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CASE ANALYSIS CASE 1-1 | STARBUCKS—GLOING GLOBAL FAST
Submitted by: Ms. Ainna Charish M. Simbulan Ms. Melanie C. Ochoa Ms. Virginia O. Tablan Mr. Jaime J. Tecson
CASE 1-1 | Starbucks—Going Global Fast
when customers seemed to draw inward after September 11. Coca-Cola. transformed a pedestrian commodity into an upscale consumer accessory has a fairy-tale quality. they weren’t wrong about Starbucks’ ambitions. and the protesters scattered to other cities. PepsiCo.” The store was quickly repaired. At a time when one corporate star after another has crashed to earth. and among their targets was Starbucks. and the company predicts monthly same-store sales gains as high as 7 percent through the end of the fiscal year. sales climbed 24 percent.” says Jerome A. It’s very difficult to protest against a can of Coke. and IBM in total returns. had 281 stores abroad. leaving its windows smashed and its tasteful green-and-white decor smelling of tear gas instead of espresso. including four splits.200 percent over the past decade. 2 .The Starbucks coffee shop on Sixth Avenue and Pine Street in downtown Seattle sits serene and orderly. to them. a symbol. Yet cup by cup. On Wall Street. before the overall market drop. Starbucks hasn’t faltered. but investors seem encouraged. In the first three quarters of the fiscal year. hitting $181. In 1999. Starbucks is rocketing ahead once again. They were just early. year to year. to $2. Its stock. a bottle of Pepsi. another multinational out to blanket the earth. of free-market capitalism run amok. brought down by revelations of earnings misstatements. If the protesters were wrong in their tactics. Says an angry Schultz: “It’s hurtful. You can’t break a can of Coke. The company confidently predicts up to 25 percent annual sales and earnings growth this year. “We’re going to see a lot more growth. excluding onetime charges and capital gains.6 billion in 2001 while profits bounded ahead an average of 30 percent per year.869 outlets in 28 countries. the quiet storefront made front pages around the world. rose 25 percent. Sales in stores open at least 13 months grew by 6 percent in the 43 weeks through July 28. executive greed. Amid the crowds of protesters and riot police were black-masked anarchists who trashed the store.2 million last year.500—and it’s still in the early stages of a plan to colonize the globe. as unremarkable as any other in the chain bought years ago by entrepreneur Howard Schultz. Starbucks Corp. And after the slowdown last fall and winter. it is hovering near its all-time high of $23 in July. During the World Trade Organization talks in November 1999.5 million. to $2. its green-and-white emblem beckoning to consumers on three continents. General Electric. Starbucks is both this ubiquitous brand and a place where you can go and break a window. or a can of Folgers. That’s below the 9 percent growth rate in 2000. protesters flooded Seattle’s streets.4 billion. Microsoft. Castellini. The story of how Schultz & Co. Now at $21. Moreover. or worse. while profits. Sales have climbed an average of 20 percent annually since the company went public 10 years ago. And the momentum continues. Starbucks grew from 17 coffee shops in Seattle 15 years ago to over 5. I think people are ill-informed. surpassing Walmart. has soared more than 2. It was one of the fastest-growing brands in a Business Week surveys of the top 100 global brands published August 5. the Starbucks name and image connect with millions of consumers around the globe. it has about 5. A few years ago however. Starbucks really is caffeinating the world. Today. to $159. Starbucks was one of the last great growth stories.
