***Presentation on “Starbucks-going global fast”***

1. TOPIC IS ABOUT
“STARBUCKS-GOING GLOBAL
FAST”
COURSE NAME: INTERNATIONAL MARKETING
COURSE CODE: MKT 402
FACULTY: KAZI AHMED
(CBA DEPT. IUBAT )
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Welcome To Our
Presentation
IUBAT-International University of Business Agriculture and Technology

2. Background of Starbucks
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 Starbucks Corporation is an American global coffee company
and coffeehouse-chain based in Seattle, Washington.
 Starbucks name came from a character in classic novel Moby Dick,
published in 1851, which takes place in sea.
 The first Starbucks opened in Seattle, Washington, on March 30,
1971 by three partners that met while students at the University of
San Francisco: English teacher Jerry Baldwin, history teacher Zev
Siegl, and writer Gordon Bowker.
 Logo was chosen with the start of the company in the year 1971.
The founders wanted the logo reflects the historical relationship
between coffee and sailing traders.
 In 1987, the original owners sold the Starbucks chain to former
employee Howard Schultz and quickly began to expand.

3. Company Growth
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 Starbucks grew from 17 coffee shops in Seattle 15 years ago to over
20,891 outlets in 62 countries.
 Including 13,279 in the United States, 1,324 in Canada, 989 in Japan,
851 in China, 806 in the United Kingdom, 556 in South Korea, 377 in
Mexico, 291 in Taiwan, 206 in the Philippines, 171 in Thailand and 10
in India.
 The company planned to open a net of 900 new stores outside of
the United States in 2009.
 Since 1987, Starbucks has opened on average two new stores every
day.
 The first store outside the United States or Canada opened in the
mid-1990s.

4. Some challenges facing the company
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 Starbucks faces antiglobalization movement.
 Dropping Sales from $10.4 to $9.8 billion in 2009, and dropping in
profits from $673 to $582 and $494 billion in 2008, 2009 respectively.
 The firm closed 475 stores in the U.S. in 2009 to reduce costs.
 Starbucks faces competition from competitors such as Nestle, Dunkin’
Donuts and McDonald’s and their new McCafés.
 The company facing employees dissatisfaction feeling overworked.

5. Starbucks Around the World
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6. Q: 01-Identify the controllable and uncontrollable elements that
Starbucks has encountered in entering global markets?
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Controllable Factors
 Product
Hot and Cold beverages, pastries, snacks, etc.
 Price
Starbucks can charges a premium prices for their products.
 Promotion
The company has controlled its promotional strategy and has saved
a lot of marketing cost by mainly relying on worth of mouth and the
company has good brand name in national market as well as in
overseas market.
 Channel of distribution
Starbucks have 20,891 outlets in 62 countries which shows that the
company has good controlled over the channel of distribution.

7. Q:01
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Uncontrollable Factors
• Economic Forces
Economic conditions.
Local price range of commodities.
• Competitive Force
Local competitors.
Imitators Coming in to grab the market share.
• Political/legal Force.
• Cultural Force.

8. Q: 02-What are the major sources of risk facing the company
and discuss the potential solutions?
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Major Risks
 Problems of changing generation
Consumers 35 years and older tend to consumer coffee more often
than the 18 - 25 age group
Market research should be carried out to study consumptions habits
for younger consumers.
Starbucks should offer innovations such as wireless networks to its
customers to overcome challenge in order to attract the next
generation of customers.
 Dissatisfaction of odd hours and low-pay
Positive reinforcement which leads to higher feelings of job
satisfaction
improve the employee satisfaction. So, the quality of service as well
coffee increases.

9. Q: 02
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Solutions
The above two major risks are to be solved by implementing proper
strategy. Then next comes the minor problem’s solutions…..
 There are still eight states in the United States with no Starbucks
stores. So Starbucks should open their branch over there.
 Stores must be strategically located.
 Starbucks have to Offer new food and other non-coffee items.
 Market research should be carried out before lunching a new store.
 Go global it will have to depend on overseas growth to maintain profit
rate.
 Licensing and franchising for foreign investors.

10. Q:03-Critique Starbucks overall corporate strategy.
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 Eight cities in U.S. remained untapped.
 Relying on word of mouth, Starbucks spends just 1% of revenues on
advertising.
 Low payment to employees.
 Stores Expansion in the U.S.
Growing continuously rapidly, Starbucks has done clustering several
locations in a small geographical area. Doing so eventually will
inevitably act to cannibalize existing locations same store sales.
 Stores Expansion Globally
Stores expansion in other countries too rapid to concern the real
preferences and habits of local consumers and competitors.

11. Q: 03
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• Labor Disputes & Involvement in Lawsuit
Because of Starbuck’s payment and policies toward its part-time and
full-time employees do not compatible with working hours and duties.
470 Frustrated store managers sued Starbucks in 2001 for allegedly
refusing to pay legally mandated overtime.

12. Q: 04-How might Starbucks improve profitability in Japan?
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 Reduce Price / Increase Benefits
Targeting mid-income levels were frequent buyers and grew
substantially.
 Offering new beverages according to the Asian or Japanese culture and
provide wider range of different tea or soft drinks –Tea drinks will
increase popularity because their perceived value of healthy benefits.
 Offering special, Japanese food in Starbucks stores, Japanese candies,
cakes or sweets or even snacks – Starbucks’ may become more
Japanese!
 Following the health conscious trend by reducing caloric and fat
content .
 Online, phone ordering and drive-through service for busy Japanese.