STARBUCKS

DURAN SÁNCHEZ DANIELA

GARZÓN CALDERÓN JUAN DIEGO

HERNÁNDEZ CLAVIJO DIEGO ALEJANDRO

RIAÑO PEÑUELA BRANDON ROMARIO

Students, International Business

MBA Oscar Mauricio Cepeda Rosas

Teacher, International Business Management

Second Term

International Business Management

International Business Faculty

SANTO TOMAS UNIVERSITY

VILLAVICENCIO

2020
 INTRODUCTION

Starbucks has been a reference in management lessons among entrepreneurs, business

schools, management careers, MBAs and enthusiasts, there are even books written about this
case such as Howard Shultz's own book (Onward: How Starbucks Fought for Its Life without
Losing Its Soul) which became a very important reference in the industry of management and
internationalization of companies and brands.

What makes Starbucks stand out as a success story, more than the smart and fast-paced way it
grew in the Seattle market, across the country and now in different parts of the world. It was
the way in which this company historically had difficult periods and was practically on the
verge of bankruptcy. And even with all the odds against it, this company did not only survive
within the market but found a way to grow exponentially over time.

This document intention is not to explore the history of the company nor to delve into its
growth. Instead, it will explore in a general way the importance and impact that the expansion
and internationalization strategy of the brand had in the different markets, which made it one
of the most recognized brands in the world, admired in the fields of entrepreneurship,
business and administration, and one with the greatest number of people who see it as a cult
and have incorporated it into their everyday life.
THE ENVIRONMENT OF INTERNATIONAL BUSINESS

It is important to analyze this success case that Starbucks had and it is the business model that
throughout its history it has been able to carry out, the entity has been one of the most
successful cases in the discretionary consumer segment, this business has managed to achieve
a high degree of saturation regarding the opening of the store in the United States, its
international expansion strategy and the expansion of its business lines imply attractive
medium and long-term growth opportunities for the different global markets.

This company started with six stores located in Seattle in 1986 and since then it has had an
international growth with more than 18,000 stores around the world, which it represents are
values ​with respect to its brand, design and decoration of its stores and the customer service a
very important factor, this has allowed it to be successful despite increasing pressure from
other companies such as McDonald's, which is being competitive with lower prices but
Starbucks has demonstrated its ability to sustain prices and profitability despite the
competition and has been achieving this since its operating income is good and its earnings
per share are very profitable.

In addition to international expansion, it is implementing a series of initiatives to continue

expanding its markets, with different alliances such as Teavana, Evolution Fresh and La
Boulang.

This aims to attract a wider range of customers and, in addition, it could have an effect
positive on its profitability margins by allowing the growth of its sales without having to
make large investments in new stores, In terms of sales channels, it is expanding in the home
coffee business through packaged products and beverage cans list for consumption that are
marketed in different supermarkets and stores.
UNDERSTANDING EMERGING MARKETS

Throughout his successful career starbucks has focused on expanding its offerings and
expanding into emerging markets as it has been noted that the company has taken a position
in the Asian giant such as China, for a few years now the chain of coffee shops, is a
recognized brand in the global consumer industry and continues to be an entity with strong
possibilities of expansion despite the competition has become entrenched in the business and
new markets, as you can see that in the United States there is a level of saturation so there are
the possibilities of expansion based on the growth of new countries and initiatives driven by
their management.

Starbucks has launched a series of strategies in different aspects such as food, alliances,
coffee lines, customer service, machines for its production process, products for caa,
marketing with the purpose of opportunities that seem potentially attractive, its main source
that this company is currently experiencing is related to the expansion towards emerging
markets.

In the United States or the main European nations, Starbucks maintains its leadership position
based on the strategic geographical location of its coffee shops, which does not leave much
room for potential competitors to expand in the most demanded locations.

In this sense Mc Donald's could be considered its strongest competitor, since it offers lower
prices and a presence of wide reach, however, it does not achieve the same differentiated
image in the target segment nor its consumer experience.
THE INTERNATIONAL MONETARY AND FINANCIAL ENVIRONMENT

Return on equity is the amount of net income returned as a percentage of shareholders'

equity. Starbucks is valued at 95.63% while the Industia is valued at 15.03% and the Sector is
valued at 13.42%, showing us that Starbucks has a higher return by revealing how much
profit it generates with the money that shareholders have invested.

In short, Starbucks is a company that is worth investing in because its financial ratios have
shown us that in most cases Starbucks is better than its sector and industry, which means that
it is one of the best in its sector. However, its success is not only due to good management of
numbers since good capital under the wrong management can quickly disappear. That's why,
beyond finance, Starbucks is an excellent option for investment because throughout its years
of operation we have seen a great growth of the company, as well as a very good expansion
and very innovative strategies.
STRATEGY FOR THE INTERNATIONAL ENVIRONMENT

For starbucks to maintain an international vision, it had to go through a market analysis and
also see what factors could or could not affect the entry of this franchise at an international
level, below we will see the points that starbuck as a company was anticipated to perceive
before reach the global market.

Product customization.

The ability to choose and personalize coffee is a key attribute that is increasingly appreciated
by consumers. This is a peculiarity that is appreciated in which, in addition to writing the
name of each consumer on the plastic cups, they can choose from a large number of options
to buy their coffee.

