mgt 449 case analysis: starbucks corporation competing in a global market

17

The number of Starbucks stores in 1987

17

The number of Starbucks stores as of 2009 in 55 countries

17,133

Beverages.. A New Era!

1990s opening a new store every workday into the 2000s

Initial public offering on the stock market in 1992 - grown to 165 outlets

Currently in more than 55 countries

A shift in strategy?

Stores closed

in the US since 2008

900Stores opened

outside of the US in 2009

900

Why?!

Strengths

Superior quality

The atmosphere

The size of the company

The company’s culture

Weaknesses

Market cannibalization

The bigger you are, the larger the overhead and the bureaucratic costs

The negative perception

Opportunities

Locally themed menu items

Intensifying socially responsible actions

Threats

Rising dairy costs

Local alternatives

Supply shortage and diminishing returns

Only 20%-50% of profit from global locations

An identity crisis?

The Corporate-Level Strategy

Mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

Environmental Mission: Starbucks is committed to a role of environmental leadership in all facets of our business.

Environmental Goals

Goals: Starbucks set a long list of environmental goals, some of the goals are:

Purchase 100 percent responsibly grown and ethically traded coffee by 2015. Achieved.

Double the purchases of Fair-trade certified coffee by 2009. Achieved.

Doubling the farmer land by $20 million by 2015.

The stake-holders to contribute 1 million hours of community services.

50000 young people are innovative in their communities by 2015.

Vertical Integration

exclusive rights to use a high quality Colombian bean crop

Horizontal Integration

Never kill the competition

Tea company acquisition (Tazo)

UK coffee retailer (Seattle’s Coffee)

Business-level strategy

What?

Who?

Where?

Partnership first, country second.

Their international expansion approach

Improving the efficiency

Economies of scale

Human Resource strategy

The marketing strategy

Recommendations

Starbucks have to rethink their “blanket strategy”

Extensive social responsibility campaigns

Catering locally themed menu items

Thank you!

Q & A