Starbucks entering Italy
Table of Contents
1. Introduction. 2
2. Starbucks Corporation. 2
2.1 History of Starbucks. 2
2.2 Strategy of Starbucks. 3
2.3 Starbucks’ international expansion. 3
3. The Italian Environment. 5
3.1 General information. 5
3.2 Trade barriers. 6
3.3 Political and legal environment. 6
3.4 Social considerations. 8
4. The Italian Culture. 8
4.1 Anglo cultural cluster versus Latin European cultural cluster. 8 4.2 Hofstede’s five cultural dimensions: United States versus Italy.11 4.3 The Italian coffee culture.12
5. An investigation towards the appropriate mode of entry.13 5.1 Environmental factors.15
5.2 Transition specific factors.16
5.3 Global strategic considerations.17
5.4 Entry modes and recommendation.18
8.1 Appendix A: Starbucks’ Mission Statement.22
8.2 Appendix B: Findings from the GLOBE Research Project.24 8.3 Appendix C: Hofstede’s five cultural dimensions.26
Starbucks Corporation is a global coffee and coffeehouse chain based in Seattle. Washington, United States. Starbucks sells coffee, handcrafted beverages, merchandise, fresh food and consumer products. It is the largest coffeehouse company worldwide, with about 16.700 stores (8850 company-operated and 7856 licensed) in more than 55 countries. However, the striking fact is that Starbucks has not expanded into the Italian market yet, whereas Italy can be seen as the coffee-lover nation number one. This is especially interesting given that Starbucks has been fairly successful in other major European countries, such as the United Kingdom, Spain, Germany and even Switzerland. Therefore the main purpose of this report is to analyze the feasibility and profitability of Starbucks entering into the Italian market.
This paper is organized as follows. To start the investigation, Section 2 examines the Starbucks Corporation. More specifically it describes the history, the strategy and the global expansion of Starbucks. To analyze the Italian market, Section 3 deals with the trade barriers, the political environment, the legal environment and the social environment. Moving on, Section 4 discusses the cultural environment and the famous Italian coffee culture. Section 5 gives a recommendation on which entry mode is best for Starbucks to enter the Italian market. Therefore it will analyze the environmental factors, the transition specific factors and it will take the global strategic considerations into account. Finally Section 6 will draw the conclusion.
2. The Corporation Starbucks.
2.1 History of Starbucks.
The company was founded by three Seattle entrepreneurs, Jerry Baldwin, Zev Siegl, and Gordon Bowker, in 1971. They started selling whole-bean coffee in Seattle's Pike Place Market. Their store was named Starbucks, after the first mate in Moby Dick. In the following years till 1982, the company grew to five stores, a small roasting facility, and a wholesale business selling coffee to local restaurants. During that period, Howard Schultz had been working for a company which marketed coffee makers to a number of retailers, including Starbucks. In this way, Schultz was introduced to the company and its founders, which lead to his recruitment by them. Consequently, he joined Starbucks as manager of retail sales and marketing. When working for Starbucks for one year, Schultz went on a buying trip to Italy. During his stay in Italy, Schultz became familiar with the Italian coffee culture. He noticed that the Italians start their day at an espresso bar and later in the day return with their friends. This made Schultz belief that this business would do well in the United States as well, and Americans would...