Starbucks'S International Operation

EXTERNAL ENVIRONMENT

A. Societal Environment

* Economic

* Amount of disposable and discretionary income from the domestic and international markets (O)

* Volatile international business environment made it difficult to effectively manage international operations (T)

* Must cater to different customer preferences in the international arena (T)

* Technological

* Political-legal

* Volatile political environment in the Middle East created serious problems (T)

* Faced criticism from Non governmental organizations (T) (NGOs)--urged company to acquire certified coffee beans

 Ensure that those coffee beans were grown and marketed under certain economic and social conditions

* The existence of political risk (T)

* Licensing issues (T)

* Socio-cultural

* Diet conscious consumers (O)

* Consumers enjoy drinking coffee while visiting bookstores and other places--opportunity for cooperative ventures (O)

* Foreign markets with different preferences and desires (T)

B. Task Environment: Porter's Competitive Analysis

1. Threat of new entrants: Low

* Becoming a saturated market (particularly in the United States), so it is slightly more difficult for new competitor to enter the market

2. Bargaining power of buyers: Low

* Established prices are non-negotiable among buyers

3. Threat of substitute products or services: High

* Domestically: consumers can purchase instant coffee for a cheaper price or buy from fast food chains and other independently owned coffee shops

* Internationally: sidewalk cafes of France, coffeehouses of Vienna, and espresso bars in Italy offer similar products and services to Starbucks

4. Bargaining power of suppliers: Moderate

5. Rivalry among competing firms: Moderate

6. Relative power of unions, governments, special interest groups, etc: Moderate

* Non-governmental organizations apply pressure that coffee beans be certified and grown under certain economic and social conditions

I. INTERNAL ENVIRONMENT

A. Corporate Structure

* Three pronged strategy: joint ventures, licensing, wholly owned subsidiaries (S)

* Decision-making authority is decentralized (S)

* Strong management team (S)

* Structure is clearly understood by everyone in the corporation (S)

* Current structure is consistent with mission, objectives, policies, procedures, and programs (S)

B. Corporate Culture

* The company has a well defined culture that all employees