maria risholm, salomon sacal, kamel ait el hadj, geraldo carvalho & yanee zhang
TRANSCRIPT
Maria Risholm, Salomon Sacal, Kamel Ait El Hadj, Geraldo Carvalho & Yanee ZhangMaria Risholm, Salomon Sacal, Kamel Ait El Hadj, Geraldo Carvalho & Yanee Zhang
Starbucks
Mission: to inspire and nurture the human spirit – one person, one cup
and one neighborhood at a time
Who? Seattle 1971 1984 coffehouse conseptIPO in 1992Market Capitalization: US $18.6Bn
Where?More than 50 countries and 16,700 stores
Source: www.starbucks.com, http://finance.yahoo.com/
Starbucks’ Success Formula Motivated employees = superior customer
service
Focus on recruiting & developingAttractive compensation policies
○ Stock options○ Medical benefits
Internationalization Licensing Lack of control
Strategy AlternativesLocal Joint-Venture (licensed format)Acquisition (Wholly owned)Greenfield investment (Wholly owned)
Local joint venture = Preferred Strategy
Local Joint-Venture Advantages
Control
A facility entry into foreign market
Shared fixed costs & associate risks
Local partner’s knowledgeCompetitive conditions, Culture, Political system, etc.
Approaches and Acquisitions in Countries such as : (EMEA)
•Japan – “ スターバックス (transliteration: sutābakkusu), and the abbreviation スタバ is also used as slang”
•Thailand – ” สตาร์�บั�คส� pronounced [satāːbākʰ]”
•Europe
- Joint Ventures and Parameters
Source: http://news.starbucks.com/article_display.cfm?article_id=378
“International operating margin improved to 7.7%, from 1.4% in Q2 FY09”
Starbucks in China:Objective:Develop the largest overseas market in China
Current Situation:
700 coffee stores in Greater China(PRChina, HK, Macau,
Taiwan) , including over 360 in mainland China (2009)
10% of Starbucks’ US$ 6.4 global sales (2005)
A growth of 30% in Beijing recent years and in Shanghai,
less than 2 years, net profit reached 4 million dollars
Licensing and Joint Venture
Ownership Structure:
Shanghai Uni-President Starbucks Coffee Ltd
Licensing: Unable to regulate the cash flow
Joint Venture: Lack of controlling stakes results in the weak
management control
The three individual companies work independently within their own regions. Unable to help to achieve Starbucks' national expansion plans.
Problems:
Solutions:
Whole ownership: Changzhou, Chengdu, Chongqing, Dalian, Dongguan, Foshan, Hangzhou, Kunshan, Nanjing, Ningbo, Qingdao, Shaoxin, Shenyang, Shenzhen, Suzhou, Tianjin, Wuxi, Wuhan and Xi’an.
Starbucks Greater China Support Center in Shanghai (2005)
Other advice for the expansion:
Develop new products
Tea drinks
Social responsibilities:
Starbucks China Education Project (US$5 million)
China Soong Ching Ling Foundation
China Women Development Foundation
Chengdu Education Foundation
2008 Sichuan Earthquake relief ($100,000)
Theoretical patterns
Internalization/market imperfections theory
Licensing system is flawed: (1) limited or no control over the licensee and (2) Starbucks’ specific culture cannot be licensed
Greenfield investments
Dunning’s Eclectic paradigm
Source: International Business, Charles W.L. Hill, McGraw-Hill 7th ed.
Conclusion
No strategy fits all models
Main factors to take into consideration when selecting a course of action: (1) immaterial elements (2) level of control