Athens comes next.000 people—meaning that there could be room for even more stores.000 in three years. But big cities.S.” But how long can that run fast? Already. For one thing. During the past 12 months. some analysts gave Starbucks only two years at most before it saturates the U. Zurich. Amazingly.” To duplicate the staggering returns of its first decade. Mont. analyst Mitchell Speiser: “Starbucks is at a defining point in its growth.400 people. Starbucks must cope with some predictable challenges of becoming a mature company in the United States. with four more on the way this year. the company faces an ominously hostile reception from its future consumers. it reduces the company’s share of the profits to only 20 percent to 50 percent. But global expansion poses huge risks for Starbucks. Starbucks expects to double the number of its stores worldwide.200 international outlets. 3 .000 Starbucks shares. Not only are the activists among them turned off by the power and image of the well-known brand. representing a 35 percent increase in its foreign base. North Dakota. After riding the wave of successful baby boomers through the 90’s. to 10. it can cut sales at existing outlets. Moreover. “We probably self-cannibalize our stores at a rate of 30 percent a year. Starbucks plans to move into Mexico and Puerto Rico. market. Frappuccino-free cities include Butte. Starbucks has 124 cafés. is a tall order to fill. In Manhattan’s 24 square miles. and the company considers that the upper limit of coffee-shop saturation. Given such concentration.” Schultz says. there is a Starbucks outlet for every 9.. the twenty. Indeed. In coffee-crazed Seattle. it is likely to take annual same-store sales increases of 10 percent or more if the company is going to match its historic overall sales growth. just due to the law of large numbers. While that makes it easier to start up on foreign turf. a satirical publication: “A New Starbucks Opens in Restroom of Existing Starbucks. Adds Lehman Brothers Inc. Starbucks has no choice but to export its concept aggressively. Indeed. with 4. Indeed. and shopping malls are full to the brim. and even in far-off Jakarta. Schultz’s team is hard-pressed to grind out new profits in a home market that is quickly becoming saturated. but many others say that Starbucks’ latte-sipping sophisticates and piped-in Kenny G music are a real turnoff. affluent suburbs.” And even the company admits that while its practice of blanketing an area with stores helps achieve market dominance. The chain now operates 1. They don’t feel wanted in a place that sells designer coffee at $3 a cup. That’s one for every 12. there are still eight states in the United States with no Starbucks stores. “The stock is on a run. as they might say at Starbucks. That leaves plenty of room to grow.or thirty-somethings of Generation X. about 400 of its planned 1.247 stores scattered across the United States and Canada. Madrid. it makes less money on each overseas store because most of them are operated with local partners. And within the next year. That. the chain has opened stores in Vienna. and Fargo. the crowding of so many stores so close together has become a national joke. which controls about 300. from Beijing to Bristol.president of Chicago-based CastleArk Management. It’s reaching a level that makes it harder and harder to grow. Berlin. eliciting quips such as this headline in The Onion.200 new stores this year will be built overseas.
Starbucks has a lot going for it as it confronts the challenge of regaining its growth. as a marketing executive in the early 1980s. However. Schultz remains the heart and soul of the operation. after the first mate in Moby Dick. Starbucks has no nationwide competitor. Frustrated store managers among the company’s roughly 470 California stores sued Starbucks in 2001 for allegedly refusing to pay legally mandated overtime. Nearly free of debt. Inc. Raised in a Brooklyn publichousing project. such as its new in-store Web service. Consumer spending tanked in the downturn. Further refinement led to Starbucks. unlike a McDonald’s or a Gap. The management trio is known as H2O. Most consumer companies its size shells out upwards of $300 million per year. And Starbucks can maintain a tight grip on its image because stores are companyowned: There are no franchisees to get sloppy about running things. Starbucks settled the suit for $18 million. stepped down as a chief executive in 2000 to become chairman and chief global strategist. By relying on mystique and word of mouth. is now CEO and in-charge of day-to-day operations. Moreover. it fuels expansion with internal cash flow. two years after retiring. Starbucks’ growth over the early part of the past decade coincided with a remarkable surge in the economy. But now. which they felt evoked the seafaring romance of the early coffee traders (hence the 4 . though employees are still paid better than comparable workers elsewhere—about $7 per hour— many regard the job as just another fast-food gig. the company saves a bundle on marketing costs. and those $3 lattes were an easy place for people on a budget to cut back. Starbucks spends just $30 million annually on advertising.. 