Group 2: Hawkins, Reilly, Corbin, Abrams, Watchorn
The Globalization of Starbucks
2.) What drove Starbucks to start expanding internationally? How was the company creating value for its shareholders by pursuing an international expansion strategy?
A.) The catalyst for the international expansion of Starbucks was the vision and experiences of Marketing Director and future CEO Howard Schultz. In the early 1980s Mr. Schulz went to Italy and experienced the Italian coffee house. Starbucks under the leadership of Mr. Schulz copied this “Third Place” experience and format which drove to great success in the United States with over 700 stores by 1995. This success positioned the company to move into outside markets in order to continue growing. The company the expanded to Japan and additional countries across Asia while continuing to grow in North America through the 1990s and early 2000s. In the early 2000s Starbucks established a presence in Europe starting in Switzerland. The vision of Howard Schulz resulting from a trip to Italy led to a winning format and business model in North America which snowballed success into international markets.
B.) By expanding into international markets, Starbuck created value for the Shareholder through economy of scale and building brand equity. Starbucks was able to take advantage of economies of scale by buying materials in extremely large quantities and by doing so is able to keep costs down, resulting in a greater profit margin. In addition, by competing globally the Starbucks brand becomes known the worldwide. Similar to Coca Cola, when a consumer decides which carbonated beverage to drink they go with what they know. Increasingly since the 1990s, when choosing a coffee experience, what they know is Starbucks. 3.) Why do you think Starbucks decided to enter the Japanese Market via a joint venture with a Japanese company? What lesson can you draw from this?
A.) Starbucks decided to enter the Japanese...