Starbucks Case Study
Degree of Geographical Diversification:
Based on the information given in “Growth Strategy”, Starbuck has 16,680 locations worldwide. Of those stores, Starbucks owns and operates 9,217 stores, 7,238 stores in the U.S. and 1,979 stores internationally. Meanwhile, Starbucks licenses out 7,463 stores, 4,329 in the U.S. and 3,134 internationally. There are currently Starbucks in Canada, the U.K, France, China, Asia Pacific, the Middle East, Mexico, and Parts of Africa. There are also stores currently being established in India. Starbucks CEO Howard Shultz states that his ultimate goal is to have 20,000 stores in the U.S. along with another 20,000 stores in the U.K. Recently Starbucks has been closing under performing stores in the U.S. and internationally. Currently, Starbucks operating margin in the U.S. is 21.9%, in addition, Starbucks international sales have increased 7% and has an operating margin of 16.3%. One of the main reasons for the successful expansion of Starbucks comes from their rapid growth of licensing retail stores both nationally and Internationally.
Degree of Industry Diversification:
Although the focus of Starbucks is in-store coffee sales, they have recently been diversifying their brand to extend beyond basic coffee sales. In addition to the store transformations, Starbucks has also implemented new beverage and food products. Starbucks now offers baked goods, breakfast items, and chilled foods. In addition to the food offerings, Starbucks has been introducing new specialty coffee-based drinks and flavors, as well as iced-coffees like the Frapuccino and iced shaken refreshment drinks. Starbucks has also expanded the scope of their business model in order to reach customers where they work, travel, shop, and dine.
In their efforts to expand, Starbucks has partnered with Barnes and Noble bookstores to be the in-store coffee shop. They have also partnered