...Starbucks’ International Operation All's Not Well with Starbucks For Howard Schultz, Chairman of Starbucks Corp., this list was special as Starbucks featured in the list. It was a dream come true for the Seattle-based entrepreneur. Though the U.S. economy was reeling under recession and many major retailers were reporting losses and applying for bankruptcy, Starbucks announced a 31 % increase in its net earnings and a 23% increase in sales for the first quarter of 2003. Analysts felt that the success of Starbucks showed that a quality product speaks for itself. The fact that Starbucks spent less than 1 % of its sales on advertising and marketing strengthened this view. In addition to being a popular brand among customers, Starbucks was also considered the best place to work due to its employee-friendly policies. However, analysts felt that the success of Starbucks was due to its profitable domestic operations. It was reported that most of Starbucks' international operations were running into losses. In May 2003, Starbucks' Japanese operations reported a loss of $3.9 million (Japan constituted the largest market for the company outside the United States), and the company also performed badly in Europe and the Middle East. Analysts pointed out that Starbucks' international operations were not as well planned as its U.S. operations. They also observed that the volatile international business environment made it difficult for the company to effectively manage its international...
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...Overview The case explains why Starbucks had to expand outside the US and the entry strategies it adopted in international markets, and discusses the various risks faced by Starbucks and the effect of these risks in its revenues in international markets. Problem Major Problem The major problem of the case was the not so well planned international operations of Starbucks compared to its US operations and the entry strategies it adopted in international markets. Minor Problem The minor problems were: The pricing of the products offered. The high level of prices of the products of Starbucks is generally caused by too expensive cost of production that causes suffering to its customers. The operation problems encountered by the business due to lack of a trained workforce. The inappropriate and unsuitable real state/location for its store. Objectives To solve the problems of this case study. To recommend advices and solutions regarding the problems encountered of this business. Facts *Alternative Course of A*ction To study and think carefully about the decision of entering international markets. To go for a supplier of cheaper items needed in the operation that would enable the business to lower the prices of its products and make it affordable and attract those middle as well as low profile consumers. To hire trained applicants to ensure the smooth...
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...Starbuck’s International Operations Synopsis In 1971 Jerry Baldwin, Zev Siegl, and Gordon Bowker started a coffee bean retailer store named Starbucks and sold specialty whole-bean coffee in Seattle, WA. Ten years later they had increased to their stores to five, they had also opened a small roasting facility. A man with the last name Schultz was so impressed by the Starbucks Company and he was offered a job as their marketing manager. The turning point of the company came when Shultz returned from a housewares show in Milan, Italy where he observed that every coffee house there sold espresso. Shultz came back to the company and thought it would be a good idea if Starbucks started selling espresso and other beverages instead of just the coffee beans. At first the owners did not like this idea, but after a lot of persuasion, they agreed. By the end of the first weekend they made more money selling the beverages than they did the coffee beans. Shultz quit the company after the owners refused to continue selling the beverages. Shultz opened his own coffee bar and named it Il Giornale. Two years later he found out that Starbucks was selling off six stores and their roasting company. Shultz knew this would be a great opportunity that he could not pass up and so he raised $3.8 million and bought it. Since Starbucks was already an established name he changed the name of his other coffee bars too. After huge losses at first, Shultz continued with his business plan and kept...
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...Factors | Starbucks is including this Cautionary Statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”) for forward-looking statements. This 10-K includes forward-looking statements within the meaning of the Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this Report. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. The Company’s actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed below. If any of the risks and uncertainties described in the cautionary factors described below actually occurs, Starbucks business, financial condition and results of operations could be materially...