49. Orin Smith. two other retailers that rapidly grew in the United States. 57. To be sure. Howard and Orin. for Howard. 60. Dissatisfaction over odd hours and low pay is affecting the quality of the normally sterling service and even the coffee itself. or roughly 1 percent of revenues. the company’s numbers cruncher. Starbucks has also a well seasoned management team. The name came about when the original owners looked to Seattle history for inspiration and chose the moniker of an old mining camp: Starbo. a retailing expert who returned last September. Schultz. pointing out that even in the weeks following the terrorist attacks. a tiny chain of Seattle coffee shops. Stock options for part-timers in the restaurant business were a Starbucks innovation that once commanded awe and respect from its employees. usually just for new flavors of coffee drinks in the summer and product launches. the heart of the complaint—feeling overworked and underappreciated —doesn’t seem to be going away. Starbucks also faces slumping morale and employee burnout among its store managers and its once-cheery army of baristas. say some customers and employees. samestore comparisons stayed positive while those of other retailers skidded. Starbucks executives insist that won’t happen.Even the thirst of loyalists for high-price coffee cannot be taken for granted. whether here or overseas.03 per share off an otherwise strong second quarter. The head of the North American operations is Howard Behar. he found his way to Starbucks. shaving $0.
mermaid logo). Starbucks and Tully’s Coffee Corp. “The real estate business in America is a very. Schultz got the idea for the modern Starbucks format while visiting a Milan coffee bar. That suggests that while coffee can command high prices in a slump. The strategy works. the company now has a test program of serving hot breakfasts in 20 Seattle stores and may move to expand the supermarket sales of whole beans. very tough game. desserts. but Schultz and his team still think there’s room to grow in the United States—even in communities where the chain already has dozens of stores. a Seattlebased coffee chain. food —at least at Starbucks—cannot. Starbucks decided to pay the rent on the empty store so its competitor could not move in. 5 . says Starbucks approached his landlord and offered to pay nearly double the rate to put a coffee shop in the same building. were competing for a space in the city. The landlord stuck with Schomer. it will have to depend on overseas growth to maintain an annual 20 percent revenue growth. analysts contend that Starbucks can maintain about 15 percent square-footage growth in the United States— equivalent to 550 new stores—for only about two more years. but management’s expansion tactics are something else. In the late 1990s. Starbucks was hoping to make up much of that growth with more sales of food and other non coffee items but has stumbled somewhat. and soon overall sales grow beyond what they would have with just one store. Schultz has a net worth of about $700 million. Starbucks has come light years from those humble beginnings. After that. and CDs in his stores and selling packaged coffee in supermarkets would significantly boost sales. Schomer. David C.” Still. but customers could also grow annoyed over having fewer choices. The stores may be oases of tranquility. the company’s strategy could backfire. who says: “It’s a little disconcerting to know that someone is willing to pay twice the going rate. Still. Moreover. Starbucks got the lease but vacated the premises before the term was up. Schultz makes no apologies for the hardball tactics.” he says. Not only will neighborhood activists and local businesses increasingly resent the tactics.” Another time. including $400 million of company stock. Clustering stores increases total revenue and market share. Starbucks can quickly dominate a local market. rather than let Tully’s get the space. One of Behar’s most important goals is to improve the record. he says. owner of Espresso Vivace in Seattle’s hip Capitol Hill neighborhood. it’s still far below the 38 percent growth rate of fiscal 2000. but growth has been less than expected. He bought out his bosses in 1987 and began expanding. Meanwhile. Schultz thought that offering $8 sandwiches. And by clustering. Take what critics call its “predatory real estate” strategy—paying more than market-rate rents to keep competitors out of a location. Smith argues. A healthy 19 percent this year. The company is still capable of designing and opening a store in 16 weeks or less and recouping the initial investment in three years.. The specialty business now accounts for about 16 percent of sales. because of Starbucks’ size. It is large enough to absorb losses at existing stores as new ones open up. For instance. even when the individual stores poach on each other’s sales. “It’s not for the faint of heart. Today. it’s cheaper to deliver to and manage stores located close together.
