Starbucks

I. Brief Background

Starbucks Coffee is North America's leading roaster and retailer of specialty coffees. The company's objective is to establish Starbucks as the most recognized and respected brand of coffee in the world. To achieve this goal, the company will continue to rapidly expand its retail operations and selectively pursue other opportunities to leverage and grow the Starbucks brand through the introduction of new products and the development of new distribution channels.

With a stable business in North America, Starbucks plans on extensively expanding abroad. Starbucks' international strategy is to utilize two expansion strategies - licensing and joint venture partnerships. The success of expanding into foreign markets is dependent on Starbucks' ability to find the right local partners to negotiate local regulations and other country-specific issues.

II. Define the Problems

Major

Starbucks plans to continue to expand its retail operations rapidly in two ways:

* To increase its market share in existing markets

* To open stores in new markets

Minor

* Store cannibalization. Starbucks has been known to open stores within one block of each other in hopes of saturating the market

* Poor merchandising efforts that have left many products - like mug and coffee makers - on display for years.

III. Areas of Consideration

* Starbucks does not have roasting plant in Asia as yet. Instead, one shipment of coffee beans arrives in Asia every other week to supply the company's shops in Singapore and Japan.

* Operating costs, like rent and labor, in Japan are extremely high and Starbucks will also have to pay for coffee shipment from its roasting facility in Kent to Japan.

* Singapore has seen a proliferation of gourmet coffee outlets in the past few years; therefore, the market is slowly becoming over-crowded.

IV. Courses of Action

Starbucks has become a great successful company in the coffee bean and beverage business and its strategy has been very effective. From the beginning, the company's owner has professed a strict, slow growing policy. He feels it is also to keep all the stores company owned to improve and grow the