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...talk about the largest coffeehouse company, the first thing that comes to your mind is Starbucks. Starbucks Corporation was launched in 1971, it corporation is based in Seattle, Washington and has more than 16,000 outlets all over the world. Starbucks always believe that serving the best coffee is there aim, there coffee beans are grown under highest quality standards and sourced using ethical practices. Starbucks s not only limited to selling coffee but also sells verity of products, viz. coffee (more than 30 blends and single origin premium coffees), handcrafted beverages (Frappuccino, smoothies, Tazo tea, fresh brewed coffee), Merchandise (coffee and tea brewing equipment, mugs and accessories, packaged goods, music, books and gifts), Fresh Food (Baked pastries, sandwiches, salads, oatmeal, yogurt parfaits and fruit cups) and Consumer Products (coffee and tea, ready to drink products and ice-creams). They also carry other brands under their trademark Starbucks Coffee, Seattle’s Best Coffee, Tazo Tea, Evolution Fresh, La Boulange and Torrefazione Italia Coffee (Starbucks, 2012). Impact of Globalization and Technology The corporation I researched was Starbucks. Starbucks is a worldwide corporation that operates in around 62 countries around the world. Just like every other corporation that has sprung up exponentially as a global entity, Starbucks has gone above and beyond to adapt its operations to the needs of the specific countries. Provision of local food item as part of their...
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...1.1 Purpose of report The economic impact of Starbucks on the UK economy June 2013 The objective of this report is to investigate the economic contribution of Starbucks to the UK economy. This contribution is quantified in terms of impacts from: The operation of Starbucks in the UK; The supply chain effects created by Starbucks purchases of inputs from elsewhere in the UK economy. The consumer expenditure of Starbucks’ staff and those employed directly in its supply chain spending their wage income. The report also discusses aspects of Starbucks UK operations that are likely to play a more diffuse role in supporting the performance of the overall economy and the localities in which Starbucks has a presence. The report comprises six chapters as follows: Chapter 2 focuses on the economic contribution to value added and the number of people employed by Starbucks operations in the UK. Chapter 3 explores the impacts on the economy, again in terms of value added and employment that Starbucks purchases from its UK supply chain creates and its staffs’ spending their wage income. Chapter 4 aggregates these operational, supply chain and wage consumption effects to provide an overall quantification of the impact on the UK economy from Starbucks activities. Chapter 5 discusses the wider, ‘catalytic’ contributions that Starbucks makes to the UK economy. First, the report provides an overview of Starbucks operations in the UK and an introduction to economic impact...
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...Internationalization STARBUCKS’ INTERNATIONAL OPERATIONS1 Internationally, we are in our infancy. (Howard Schultz, Chairman & Chief Global Strategist – Starbucks, 2003) The expansion strategy internationally is not bullet-proof as it is in the U.S. (Mitchell J. Speiser, Analyst – Lehman Brothers, 2003) ALL’S NOT WELL WITH STARBUCKS In March 2003, Fortune came out with its annual list of “Fortune 500 companies”. For Howard Schultz (Schultz), Chairman of Starbucks Corp. (Starbucks), this list was special as Starbucks [was] featured in the list (position 465). It was a dream that come true for the Seattle-based entrepreneur. Though the U.S. economy was reeling under recession and many retail majors were reporting losses and applying for bankruptcy, Starbucks announced a 31% increase in its net earnings and a 23% increase in sales for the first quarter of 2003. Analyst felt that the success of Starbucks showed that a quality product speaks for itself and the fact that Starbucks spent less than 1% of its sales on advertising and marketing strengthened this view. In addition to be a popular brand among customers, Starbucks was also considered the best place to work due to its employee friendly policies (Starbucks was the first organization in the U.S. to offer stock options and health coverage to part-time employees also). However, analysts felt that the success of Starbucks was due to its profitable domestic operations. It was reported that most of Starbucks’ international operations were running...
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...This paper will discuss the strategy utilized by Starbucks, analyzing the market position, competitive advantage, external environment and will summarize the Porter’s Five Forces. Strategic issues faced by Starbucks will be discussed as well. Howard Schultz bought a Seattle coffee company in 1987 and converted the six coffee stores into an international brand today. Starbucks currently, a publicly owned company with more than 25, 000 employees and 5,689 stores in 28 countries. He is the man behind, and CEO of, Starbucks. Starbucks began as a small company who provided coffee to fine restaurants and espresso bars. It has since, over the last twenty-one years, become the largest retail coffee company in the world. Starbucks has seen its company grow from having a mere 17 stores in 1987 to having currently 5, 688 locations globally. This amazing expansion can be attributed to Howard Schultz, who bought the Starbucks name fifteen years ago. A large reason Starbucks has done so well for almost two decades can be attributed to changes of the coffee image among consumers. The recent popularity of specialty coffee is due to four new consumer trends: 1) the adoption of a healthier lifestyle, which led people to replace alcohol with coffee; 2) coffee bars had become a place where people could meet, and talk; 3) people developed a liking of affordable luxuries, and specialty coffee became the beverage to drink; and 4) consumers had become more aware about coffee, as its popularity...
