness

Teritorial Intelligence

Actual Environment Factor

Regional and Community Acceptance

Challenge of Global Expansion

Competitive Environment • Local Competition• Copycat• Untapped Market

Negative perception of an American representative in overseas

Local Culture barrier

CASE STUDIESStarbucks

goes to China

CASE STUDIES

CONTRACoffee is not the main mainstream beverage in ChinaRigid business policies

Starbucks goes to China

CASE STUDIES

PROThe fastest growing and the most powerfull marketplace in the world First mover advantage

CONTRACoffee is not the main mainstream beverage in ChinaRigid business policies

Starbucks goes to China

CASE STUDIESStarbucks

goes to China

TARGET CONSUMERYoung and affluentStatus consciousBusiness executivesPeople who were educated abroadExpatriates

PARTNERSHIPMei Da Coffee (Licencing)President Coffee (Joint Venture)

ENTRY STRATEGY

Entry PhaseConducting research to the Chinesse environmentTesting its Coffee for free in major restaurants and hotels in BeijingFirst store was opened in 1999.

Country DevelopmentBuilding brand awarenessStores opening in China’s major City

GLobal IntegrationDeepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai

Expansion Phase

ENTRY STRATEGYChinese’s Coffee Drinking Behaviour

Entry PhaseConducting research to the Chinesse environmentTesting its Coffee for free in major restaurants and hotels in BeijingFirst store was opened in 1999.

Country DevelopmentBuilding brand awarenessStores opening in China’s major City

GLobal IntegrationDeepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai

considered as social event than daily necessity.

They can sit for hours

mostly cannot drink coffee alone, it must go with the food

Starbucks does most of its business during afternoon and night time

ENTRY STRATEGYImplementing “Starbucks Experience” in China

Entry PhaseConducting research to the Chinesse environmentTesting its Coffee for free in major restaurants and hotels in BeijingFirst store was opened in 1999.

Country DevelopmentBuilding brand awarenessStores opening in China’s major City

GLobal IntegrationDeepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai

considered as social event than daily necessity.

They can sit for hours

mostly cannot drink coffee alone, it must go with the food

Starbucks does most of its business during afternoon and night time

Promoting them self as “third living space” beside home and office

Increase the size of the store around 2000 square feet

Providing foot including traditional chinesse cookies

QUESTION....?