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Analysis of
Development and Success Strategy

Lecturer:
Professor

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Starbucks
A global coffeehouse chain based in Seattle
the largest coffeehouse company in the world
The first Cafe opened in Seattle on Mar.30, 197
In the mid-1990s,opened first Caf
abroad

Is
It
Something

Main products in china

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drip brewed coffee

espresso-based hot drinks
coffee beans, salads
hot and cold sandwiches and
panini
sweet pastries
Snacks
Traditional green tea drinks
Chinese traditional snacks

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12 Years Development In China

In 1999, First Caf in China Mainland

In 2012, will open 300 new stores in China

By 2015, Total store numbers in 70 Chinese cities will increase to

1,500.
China will become its abroad largest outside the United States

In the future, plan to open more than 10,000 coffee stores in China

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Developing stages and Mode Change

Franchise

1999-2003
Trial operation
Concentrate on
several largest
cities
Indirect control

Joint Venture

Sole proprietorship

2003-2006

After 2006

Sharply Increase
share stake in
joint ventures

Purchase back
franchise right,
purchase all share
stake of joint
venture

Expand to medium
size cities

Realize direct control

Build up long term
expansion plan

Huge market potential and excellent store profit stimulate quick expansion
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1999-2003
Indirect operation through three franchised
companies
Reasons to chose
franchise:
In 1999, the first Starbucks cafe
opened in china capital city Beijing by
franchise. (In North china)
In 2000, enter into Shanghai market
by franchising a new joint venture(5%
shares ownership)
In 2002, open southern China market
by franchising a joint venture(5%
shares ownership )
Developed rather rapidly, huge profit
margin (Hong Kong Store realize
profit in the first month)

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1. small investment as a trial operation,

dont want to take too much risk in a strange
market environment
2. know little about this oriental countrys
coffee market potential which has a long
history of drinking tea and a prevailing
traditional tea culture
3. considering local government policy risk ,
confined by local policy restrictions about
foreign investment, obscure political
perspective
4. take advantage of the fund and
management support of local cooperators.

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2003-2006
Increase investment, strengthen control by joint ventures
Increase share stakes in 3 joint
ventures to 50-51%
sharply increase investment in
China market
build up long term expansion
plan

local government deepened openingup economic policy, foreign company

gained more freedom in investing and
operating
Huge market potential and excellent
profit of local outlets push Starbucks to
consider long term development and
expansion in china market. The
company decided to directly control
the market.

seek maximize long term profit

and market potential

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Since 2006, purchase back all share stakes in joint ventures

directly control all operation in China market
After 2006, begin to expand
rapidly into medium and small
sized cities
Localize all food supply chain
and build up local coffee plant
Localize menu, adjust to appeal
local consumers taste, try to
combine different cuisine culture
to create new drinks and snacks

Localize management team

which fully understand the
culture and market

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In Q2, China segment recorded 7th consecutive

quarter of over 20% sales growth
Q2 China/Asia Pacific VS Total companys earnings data
(In millions
$)

Apr.1,2012

Apr.1,2011

Change

Revenues

$174.6 / $ 3195.9

$131.8/ $2785.7

32% / 15%

Operating
income

$69.5 / $430.4

$43.7/ $376.1

59% / 14%

Operating
margin

39.8% / 13.5%

33.2% / 13.5%

660 bps / 0

Q3 China/Asia Pacific VS Total companys earnings data

(In millions
$)

Jul.1,2012

Jul.1,2011

Change

Revenues

$181.8 / $ 3303.6

$138.6/ $2932.2

31% / 13%

Operating
income

$61.4 / $430.4

$44.9/ $376.1

59% / 22%

Operating
margin

33.8% / 14.9%

32.4% / 13.7%

140 bps/ 120bps

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Successful Brand Strategy

Succeeded in building up high profile brand image

brand strategy
pricing strategy
no advertising strategy
localizing strategy

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Success strategy analysis

Successful Brand strategy

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