Starbucks International Operations
Essay Preview: Starbucks International Operations
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Assignment:
Unit 3Independent Project
Date Submitted:
October 20, 2006
Course (include the section number:
MTG485-0604A-13 Global Strategic Management
Dr. Mernoush Banton
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I certify that:
I prepared this document specifically for this class;
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Case Study 5: Starbucks International Operations
1. World wide operations of Starbucks
Starbucks created a very interesting and ultimately profitable concept to the United States when Schultz bought the company in 1987. He decided that he needed to introduce corner coffee bars such as the ones found overseas. When he visited Italy he had discovered they had these on almost every corner and decided to implement the same strategy. With the excellent reviews and blanketing of stores throughout the United States, Schultz decided to expand his business overseas. As he expanded his business, he discovered just how well entrenched his competitors were in the global market and the differences in ethnic values and beliefs. Some of these he had to conform with by building one where the women were separated from the men.
The company has an excellent management team. Their training and development of employees is also of high quality. Employees are very satisfied with training and compensation. Starbucks entered international markets by using a three-pronged strategy which deemed itself to work very well. There was a joint venture to open Starbucks in Japan. They incorporated the same policy and principles world wide in all of their stores.
2. SWOT Analysis
External Factors
Weight
Rating
Weighted Score
Comments
Opportunities
New global strategy plan
0.2
New strategies needed
New Products & Services that can be retailed in their cafes
0.1
Starbucks introduced new products
Using internet for sales
What customers want
Utilizing local buyer base
Familiar product
Re-establish global presence
Diversification
Total Scores
Slightly above average performance
Threats
Competition overseas
5.0
1.5
Coffee bars established
Shifts in consumer tastes
0.15
2.0
0.3
Customers change in taste
Instability in economy
0.1
4.0
0.4
Consumer/public opinion
0.2
2.0
0.4
Difficult to predict
Unstable political environment
0.25
1.0
0.25
Rapid change
Total Scores
1.0
Below average performance
Starbucks performance in the opportunity category rated slight above average. This means that they have room for improvement. They need more flexibility in the overall rigid management in the company so far.
In reference to the threats, the company came in just below average performance. They need to work on adapting different guidelines for their overseas operations. They need more leeway with regard to other countrys beliefs and customs.
Internal Factors
Weight
Rating
Weighted Score
Comments
Strengths
Very profitable Organization
over $600 million in profits
Strong brand name
Starbucks is known world wide
Good reputation among customers
Strong market base
Strong
Favorable access to distribution networks
Global familiarity
Total Scores
Slightly above average performance
Weaknesses
Inappropriate management comments
High cost structure
Entrenched overseas competition
Public opinion
States and Japan
Joint ventures and licensing – stop gap plan
0.35
Total Scores
Slightly above average performance
In regard to the strengths and weakness areas of the company, Starbucks