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...strategies. Political From the discussions of Thomson, Shah and Thomas (2006), the withdrawal of the USA from the International Coffee agreement that set limits of coffee exported could have a major impact on Starbucks operations. Furthermore, political stability in coffee producing regions like Zimbabwe will have huge impact on Starbucks operations as farmers can be able to concentrate on producing quality coffee beans. Economical High inflation rates in the countries where Starbucks have established presence might result to low sales as potential customers might not afford to regularly buy coffee. Since Starbucks exports coffee from various countries, fluctuating exchange rates might result to reduction in profit margins. Finally, slow economic growth rate in countries where Starbucks has established presence as already highlighted might result to low consumer purchasing power implying decrease in demand for coffee. Social Since coffee is now accepted throughout the society, it is now easy for Starbucks to sell coffee in various regions than it was in the past when the company was established. Technological The advancement of Information Technology means that Starbucks can be able to make use the technology to achieve efficiency in the corporation’s operations. In addition, advanced technology can be used to improve Starbuck’s Research and Development team. Legal Three Year Strategic Proposal 7 Health and safety...
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...Globalization and Starbucks Globalization has impacted almost every organization currently in operation. Even when organizations choose to limit their activities and operations to a specific geographical region, globalization becomes part of operations as new technologies bring international attention and customers to the company. In the end, few organizations are able to escape the impact of globalization. Given the importance of globalization on the organization, there is a clear impetus to consider how this reality will impact business operations in both the short and the long-term. Using this as a basis for investigation, this research considers the impact the globalization is having on the Starbucks organization. Through a careful consideration of how globalization has impacted this organization, it will be possible to provide salient policy recommendations for change that will improve operations in the organization. Starbucks-An Overview In order to begin this investigation, it is first helpful to consider a review of the Starbucks organization and critical issues currently impacting its development. Reviewing this history of this organization, Lyons (2005) reports that Starbucks originated in Seattle, Washington as a premium coffee retailer. In an effort to foster the success of the organization, leaders chose an aggressive business model that would allow them to permeate and saturate local markets. The business model used by the organization was novel, prompting...
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...Introduction Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 63 countries. In 2007 the company was in a need of transformation. Peter Gibbons was hired to manage the supply chain of Starbucks. The company was reorganized and the supply chain has changed dramatically since then (Starbucks, 2012). Here is a diagram showing the supply chain network of Starbucks in 2014: ... Components of the supply chain Starbucks has commitment to sell only the finest coffees and coffee beverages. To ensure compliance with their coffee standards, they control coffee purchasing, roasting and packaging, and the global distribution of coffee used their operations. The company purchases green coffee beans from multiple coffee-producing regions around the world and custom roast them to the exacting standards for our many blends and single origin coffees. The price of coffee is subject to significant volatility. Although most coffee trades in the commodity market, high-altitude Arabica coffee of the quality sought by Starbucks tends to trade on a negotiated basis. Both the premium and the commodity price depend upon the supply and demand at the time of purchase. In addition to coffee, Starbucks also purchases significant amounts of dairy products, particularly fluid milk, to support the needs of Company-operated stores. Products other than whole bean coffees and coffee beverages sold in Starbucks® stores include tea and a number of ready-to-drink...
