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GLOBAL MANAGEMENT - CASE STUDY
    Starbucks International Operations
                       a presentation


                                     1
GLOBAL MANAGEMENT - CASE STUDY
    Starbucks International Operations
                       a presentation


                                     1
First store opened in Seatle in
1971
165 Outlet in 1992 when
company issued its initial
shares of public stocks
generates $4 billion per year in
revenue
Serves more than 33 million
customer each week
Partners with Albertson’s,
Barnes & Nobles, Hyatt, Kraft,
Marriot, Pepsi, United Airlines



              STARBUCKS
                      facts
               and figures
                                   2
First store opened in Seatle in
              1971
For Year 2002...... 13101992 initial
              165 Outlet in
              company issued its
                                  when

 Stores in more than public stocks
              shares of 30
  countries around the billion per year in
              generates $4
              revenue
          world
              Serves more than 33 million
              customer each week
              Partners with Albertson’s,
              Barnes & Nobles, Hyatt, Kraft,
              Marriot, Pepsi, United Airlines



                              STARBUCKS
                                      facts
                               and figures
                                                2
1,500
   Country    Store
                                                            1,310
                                First store opened in Seatle in
Japan         397
                                1971
Taiwan         99     1,125     165 Outlet in 1992 when
China          88               company issued its initial
                                                        929
South Korea    53               shares of public stocks
                       750      generates $4 billion per year in
Arab Emirat    23
                                revenue
Lebanon        11                                  524
                                Serves more than 33 million
Spain          5                customer each week
                       375
Indonesia      5
                                Partners with Albertson’s,
                                               278
                                Barnes & Nobles, Hyatt, Kraft,
                                           128
New Zealand    34               Marriot, Pepsi, United Airlines
                                   5    17
Hawai          30        0
                              1995 1996 1997 1998 1999 2000 2001 2002



                                                  STARBUCKS
                                                          facts
                                                   and figures
                                                                        2
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



                                            STARBUCKS
                                               business
                                             philosophy
                                                      3
Customer Service
Excellence
Product Quality
Accessibility
Emerging Corporate
Responsibility
Financial Resources
Brand Recognition


                      STARBUCKS
                         success
                           factor
                                3
A new Starbucks open in restroom
    of existing Starbucks.......!!!
            Headline in The Onion, a Satirical Publication




                                              STARBUCKS
                                                 business
                                                   model
                                                             3
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.



                               STARBUCKS
                                  business
                                    model
                                         3
STARBUCKS
   business
     model
          3
STARBUCKS
   business
     model
          3
STARBUCKS
   business
     model
          3
STARBUCKS
  expansion
    strategy
           4
Advantage
            • low development cost and risk.
            • fast market access
            • Avoids regulations and tariffs
LICENSING
            Disadvantage
            • Lack of control over the licence ‘s
               activities and performance




                                    STARBUCKS
                                      expansion
                                        strategy
                                                    4
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
                          JOINT
• Inability to realize
   location and
                         VENTURE
   experience
   economic



                                   STARBUCKS
                                     expansion
                                       strategy
                                              4
Advantage
  WHOLLY       • Protection of
                 technology and skill
  OWNED          base
                                        Disadvantage
                                        • High cost and risk
SUBSIDIARIES   • Full authority of
                 revenue and controll




                                        STARBUCKS
                                          expansion
                                            strategy
                                                               4
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       Advantage              0              5
   WHOLLY Grup Vids
 Spain                                     JV
                                                      • Protection of
                                                        technology and skill 2
                                                           18%                             13
   OWNED President Coffee
 Taiwan                                    JV           base5%              91
                                                                               Disadvantage
                                                                                          137
                                                                               • High cost and risk
SUBSIDIARIES
 United Kingdom                       wholly owned    • Full authority of 297
                                                          100%
                                                        revenue and controll
                                                                                          470
 Source : Merryl Lynch



                                                                          STARBUCKS
                                                                     international ops
                                                                       and partnership
                                                                                                      4
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       Advantage              0              5
   WHOLLY Grup Vids
 Spain                                     JV
                                                      • Protection of
                                                        technology and skill 2
                                                           18%                             13
   OWNED President Coffee
 Taiwan                                    JV           base5%              91
                                                                               Disadvantage
                                                                                          137
                                                                               • High cost and risk
SUBSIDIARIES
 United Kingdom                       wholly owned    • Full authority of 297
                                                          100%
                                                        revenue and controll
                                                                                          470
 Source : Merryl Lynch