6 . or download multimedia presentations without looking for connections or tripping over cords. Starbucks executives hope such innovations will help surmount their toughest challenge in the home market: attracting the next generation of customers. customers can pre-order and prepay for beverages and pastries via phone or on the Starbucks Express Web site.to late-1990s. In 800 locations it has installed automatic espresso machines to speed up service. a Chicago paralegal.” As it expands. Starbucks had the lowest employee turnover rate of any restaurant or fast-food company. and faster service. Katie Kelleher. which blends java. They start with 24 hours of free wireless broadband before choosing from a variety of monthly subscription plans. The company knows that because it once had a group of twenty something hypnotized for a market study. And Starbucks is bent on even more fundamental store changes. She goes to Dunkin’ Donuts.” says Mark Barden. When their defenses were down. Starbucks has launched Starbucks Express. Partners in the project—which Starbucks calls the world’s largest Wi-Fi network—include Mobile International. One of the recurring themes the hypnosis brought out was a sense that “people like me aren’t welcome here except to serve the yuppies. Then there are those who just find the whole Starbucks scene a bit pretentious. “They either can’t afford to buy coffee at Starbucks. They just make the call or click the mouse before arriving at the store. says the company. is that Starbucks has proven to be highly innovative in the way it sells its main course: coffee. 22. That. cuts transaction times in half. priced from $5 to $500.What’s more important for the bottom line. which clerk swipe through a reader to deduct a sale.” he says. And several years ago. at about 60 stores in the Denver area. For a company modeled around enthusiastic service. out came the bad news. medium. Web technology. The company will decide in January on a national launch. saying: “Small. Younger coffee drinkers already feel uncomfortable in the stores. and large is fine for me. and Hewlett-Packard. and their beverage will be waiting—with their name printed on the cup. Customers sit in a store and check e-mail. it announced expansion of high-speed wireless Internet service to about 1. a wireless subsidiary of Deutsche Telekom. Starbucks faces another big risk: that of becoming a far less special place for its employees.200 Starbucks locations in North America and Europe. largely thanks to its then unheard-of policy of giving health insurance and modest stock options to part-timers making barely more than minimum wage. During its growth spurt of the mid. Starbucks has sold $70 million of the cards. In early August. that could have dire consequences for both image and sales. its boldest experiment yet. is put off by Starbucks’ Italian terminology of grande and venti for coffee sizes. it began offering prepaid Starbucks cards. surf the Web. though. or the only peers they see are those working behind the counter. On August 21. who conducted the research for the Hal Riney & Partners ad agency (now part of Publicis Worldwide) in San Francisco.
worker. a former store manager in West Hollywood. I’d still be there. too many young people. The French seem to be ready for Starbucks’ sweeter taste. Helmut Spudich.Such perks are no longer enough to keep all the workers happy. loved the place. and monitored the store’s weekly profit-and-loss statement. But he wonders if the company can profitably cope with France’s arcane regulations and generous labor benefits. sitting in the world’s busiest Starbucks. Starbucks’ top foreign market. But if Starbucks can count on its youth appeal to win a welcome in new markets. says Philippe Bloch. She hired employees. where Starbucks had a gala opening for its first Austrian store. Robert J. Starbucks’ second-biggest overseas market. complain some staff. “I don’t care if it costs more. but they are old. says she earned $32. “The coffeehouses in Vienna are nice. California: “If I were making a decent living. in Tokyo’s Shibuya district. same-store sales are down 14 percent for the year ended in June. managed their schedules.” Overseas. But she was also expected to put in significant time behind the counter and had to sign an affidavit pledging to work up to 20 hours of overtime a week without extra pay—a requirement the company has dropped since the settlement. Starbucks Japan seems to be losing steam. Starbucks’ pay doesn’t come close to matching the workload it requires. says of Starbucks: “It’s turning out to be one of the great 21st century American success stories— complete with all the ambiguities. cofounder of Columbus Cafe.” she says. predicted that Starbucks would attract a younger crowd than the established cafés. The business model calls for lots of low-wage workers. a Starbucks-like chain. In