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...retailer, Starbucks sells coffee drinks, food items, coffee beans, and coffee-related accessories and equipment. In addition, Starbucks sells whole-bean coffees through a specialty sales group and grocery stores. Starbucks has grown beyond coffee into related businesses such as coffee-flavoured ice cream and ready-to-drink coffee beverages. The purpose of this paper is to analyze Starbucks business strategy, customer value proposition, company’s operations and the risks to financial results and reporting in the short term. BUSINESS STRATEGY The Starbucks former strategy was centered in offering a high quality product to a narrow consumer segment (coffee lovers), therefore, a focus strategy. Later on, primarily thanks to the vision of Howard Schultz, the company moved to the differentiation strategy which is defined by Porter as “differentiating the product or service offering of the firm, creating something that is perceived industry wide as being unique” . Some of the advantages of this strategy are: customers have a lower sensitiveness to price, opportunity for higher margins, creation of entry barriers thanks to customer loyalty and brand uniqueness CUSTOMER VALUE PROPOSITION The brand strategy was best captured by the phrase “live coffee.” From a retail perspective, this meant creating an “experience” that people would want to incorporate into their everyday lives. There were also three components to the branding strategy: Coffee - Starbucks offered...
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...STARBUCKS: DELIVERING CUSTOMER SERVICE In 1992 Starbucks vision was to become the “Third Place” (home, work and then Starbucks). The value proposition was based on high quality coffee, high service standards and customer intimacy all offered in a relaxed and comfortable atmosphere. The positioning was meant to appeal to a niche market of highly educated affluent customers predominantly female between the ages of 24-44 years. Starbucks did not have a dedicated marketing strategy, but the function was performed by three separate groups with little coordination. In the words of Chistine Day everybody had to perform marketing as part of their job. This meant that they weren’t strategic in their approach and while they were hugely successful over the next decade, by 2002 there were some widening gaps between Starbucks vision and their market survey results. Christine Day realized they had failed in terms of “customer intimacy”; their customer base had changed, yet they hadn’t realized this. Additionally their service level had fallen, with a concurrent increase in the technical and rigorous demands of the barista’s job. The entry strategy into China similarly positioned Starbucks as an elite and ubiquitous brand. In the east and particularly in China, status is an integral part of the culture. Starbucks positioning would therefore appeal to the burgeoning masses of young well educated and affluent class of Chinese society. This market segment had growing purchasing power and an...
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...ASSIGNMENT SUBMISSION FORM Treat this as the first page of your assignment Course Name: Competitive Strategy Assignment Title: Project – Globalization Problems faced by Starbucks – Focus on Europe (Let us not waste paper, please continue writing your assignment from below) Table of Contents Executive Summary 3 Industry structure – Porter five forces analysis 4 Company background 5 Globalization strategy [1995-2008] 9 Performance in EMEA 11 Findings and analysis 13 References 27 Executive Summary This study is focused on Starbucks, the world’s largest coffeehouse company. The company has the knack of finding the magic formula for every aspect – be it customer satisfaction, innovative marketing or smart partnerships. Given the brilliant performance that Starbucks found in the US, success should have been a foregone conclusion in other geographies as well. Despite all the positives, it could not replicate the same degree of success in Europe as it enjoyed in the US. This study has analyzed the factors which might be held accountable. The aggressive policy of opening stores worldwide to achieve inimitability of its business model, loss of control over the cost of operations, the stock market’s notional correlation of success with number of stores, over-reliance on Seattle management causing a lack of decentralization of key decision-making power in multi-domestic...
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...Author: Group 2 Course: Operation Management SERVICE QUALITY IN STARBUCKS COFFEE An in-depth study ABSTRACT This report has been prepared to analyze the processes and strategies such as control of operations systems, design and planning of Starbucks. Theoretical frameworks have been applied to evaluate the company’s operational strategy in terms of its products and services offering. While the report considers Starbucks overall strategy, it also focuses on the daily operations of Starbucks franchises. The study evaluates how Starbucks has been able to position itself as a leader in its market segment and analyses the strengths and weakness in the company’s existing strategy. Upon dissecting various aspects of the company’s processes, it provides an appreciation of the company’s efforts to continuously evolve in the changing market conditions by incorporating new product design and being innovative to stay at parity with its competition. Finally, upon identifying the areas of improvement in the company’s existing strategy, the report conclusion discusses about lesson learned and possible recommendations that can be incorporated in order to further ensure operational efficiency thereby maximizing profits and increasing its value offering. Page 1 of 31 Table of Contents ACKNOWLEDGEMENT .............................................................Error! Bookmark not defined. ABSTRACT ..........................................................
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