                                                                          STARBUCKS
                                                                     international ops
                                                                       and partnership
                                                                                                      4
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       Advantage              0              5
   WHOLLY Grup Vids
 Spain                                     JV
                                                      • Protection of
                                                        technology and skill 2
                                                           18%                             13
   OWNED President Coffee
 Taiwan                                    JV           base5%              91
                                                                               Disadvantage
                                                                                          137
                                                                               • High cost and risk
SUBSIDIARIES
 United Kingdom                       wholly owned    • Full authority of 297
                                                          100%
                                                        revenue and controll
                                                                                          470
 Source : Merryl Lynch



                                                                          STARBUCKS
                                                                     international ops
                                                                       and partnership
                                                                                                      4
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
Partner Selection
Partner first,
                        Country second
                          Site Attractiveness
                        Fundamental qualification
                        is expected of its
                        potential partner
                          Teritorial Intelligence
                        Criterien included
                         Actual Environment
                        financial solvency,
                        knowledge of local market
                         Factor
                        condition, prior retail
                        experience, and creative
                         Regional and
                        ability
                         Community
                        13 weeks training in
                         Acceptance
                        Seattle




CRITICAL FACTOR
Environment Assesment
Competitive Environment first,
                                   Partner
                  • Local Competition
                                   Country second
                  • Copycat         Site Attractiveness
                  • Untapped MarketFundamental qualification
                                  is expected of its
                                  potential partner
                                    Teritorial Intelligence
                  Negative perception of an
                  American representative inincluded
                                   Criterien
                  overseas          Actual Environment
                                   financial solvency,
                                   knowledge of local market
                                     Factor
                                   condition, prior retail
                  Local Culture barrier
                                   experience, and creative
                                     Regional and
                                   ability
                                   Community
                                  13 weeks training in
                                   Acceptance
                                  Seattle




CRITICAL FACTOR
Challenge of Global Expansion
Competitive Environment first,
                                   Partner
                  • Local Competition
                                   Country second
                  • Copycat         Site Attractiveness
                  • Untapped MarketFundamental qualification
                                  is expected of its
                                  potential partner
                                    Teritorial Intelligence
                  Negative perception of an
                  American representative inincluded
                                   Criterien
                  overseas          Actual Environment
                                   financial solvency,
                                   knowledge of local market
                                     Factor
                                   condition, prior retail
                  Local Culture barrier
                                   experience, and creative
                                     Regional and
                                   ability
                                   Community
                                  13 weeks training in
                                   Acceptance
                                  Seattle




CRITICAL FACTOR
Challenge of Global Expansion
Competitive Environment first,
                                   Partner
                  • Local Competition
                                   Country second
                  • Copycat         Site Attractiveness
                  • Untapped MarketFundamental qualification
                                  is expected of its
                                  potential partner
                                    Teritorial Intelligence
                  Negative perception of an
                  American representative inincluded
                                   Criterien
                  overseas          Actual Environment
                                   financial solvency,
                                   knowledge of local market
                                     Factor
                                   condition, prior retail
                  Local Culture barrier
                                   experience, and creative
                                     Regional and
                                   ability
                                   Community
                                  13 weeks training in
                                   Acceptance
                                  Seattle




CRITICAL FACTOR
Challenge of Global Expansion
CASE STUDIES
    Starbucks
 goes to China
CASE STUDIES
                                          Starbucks
                                       goes to China




CONTRA
  Coffee is not the main mainstream
  beverage in China
  Rigid business policies
CASE STUDIES
                                           Starbucks
                                        goes to China




CONTRA
  Coffee is not the main mainstream
  beverage in China
  Rigid business policies
PRO
  The fastest growing and the most
  powerfull marketplace in the world
  First mover advantage
CASE STUDIES
                                          Starbucks
                                       goes to China




TARGET CONSUMER
   Young and affluent
   Status conscious
   Business executives
   People who were educated abroad
   Expatriates
PARTNERSHIP
   Mei Da Coffee (Licencing)
   President Coffee (Joint Venture)
Entry Phase
                            Conducting research to the
                            Chinesse environment
                            Testing its Coffee for free in
                            major restaurants and hotels
                            in Beijing
                            First store was opened in
                            1999.
                       Country Development
                            Building brand awareness
                            Stores opening in China’s
                            major City
                        GLobal Integration
                            Deepening commitment to
                            the China Market by
                            increasing its stakes in
                            Taiwan and Shanghai


