Analysis of Starbuck's strategy of expansion in various areas and India in particular.

1. PRESENTED BY : DEEPAK VARGHESE M-14-02
DIXON DOMINIC M-14-04
ISHAN PARASHAR M-14-06
SOHAM DAS M-14-16

2. Introduction
 Industry - Coffee Shop
 Founded - March 30, 1971 (Seattle, Washington)
 Key People - Howard Schultz (Chairman & CEO)
Kevin Johnson (President & COO)
 Inspired to sell high quality beans &
equipment inspired from Alfred Peet’s style
 Roasted coffee beans bought from Peet’s
 After a year started buying from growers
 Later bought Peet’s

3. Timeline in Brief
1971 - Starbucks Coffee, Tea and Spice store
(coffee bean roasting) opened in Seattle Pike Place
Market
1982 - Howard Schultz joined Starbucks
1986 - Howard Schultz established Il Giornale
Coffee Company
1987 - Il Gionarle acquired Starbucks and
changed name to Starbucks Corporation
1992 - IPO with 140 outlets (12% = $25mill.)

4. • 1996 - Started selling bottled Frappuchino
• 1999 - Acquired Tazo Tea
• 2000 - Acquired Hear Music, a San Fransisco based
company
• 2003 - Acquired Seattle’s Best Coffee
• 2005 - Introduced Starbucks Coffee Liqueur;
Acquired Ethos Wate

5. Why Globalize?
Saturated home market
Reaching brand maturity stage in USA
Salient Features
International joint ventures
Licensing
Acquisitions
Maintaining its image throughout
Operating at loss in few areas
Imbibing local culture
With 20% of world’s coffee consumed in North America,
Starbucks had to aggressively sell its offerings in countries that
already have dedicated tea or coffee drinkers.

6. Japan
Starbucks Coffee Japan was established in October
1995, as a JV between Sazaby Inc. and Starbucks
Coffee International.
Since opening its first store in Ginza district, Tokyo
has expanded to more than 900 stores.
Company Name:- Starbucks Coffee Japan Ltd.
Critics warned that Japanese would never buy
takeout coffee in paper cups or accept the interior
non smoking policy.
Starbucks proved them wrong with nearly 30% of its
customers drinking takeout coffee in those throw
away cups.

7. UK
• Starbucks fuelled its initial expansion into UK
with an acquisition of the then 56 outlet, UK
based, Seattle Coffee Company, 1998.
• Rebranded all stores to Starbucks
• Used its capital and influence to obtain prime
locations across the country.
• 675 stores : 2nd biggest overseas market.

8. France
Started in 1994 but could open only 30
outlets in 10 years.
Huge cultural diversity considering its
historic café culture and French tend to hold
to their traditions
Target audience = America & Asian tourists +
young rich kids wanting to mingle with these
tourists
Has been incurring losses inspite of
tweaking the menu to local tastes and

9. South Korea
• Started in 1999
• Starbucks Korea Co. Ltd. As a JV with Shinsegae
Department Store Co. Ltd. and Starbucks Coffee
International
• Faced opposition from locals; changed lettering
of the store and in-store redecorating
• A Starbucks store in Seoul showcases traditional
Korean culture, with much of its interior
constructed with material reclaimed from old
buildings.
• Succeeded where Wal-Mart failed; largest in the

10. Middle East
• Entered in 1999, Kuwait.
• Licensing agreement with trading partner and
licensee M.H. Alshaya Co. WLL, a private Kuwait
family business.
• The family operates over 280 Starbucks stores in
Middle East Region including Kuwait, KSA, UAE,
Egypt, Lebanon, Jordan, Qatar, Bahrain and Oman.
• Currently 600+ stores.

11. China
• Entered in 1999
• China was a tea preferring country and had a rich
culture around it.
• Targeted the new middle classes with the idea of
“meet with friends while drinking our favorite
beverage”.
• Didn’t advertise but focused on getting high
visibility and high traffic localities.
• Introduced beverages using popular local

12. India
• Attempted to form alliance with Future Group; rejected
by FIPB.
• Was in talks with Jubilant Group for an alliance; didn’t
materialize.
• Entered in 2012 by forming a JV with Tata Global
Beverages.
• Indian consumers sit for hours in the outlets with their
coffee unlike their foreign counterparts which demand
plush outlets rather than kiosks and small outlets serving
coffee on the go.
• Opened its 75th store on July, 2015.

13. Cultural Diversity
• At Starbucks diversity is defined by an equation –
DIVERSITY = INCLUSION + EQUITY + ACCESSIBILITY
ACCESSIBILITY
• “We remain highly respectful of the culture and
traditions of the countries in which we do business.
business. We recognize that our success is not an
an entitlement, and we must continue to earn the
the trust and respect of customers everyday.”
Howard Schultz

14. Generic Value Chain

15. Generic Value Chain
Primary Activities
• Inbound logistics - Sourcing coffee from diverse
coffee beans producers with whom they have
relationships and built up efficient supply chain
management system.
• Operations - They have operation in 60 countries
with their stores being modeled on company
stores and licensed stores.
• Outbound logistics - Most of its product mix are
in-store and some through large box retailers.
Payment around source through point of sale,
prepaid Starbucks Cards and mobile payments.

16. Generic Value Chain
• Marketing and Sales - Traditionally, investment in
marketing activities have not been significant and
relied mainly on the growing reputation of premium
quality product mix and superior customer services to
give the ‘Starbucks Experience’ to drive customers to
their stores and products.
• Service - Starbucks has a reputation for providing
supreme level of customer services to their
consumers.
SUPPORT ACTIVITIES
• Firm Infrastructure- They have well designed,
aesthetically pleasing stores. They have efficient
level of finance, accounting and legal departments to
support the firm’s infrastructure.

17. Generic Value Chain
• Human Resource Management:- Great benefits,
employee empowerment and amazing corporate
culture makes Starbucks drive efficient
management of human capital.
• Technology development:- Investments in
innovative technologies like the well - liked
mobile app.
• Procurement:- Starbucks procures its products
from a diverse group of supplier and has fixed
contracts with some of the suppliers.

18. OPERATING RESULTS

19. AMERICA – SEGMENT RESULTS

20. EMEA – SEGMENT RESULTS

21. CHINA / ASIA PACIFIC – SEGMENT RESULTS

24. 0
10
20
30
40
50
60
70
80
2013 2012 2011 2010 2009
Gross margin
Gross margin
0
200
400
600
800
1000
1200
1400
1600
2013 2012 2011 2010 2009
Net Income
Net Income

25. 0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
2013 2012 2011 2010 2009
D/E Ratio
D/E Ratio
0
5
10
15
20
25
30
35
2013 2012 2011 2010 2009
ROE
ROE

26. STARBUCKS VS PEERS

28. References
• Starbucks’ Global Quest in 2006: Is it the best yet to come? by Danny
Nugroho RP and Retnowulan
• Starbucks International Marketing Strategy by Shahzad Khan
• Modes of International Business by Brijesh Dholakia
• Strategic Planning of Starbucks(Past Decissions, Current Situation and
Future Options) by Namrataben Govindbhai Panchasara
• https://en.wikipedia.org/
• http://articles.economictimes.indiatimes.com/
• http://marketresearch.about.com/
• http://www.forbes.com/
• http://www.bloomberg.com/
• https://news.starbucks.com/views/
• http://www.business-standard.com/