Situation:
Starbucks is the leading specialty coffee retailer in the world. Starting from a small, humble location in Seattle’s Pike Place Market, Starbuck’s now has expanded to 12,000 cafes in 35 countries around the world. CEO Howard Schultz and his Starbucks team hopes to expand to 40,000 shops worldwide by penetrating into key markets, half of those 40,000 situated outside the U.S. Throughout its existence Starbucks has built brand equity and a established a loyal following based on the idea of convenient, high-quality specialty coffee that surpassed the taste of its competition.
Like every company venturing abroad, Starbucks faced many challenges and growing pains in bringing American-style coffee into international markets. For example, in China, Starbucks faces government intervention (although policies are more relaxed presently), consumer hesitation due to the lack of coffee consumed, and different consumer behavior. Another global challenge is the global economy and competition. Starbucks also had to deal with an initial lack of acceptance from historic café culture in France, with older coffee drinkers frowning upon the big U.S. coffee chain with standardized disposable cups. Starbucks has faced challenges particularly in locations with volatile political or economic situations, such as Lebanon and Israel. Starbucks was forced to close in Israel because of the threat of terrorist attacks and was boycotted in Lebanon due to anti-war protestors. Despite the challenges, and CEO Shultz’s warning that an over-aggressive market expansion was compromising the company’s brand experience, Starbucks has been able to maintain profitable growth. Starbucks’ plan to aggressively cluster stores in the fastest growing markets, such as the BRIC countries, may be able to sustain their vision of profitable growth. As with any trend or popular product,