Vienna. the less they are apt to feel connected to the original mission of high service—bantering with customers and treating them like family. Add to that the depressed economy. last December. the company beat even its own bullish expectations. to $8 million. as long as it tastes sweet. the epicenter of European 7 . imitators are popping up left and right to steal market share. Meanwhile in England. Smith says that Starbucks offers better pay benefits and training than comparable companies. growing to 368 stores after opening its first in Tokyo in 1996. And in Italy. Yet same store sales growth has fallen in Japan. a business editor for the paper Der Standard.” Shay. Entering other big markets may be tougher yet.” he says. Although it forecasts a 30 percent gain in net profit. But perhaps it is inevitable. for the year started in April. as rivals offer similar fare.000 a year to run a store with 10 to 15 part-time employees. a professor of popular culture at Syracuse University. Says Carrie Shay. Thompson. though. the whole Starbucks package seems new and. In Japan. such enthusiasm cannot be counted on indefinitely. Starbucks is considered hip. a 22-year old Toyota Motor Corp. with over 310 stores. And the more people who are hired as Starbucks expands. For sure. on record sales of $ 516 million. while it encourages promotions from within. still very cool. Affluent young Japanese women like Anna Kato. one of the plaintiffs in the suit against the company. employee discontent is far from the image Starbucks wants to project of relaxed workers cheerfully making cappuccinos.
Americans pay about $1. It also underscores Starbucks’ determination to expand its presence in Asia by catering to local tastes. In a 2005 bid to boost sales in its largest international market. sniffs that Starbucks’ “substances served in styrofoam” won’t cut it. with a line of chilled coffee in plastic cups. java and. Profit at Starbucks Coffee Japan fell 70 percent in the first nine months of the year because of growing competition from rival coffee chains. and Saudi Arabia. Carlo Petrini.Oman. In December. With Starbucks outlets already in Kuwait. an area where Starbucks still struggles. just 55 cents. Qatar. Also. The cups are paper. Starbucks Discoveries. he created a mild uproar among Palestinian supporters. at a Seattle synagogue. Starbucks says it hasn’t decided yet whether to launch the product nationwide. For instance.000 coffee bars en masse for Starbucks strikes many as ludicrous. the company also plans to start selling the product in Taiwan. But subsequently. beyond cafés and into convenience stores. In northern Italy. It is a lucrative but fiercely competitive sector. Schultz let the Palestinians have it. in the south. here today. but Starbucks. But the giddy buzz of that initial expansion is wearing off. is expanding its business in Japan. Starbucks Corp. the Seattle coffee company has compiled an envious record of growth. Schultz insists that Starbucks will eventually come to Italy. Now. which has become a household name since opening its first Japanese store nine years ago. saying that his words were taken out of context and asserting that he is “pro peace” for both sides. The Discoveries line is the company’s first foray into the ready-to-drink market outside North America. For one. bottles. It’ll have a lot to prove when it does. or vending machines rather than made-to-order at cafés. says Italian purists. The firm expects a loss for the full year. the price is 67 cents. the notion that the locals will abandon their own 200. Sales at stores open more than one year fell 16 percent. where it sells a line of bottled and canned coffee. So far. Starbucks is waking up to the grande challenges faced by any corporation bent on becoming a global powerhouse. Schultz quickly backpedaled. The move gives the Seattle-based company a chance to grab a chunk of Japan’s $10 billion market for coffee sold in cans.50 for an espresso. There are plenty more minefields ahead. he flew to Israel several years ago to meet with then Foreign Secretary Shimon Peres and other Israeli officials to discuss the Middle East crisis.000 stores in the coming weeks. with plans to extend sales to a total of 10. much better. But the skepticism is real. of course. Starbucks is working with Japanese beverage maker and distributor Suntory Ltd. Italian coffee is cheaper than U. Schultz will have to be increasingly sensitive to those cultural challenges. Tomorrow. As Starbucks spreads out. founder of the anti globalization movement Slow Food. for instance. He won’t divulge the nature of his discussions. is betting on the power of its brand to propel sales of the new drinks.S.coffee culture. Italian coffee bars prosper by serving food as well as coffee. the new product comes in two variations—espresso and latte 8 . is launching the drinks called. Lebanon.