Expansion model inspired by another great one.

For the founder of the Starbucks model, Howard Schultz, it was always key to generate a
rapid expansion of the chain and the model, so he has admitted that McDonald's has been a
source of inspiration for its growth model.

A premium approach.

Despite drawing inspiration from other established franchises, this chain always looked for a
way to differentiate itself in its vision. The three most differentiating characteristics are:
being very selective with its franchisees, selling premium products to upper-middle-class
urban customers, and not advertising on TV.

Offer an experience.

At Starbucks you will find more than just the best coffee, great people to meet, top-notch
music, and a comfortable place to meet someone.

Here are few companies in the world that generate more engagement and loyalty than
Starbucks. It is no longer just the search for apps to facilitate mobile payment, nor is it a
reference for customer service on social networks, nor that it was the first cafeteria to
implement free internet access -so common today at the level worldwide-, Starbucks is the
result of a company philosophy that has focused on the customer as the center of its entire
global strategy. This type of marketing is based on a strong affective connection between the
brand and the customer. Assuming that most purchasing decisions are based on emotion and
creating an emotional connection with the consumer.

The main value of Starbucks lies in the orientation of its brand towards a buyer person who
wants to belong to a select community. In the words of the company's Marketing Director,
the Starbucks buyer person includes women and men.

Starbucks strategy has managed to make its public consider the sale of coffee, not as a
product, but as a service: 'the Starbucks experience', where the priority is to create an
emotional connection with the customer, and where once the consumer want to be part of the
Starbucks community, the company's next goal is to involve you in the entire experience. In
addition to being a brand that fosters an enriching user experience, your company can learn
other things from the Starbucks business model.
EFFICIENT INTERNATIONAL STRATEGY

Based on the research carried out, it is possible to affirm that Starbucks entry into emerging
and developed markets is based on conducting market research.

In order to gain a more in-depth understanding of world markets and the way countries
operate, Starbucks conducted a market diagnostic. Countries have very different regional
markets, which makes market research crucial in order to carry out an efficient international
strategy.

With the objective of making Starbucks' entry into certain countries as efficient as possible,
the company carried out a strategic implementation process. In addition to carrying out all the
steps previously described in point three of this work, Starbucks internationalization strategy
was based on the points explained below.

Given the complexity of the markets worldwide, Starbucks focused on seeking alliances with
local companies, already positioned in the coffee industry, for example upon arrival, it
associated with these companies from each country to which it was going. The global market
is not homogeneous, there are large regional differences between the north and the south, and
the purchasing power is not comparable between the interior areas, and the coastal cities,
where it is considerably higher. Through these partnerships, Starbucks was able to better
understand the tastes and preferences of local consumers.

There were too many brands from the same countries that it would be possible to enter and
these are pushing for market share by reducing prices, which is not a good strategy because
they can never outperform local competitors.

However, Starbucks in its internationalization strategy decided not to lower prices, as it

already had an advantage over its competitors in the Asian market by being perceived as a
western luxury brand. In this way, the consumption of Starbucks products is considered a
status sign, and customers were willing to pay a slightly higher price.

But if something characterizes Starbucks' internationalization strategy, it is its adaptation to

the world market.

As mentioned in previous paragraphs, when relocating their activities, companies can choose
to standardize or adapt their products or services. After conducting a diagnosis of the
company's internal and external factors, Starbucks considered that the most feasible option
was adaptation in order to achieve success, since being a global brand does not imply having
global products.

Therefore, we can affirm that Starbucks' internationalization strategy in these countries was
based mainly on personalizing the final part of the value chain, that is, the part that is closest
to the customer.

According to the latest coffee market reports, the good results obtained by the company last
year are mainly due to the success obtained in the global market, therefore, it is a key country
for long-term growth.

Starbucks in the world, which sales are significant, are growing along with the size and scale
of our business, and the deepening of the connections between our partners, our customers
and the Starbucks brand, therefore we want to continue targeting other global markets and be
attractive to our new market niches.
CONCLUSION

To conclude, it is important to point out again the fact that thanks to the decision making and
risk bearing of its management team, Starbucks is nowadays one of the most important and
prevalent brands in different parts of the world, and mainly in the United States. Its
competition on an international level is unparalleled and in most cases it has to compete with
local brands as it expands around the different countries, and yet this brand has managed to
become a standard and an example for not just other "coffee" brands, but also to companies
in other markets.

It is also important to note that thanks to its international expansion strategy, it has gone from
having nearly 7500 shops in 2003, to having more than 31000 shops by 2019, in addition to
having a very important presence in up to 80 different countries (Statista, 2003-2019). This is
why it is so well admired and its customers, suppliers, and investors hope for it to continue to
expand around the world, bringing the experience of a pleasant environment, a significant
brand, and the teachings of good management and impeccable customer care and attention, as
its banner and message to other companies and industries whose key point is the personal and
exclusive service for each of its consumers.
REFERENCE

Statista. (2003–2019, August 17). ​Number of Starbucks stores worldwide from 2003 to 2019

[Dataset]. Statista.

https://www.statista.com/statistics/266465/number-of-starbucks-stores-worldwide/#:

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