Starbucks International Operations

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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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 2.5 0.5 New strategies needed

New Products & Services that can be retailed in their cafes 0.1 4.0 0.4 Starbucks introduced new products

Using internet for sales 0.1 4.0 0.4 What customers want

Utilizing local buyer base 0.3 3.0 0.9 Familiar product

Re-establish global presence 0.3 3.0 0.9 Diversification

Total Scores 1.0 -- 3.1 Slightly above average performance

Threats

Competition overseas 0.3 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 -- 2.85 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 country's beliefs and customs.

Internal Factors Weight Rating Weighted Score Comments

Strengths

Very profitable Organization 0.3 4.0 1.2 over $600 million in profits

Strong brand name 0.3 4.0 1.2 Starbuck's is known world wide

Good reputation among customers 0.15 2.0 0.3

Strong market base 0.1 2.0 0.2 Strong

Favorable access to distribution networks 0.15 2.0 0.3 Global familiarity

Total Scores 1.0 -- 3.2 Slightly above average performance

Weaknesses

Inappropriate management comments 0.4 4.0 1.6

High cost structure 0.3 4.0 1.2

Entrenched overseas competition 0.1 2.0 0.2

Public opinion 0.1 3.0 0.3 States and Japan

Joint ventures and licensing - stop gap plan 0.1 3.5 0.35

Total Scores 1.0 3.65 Slightly above average performance

In regard to the strengths and weakness areas of the company, Starbucks