After cutting the ribbon on its first Japan store in 1996. One of the most popular brands. as the coffee maker developed them to suit Asian palates.—that are less sweet than their U. including further store openings. at 210 yen ($1. the company began opening stores at a furious pace. Convenience stores also are packed with canned coffee drinks.S. is emblazoned with a green circle logo that closely resembles that of Starbucks. In August. was introduced in the United States and Canada this past summer. including Starbucks lookalikes. forcing the company to post a loss in Japan in the fiscal year ended March 2003. which. Schultz says. Rainier. “The wind is at our back here. Starbucks faces steep competition. 9 . Japan’s “chilled cup” market is teeming with rival products. Sales began to slow. though it has in the past brought home products launched in Asia. will be priced at the upper end of the category. Starbucks officials said they hope to establish their product as the premium chilled cup brand. Schultz says Japan is ripe for development. it cleared another hurdle when sales at stores open at least 13 months rose from a year earlier for the first time in four years. first launched in Asia. called Mt. Starbucks Chairman Howard Schultz declined to speculate on exactly how much coffee Starbucks might sell through Japan’s convenience stores. where company officials say it was well received.17 billion yen. and it now has 570. The company has no immediate plans to introduce the beverage in the United States. It is focusing on continuing this trend by renovating stores and improving service.87).” he said. including Coca-Cola Co. but the effect wore off as the market became saturated. and for the fiscal year ended March 31 net profit jumped more than sixfold from the previous fiscal year to 1. “We wouldn’t be doing this if it wasn’t important both strategically and economically. A green tea frappuccino. The company has since returned to profitability.’s Georgia brand and brews with extra caffeine or made with gourmet coffee beans. Starbucks has done well in Japan. counterparts.” Mr. New shops attracted large crowds. Mr. although the road hasn’t always been smooth.
COMPANY OVERVIEW Three Seattle entrepreneurs started the Starbucks Corporation in 1971. and a wholesale business for local restaurants.I. Howard Schultz. 10 . this business had grown tremendously into five stores selling the coffee beans. Their prime product was the selling of whole bean coffee in one Seattle store. CASE TITLE STARBUCKS—GOING GLOBAL FAST II. By 1982. a roasting facility.
He brought new ideas to the owners. Schultz in turn opened his own coffee bar in 1986 based on Italian coffee cafes. the Starbucks CEO. By 1996 it grew to 870 stores with plans to open 2000 stores by the year 2000. Starbuck’s sales increased by 84% and the company were out of debt. VIEWPOINT From the point of view of Howard Schultz. Starbucks grew to 26 stores by 1988.a marketer. TIME CONTEXT November 1999 IV. CORE PROBLEM STATEMENT How would Starbucks go global? VI. was recruited to be the manager of retail and marketing. He wanted to create a top-notch management by wooing top executives from other well-known corporations. selling brewed Starbucks coffee. For the first two years. Schultz stood his ground and did not sacrifice long term integrity and values for short-term profit. but was turned down. Schultz had expanded to three coffee bars and bought Starbucks from the original owners for $4 million. By 1991. By 1987. OBJECTIVES MUST To decide on what investment strategy should Starbucks use in going global WANT 11 . V. Starbucks losses doubled as overhead and operating expenses increased with Starbucks' expansion. He changed the name of his coffee bars from Il Giornale to Starbucks. III. His intention for the company was to grow slowly with a very solid foundation.
