STARBUCKS: GOING

GLOBAL FAST
CASE ANALYSIS BY GROUP 9
AMAN AHUJA | 143063
ARPITA MISHRA | 143065
MAHIMA ATREJA | 143078
JOSE ROYAL | 143074
POOJA KALESH KUMAR | 143087
 TABLE OF CONTENTS

CASE SYNOPSIS QUESTION 3

QUESTION 1 QUESTION 4

QUESTION 2 CONCLUSION
CASE SYNOPSIS
 STARBUCKS: HIGH SERVICE

1. Largest Coffee Chain 2. Upscale accessory

● 19,000 stores in 58 countries ● $3 lattes unapproachable
● 12,000 in U.S. alone ● Attracting next NEW
● Leads to Self Cannibalization generation of customers
● Pretentious

3.Maintaining leadership 4. Employee discontent

● “Predatory Real estate” ● Low paid labour
● McCafe and Tully’s Coffee Shop ● Significant time & effort
● Pre-order at some cafes ● Health insurance
 STARBUCKS: CROSSING BORDERS
EUROPE ASIA
European coffee culture, preference
to own 200,000 coffee bars over
“Styrofoam substance” JAPAN
Local partnerships
Beyond cafes- Convenience
stores
Customization of stores
FRANCE
Arcane Regulations &
Generous labour benefits
CHINA
ITALY 1 store every 15 hours
Largest Starbucks at Shanghai
Serve food at coffee bars, Pushing coffee culture for long
Starbucks lacks term rewards
 QUESTION 1

Identify the controllable and uncontrollable elements that Starbucks has encountered
in entering global markets.
 CONTROLLABLE ELEMENTS
MARKETING MIX
Starbucks can control the price,
promotion, and placing of its
products DELIVERING ON CUSTOMER
EXPECTATIONS
Starbucks can adjust according to
availability, affordability, product type
BRAND EQUITY according to customer expectations
Starbucks can leverage its
globally known brand value

INTERNAL FIT TO COUNTRIES

Starbucks can use market research
to ensure its products are a right-fit
internationally
 UNCONTROLLABLE ELEMENTS
COUNTRY-WISE RULES AND
REGULATIONS
France → Political and legal
bindings (Cumbersome regulations
& generous labour benefits)
STATE OF NATIONAL
ECONOMIES
Japan → Economic depression
COMPETITORS
Italy → Long standing customer loyalty;
perceived superiority of Italian coffee;
price competitiveness;
Europe → Copycats
Japan → Rival shops
CULTURAL/POLITICAL CLIMATE
Israel/Palestine → Geopolitics of a
region can affect Starbucks’ market
share
Vienna → The youth are enthusiastic
 QUESTION 2

What are the major sources of risk facing the company? Discuss potential solutions.
 RISKS
ATTRACTING NEXT GENERATION
SATURATED MARKET CONDITION
OF CUSTOMERS
● Upper limit of
coffee-shop saturation ● Hostile Reception
from Gen X
● High Priced Coffee

GLOBAL EXPANSION COMPETITORS

● Tougher to enter Big ● US Competitors like
Markets McDonalds and
● For e.g. In Italy, McCafes
Coffee is Cheaper +
Options in Food items

LOSING CUSTOMERS
● Fewer options available
 POTENTIAL SOLUTIONS
Focus on International/
Global Strategies
Global Marketing ● Keeping SRC &
● Increased quality of Ethnocentrism away in
Service & Coffee decision making
● New Products to fulfill ● Researching on
the demand Country’s culture

Restructuring the Price Strategy Younger Generation

● Adapt pricing according ● Advanced Technology
to the local markets ● Appealing Stores
● Working with local ● Price Restructuring
partners- Cheap inputs to ● Reviewing Compensation
reduce the pricing Structure of Employees
 QUESTION 3

Critique Starbucks’ overall corporate strategy

Employee Dissatisfaction
● Excessive cost-cuts
● 20 hours mandatory overtime, without pay
● 32,000$ to a store manager
● Has lead to a lawsuit

Predatory Real-Estate Policy

● Undercuts small players
● Has offered twice the going rate
● Holds onto properties even after vacating them
● Could lead to consumer backlash
Excessive market penetration
● One starbucks for every 9.4k people in Seattle
● Clustering strategy
● Stores cannibalize sales from each other
● Does not focus on increasing coverage

Narrow Product Range

● Only coffee available with some eatables
● Unable to compete in countries with a coffee
plus restaurant culture, like Italy
● Unable to bring diverse flavors from other
cultures to different countries
 QUESTION 4

What advice would you have for Starbucks in Africa? In China?

 STARBUCKS IN AFRICA

Economic factors are the uncontrollable factors and

Starbucks can only adapt to it

Average Per capita income of Africa is $315 which is

less than a dollar a day.

Due to lower GDP per capita majority of the people

cannot afford starbucks current prices.

There is also demand for better alternatives at

affordable costs

Africa has to come up with a price to compete with

local shops. The strategy has to be penetrative pricing.
 STARBUCKS IN CHINA
China has always been a tea drinking country, Coffee was
kept only for gifting and as a luxury, it was only available in
hotels and big restaurants

China has a lot of leverage and can open a lot of stores as

high demand, low labour wages and low cost of
development.

Economic environment is very favorable as the GDP and per

capita income is constantly rising.

Reposition their product for the chinese market serving the

food more in demand

Chinese markets needs maximum proliferation and

densification due to high growth and high profitability due to
its coffee culture and perception of being healthy drink.
CONCLUSION
 IN CONCLUSION

Starbucks has done very well in expanding across the globe

Success factors → Innovation • Friendly Environments • Improved Facilities

Pressure Points → Expand to New Markets • Improved Consumer Relations •

Better Employee Management
THANK YOU