ENTRY STRATEGY
     Expansion Phase
Entry Phase
                                           Conducting research to the
considered as social event than            Chinesse environment
daily necessity.                           Testing its Coffee for free in
                                           major restaurants and hotels
They can sit for hours                     in Beijing
                                           First store was opened in
                                           1999.
mostly cannot drink coffee            Country Development
alone, it must go with the food            Building brand awareness
                                           Stores opening in China’s
Starbucks does most of its                 major City
business during afternoon and          GLobal Integration
night time                                 Deepening commitment to
                                           the China Market by
                                           increasing its stakes in
                                           Taiwan and Shanghai


              ENTRY STRATEGY
              Chinese’s Coffee Drinking Behaviour
Entry Phase them self as “third
                                         Promoting
                                         living space”research home
                                           Conducting beside to the
considered as social event than          and office environment
                                           Chinesse
daily necessity.                           Testing its Coffee for free in
                                         Increase the size of the store
                                           major restaurants and hotels
                                         around 2000 square feet
                                           in Beijing
They can sit for hours
                                           First store was opened in
                                         Providing foot including
                                           1999.
mostly cannot drink coffee            Country Development cookies
                                         traditional chinesse
alone, it must go with the food            Building brand awareness
                                           Stores opening in China’s
Starbucks does most of its                 major City
business during afternoon and          GLobal Integration
night time                                 Deepening commitment to
                                           the China Market by
                                           increasing its stakes in
                                           Taiwan and Shanghai


              ENTRY STRATEGY
               Implementing “Starbucks Experience” in China
QUESTION....?