h. Well known brand Majority market share Recognized for quality and service Low employee turnover Comfortable ambiance Fastest growing brands in a Business week survey of the top 100 global brands and the last great growth story according to Wall Street g. Profitable organizations Product variety Product delivery to home or office Starbucks domination drives small cafes out of business WEAKNESSES a.- To increase in sales To increase the number of stores - VII. f. b. Over saturation of Starbucks in some areas b. i. d. c. e. ANALYSIS SWOT STRENGTHS a. j. Slumping morale and employee burnout among store managers 12 .
different cultures and management styles result Access to greater resources and needed information 13 . b.OPPORTUNITIES a. Joint Venture with Local Partner 2. Changing customer’s taste and preference VIII. b. c. Franchise Opportunities Limited number of strong competitors THREATS a. ALTERNATIVE SOLUTIONS OR ALTERNATIVE COURSES OF ACTION 1. Global financial crisis Sentimental issues to the bad effects of coffee to health A great deal of risk of entry by potential competitors due to the low start up costs d. Direct Investment ANALYSIS ACA 1 - ADVANTAGES Sharing of expertise - DISADVANTAGES It takes energy and effort to establish an effective relationship. Franchising 3.
2 Extended marketing reach . 3 4 4 3 4 . . the knowledge of local franchisees can be of great help .Requires good logistics and services Very slow services Valuable access to the real market and customers demand It is good for building and promoting brand image (such as through specialty stores). especially in unfamiliar places.It is easy to control the in poor integration cooperation. and market because the potential partner is already familiar with the culture of Vietnam.Time consuming - - DECISION MATRIX CRITERIA Effectiveness Acceptability Timeliness Relevance ACA NO. 1 5 4 4 4 14 ACA NO.Franchising facilitates the building of brand reputation within a relatively short time . which will add to the value of both brands and products It provides greater control and accountability .Small investment and quick returns 3 - .The franchiser can make use of the social connections of mainland legal and natural persons. 2 5 5 4 5 ACA NO.Expensive .
X. Franchisee Store Managers and staff Executives 15 1 month 3 months 6 months 1 month 1 month/ franchisee 2 months 1 month after the 1 year after . Training and Orientation of employees 9. RECOMMENDATIONS Based on the given criteria. ACA No. Advertise and Sell Franchises 6. Register as a franchisor 5. etc. Prepare the Legal Requirements Responsibility Starbucks Executives Accounting & Finance Office. royalty percentage. Store Opening 10. Screen the Franchisees 7. Financial Analyst Legal Office Marketing Executives Marketing Executives Starbucks Executives. 4. franchise fee. an operating manual for franchisees. Formal Meeting/ Discussion/ Brainstorming re: Expansion of Starbucks stores globally 2. relevance at a minimum cost. etc. audited financial statements. Evaluation Starbucks Executives. Legal Office Timetable 1 month Budget 2 months (information about the business. royalty percentage. Qualified Franchisees HR Personnel. franchise fee. Decide on the terms of franchise agreement. PLAN OF ACTION Action Steps 1. Meeting with Qualified Franchisees. acceptability. and descriptions of the company’s business experience) 3. 8. 2 is the best alternative course of action because of its effectiveness. timeliness. Discuss the terms and restrictions of franchise agreement.Economical TOTAL 4 21 5 24 3 18 * RATING SCALE : 1-5 (Lowest –Highest) IX.
It is a method of doing business wherein a franchisor licenses trademarks and methods of doing business to a franchisee in exchange for a recurring royalty fee. This investment strategy requires limited capital and time requirements. company prestige and visibility. It improves the financial condition of the company and enhances corporate image. It can conquer all the competitors to shine high as the first class coffee chain.XI. CONCLUSION Starbucks global success can be achieved through Franchising. It is one of the popular business expansion systems in the world today. Starbucks have a good financial capacity applying the best strategies. 16 .
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