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Starbuck's experience

  • 1. GLOBAL MANAGEMENT - CASE STUDY Starbucks International Operations a presentation 1
  • 2. GLOBAL MANAGEMENT - CASE STUDY Starbucks International Operations a presentation 1
  • 3. First store opened in Seatle in 1971 165 Outlet in 1992 when company issued its initial shares of public stocks generates $4 billion per year in revenue Serves more than 33 million customer each week Partners with Albertson’s, Barnes & Nobles, Hyatt, Kraft, Marriot, Pepsi, United Airlines STARBUCKS facts and figures 2
  • 4. First store opened in Seatle in 1971 For Year 2002...... 13101992 initial 165 Outlet in company issued its when Stores in more than public stocks shares of 30 countries around the billion per year in generates $4 revenue world Serves more than 33 million customer each week Partners with Albertson’s, Barnes & Nobles, Hyatt, Kraft, Marriot, Pepsi, United Airlines STARBUCKS facts and figures 2
  • 5. 1,500 Country Store 1,310 First store opened in Seatle in Japan 397 1971 Taiwan 99 1,125 165 Outlet in 1992 when China 88 company issued its initial 929 South Korea 53 shares of public stocks 750 generates $4 billion per year in Arab Emirat 23 revenue Lebanon 11 524 Serves more than 33 million Spain 5 customer each week 375 Indonesia 5 Partners with Albertson’s, 278 Barnes & Nobles, Hyatt, Kraft, 128 New Zealand 34 Marriot, Pepsi, United Airlines 5 17 Hawai 30 0 1995 1996 1997 1998 1999 2000 2001 2002 STARBUCKS facts and figures 2
  • 6. 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 STARBUCKS business philosophy 3
  • 7. Customer Service Excellence Product Quality Accessibility Emerging Corporate Responsibility Financial Resources Brand Recognition STARBUCKS success factor 3
  • 8. A new Starbucks open in restroom of existing Starbucks.......!!! Headline in The Onion, a Satirical Publication STARBUCKS business model 3
  • 9. 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. STARBUCKS business model 3
  • 10. STARBUCKS business model 3
  • 11. STARBUCKS business model 3
  • 12. STARBUCKS business model 3
  • 13. STARBUCKS expansion strategy 4
  • 14. Advantage • low development cost and risk. • fast market access • Avoids regulations and tariffs LICENSING Disadvantage • Lack of control over the licence ‘s activities and performance STARBUCKS expansion strategy 4
  • 15. 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 JOINT • Inability to realize location and VENTURE experience economic STARBUCKS expansion strategy 4
  • 16. Advantage WHOLLY • Protection of technology and skill OWNED base Disadvantage • High cost and risk SUBSIDIARIES • Full authority of revenue and controll STARBUCKS expansion strategy 4
  • 17. 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 Advantage 0 5 WHOLLY Grup Vids Spain JV • Protection of technology and skill 2 18% 13 OWNED President Coffee Taiwan JV base5% 91 Disadvantage 137 • High cost and risk SUBSIDIARIES United Kingdom wholly owned • Full authority of 297 100% revenue and controll 470 Source : Merryl Lynch STARBUCKS international ops and partnership 4
  • 18. 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 Advantage 0 5 WHOLLY Grup Vids Spain JV • Protection of technology and skill 2 18% 13 OWNED President Coffee Taiwan JV base5% 91 Disadvantage 137 • High cost and risk SUBSIDIARIES United Kingdom wholly owned • Full authority of 297 100% revenue and controll 470 Source : Merryl Lynch STARBUCKS international ops and partnership 4
  • 19. 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 Advantage 0 5 WHOLLY Grup Vids Spain JV • Protection of technology and skill 2 18% 13 OWNED President Coffee Taiwan JV base5% 91 Disadvantage 137 • High cost and risk SUBSIDIARIES United Kingdom wholly owned • Full authority of 297 100% revenue and controll 470 Source : Merryl Lynch STARBUCKS international ops and partnership 4
  • 20. 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 Partner Selection
  • 21. Partner first, Country second Site Attractiveness Fundamental qualification is expected of its potential partner Teritorial Intelligence Criterien included Actual Environment financial solvency, knowledge of local market Factor condition, prior retail experience, and creative Regional and ability Community 13 weeks training in Acceptance Seattle CRITICAL FACTOR Environment Assesment
  • 22. Competitive Environment first, Partner • Local Competition Country second • Copycat Site Attractiveness • Untapped MarketFundamental qualification is expected of its potential partner Teritorial Intelligence Negative perception of an American representative inincluded Criterien overseas Actual Environment financial solvency, knowledge of local market Factor condition, prior retail Local Culture barrier experience, and creative Regional and ability Community 13 weeks training in Acceptance Seattle CRITICAL FACTOR Challenge of Global Expansion
  • 23. Competitive Environment first, Partner • Local Competition Country second • Copycat Site Attractiveness • Untapped MarketFundamental qualification is expected of its potential partner Teritorial Intelligence Negative perception of an American representative inincluded Criterien overseas Actual Environment financial solvency, knowledge of local market Factor condition, prior retail Local Culture barrier experience, and creative Regional and ability Community 13 weeks training in Acceptance Seattle CRITICAL FACTOR Challenge of Global Expansion
  • 24. Competitive Environment first, Partner • Local Competition Country second • Copycat Site Attractiveness • Untapped MarketFundamental qualification is expected of its potential partner Teritorial Intelligence Negative perception of an American representative inincluded Criterien overseas Actual Environment financial solvency, knowledge of local market Factor condition, prior retail Local Culture barrier experience, and creative Regional and ability Community 13 weeks training in Acceptance Seattle CRITICAL FACTOR Challenge of Global Expansion
  • 25. CASE STUDIES Starbucks goes to China
  • 26. CASE STUDIES Starbucks goes to China CONTRA Coffee is not the main mainstream beverage in China Rigid business policies
  • 27. CASE STUDIES Starbucks goes to China CONTRA Coffee is not the main mainstream beverage in China Rigid business policies PRO The fastest growing and the most powerfull marketplace in the world First mover advantage
  • 28. CASE STUDIES Starbucks goes to China TARGET CONSUMER Young and affluent Status conscious Business executives People who were educated abroad Expatriates PARTNERSHIP Mei Da Coffee (Licencing) President Coffee (Joint Venture)
  • 29. Entry Phase Conducting research to the Chinesse environment Testing its Coffee for free in major restaurants and hotels in Beijing First store was opened in 1999. Country Development Building brand awareness Stores opening in China’s major City GLobal Integration Deepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai ENTRY STRATEGY Expansion Phase
  • 30. Entry Phase Conducting research to the considered as social event than Chinesse environment daily necessity. Testing its Coffee for free in major restaurants and hotels They can sit for hours in Beijing First store was opened in 1999. mostly cannot drink coffee Country Development alone, it must go with the food Building brand awareness Stores opening in China’s Starbucks does most of its major City business during afternoon and GLobal Integration night time Deepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai ENTRY STRATEGY Chinese’s Coffee Drinking Behaviour
  • 31. Entry Phase them self as “third Promoting living space”research home Conducting beside to the considered as social event than and office environment Chinesse daily necessity. Testing its Coffee for free in Increase the size of the store major restaurants and hotels around 2000 square feet in Beijing They can sit for hours First store was opened in Providing foot including 1999. mostly cannot drink coffee Country Development cookies traditional chinesse alone, it must go with the food Building brand awareness Stores opening in China’s Starbucks does most of its major City business during afternoon and GLobal Integration night time Deepening commitment to the China Market by increasing its stakes in Taiwan and Shanghai ENTRY STRATEGY Implementing “Starbucks Experience” in China