Starbucks Study

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Starbucks - international business
concept and Starbucks in Germany

von: Peter Strehle

Table of Contents

1 Introduction 1

2 Starbucks’ International strategies 3

2.1 Competitive Forces 3
2.2 Entry Strategies 7
2.3 Success factors 11
2.4 Problems of globalisation 12

3 Starbucks in Germany 14

3.1 German Coffee Market 14

3.1.1 Coffee Shop trend 14
3.1.2 Coffee - unquestioned front runner in the beverage consumption of the Germans 14

3.2 Starbucks’ Joint Venture with KarstadtQuelle AG 15

4 Conclusion 18

5 Appendix II

6 Table of References IX

1 Introduction
Starbucks Corporation was founded in 1985 by Howard Schultz. The origins of Starbucks reach back to 1971, when the Starbucks Coffee Company was founded by three students in Seattle. These students, Gerald Baldwin, Gordon Bowker and Zev Siegl love coffee and tea. And this was the only reason why the set up the Starbucks Coffee Company. They just want to bring the best coffee in the world to Seattle. This time Starbucks only sold the coffee beans and the according coffee machines and mills. In the first ten years four more stores were set up. Howard Schultz, who was working in a Swedish house ware company this time, recognized the development and increasing demand of coffee mills of Starbucks. Infected by his interest in this company he started his research in Starbucks. He often went to Seattle and always met the founders of Starbucks, trying to convince them to employ him. Howard Schultz, who had no idea about coffee, but a lot of knowledge about selling, stayed very obstinate and so finally in middle of 1982 he became a manager at Starbucks. Since he joined the company he started to learn as much about coffee as he could. Inspired from the Italian coffee culture, which he got know during a visit in Milan, he wanted to introduce a coffee bar culture in the United States. After disagreements with his partners he decided to set up his own business. So, in 1985 he opened his first coffee bar in Seattle – Il Giornale. To get the capital he needed he spoke to 242 investors. 217 declined, but the others gave him the money to win the competition together with Starbucks. In 1987 he could purchase the Starbucks Coffee Company and most important the brand name that he used for all his stores, as Starbucks was a more familiar brand to the Americans. When he acquired Starbucks for US-$ 3.8 million the company had already 11 stores and about 100 employees. He kept almost all the employees because he also wanted to make Starbucks become a social company. So, he also paid more than the minimum wage, cares for good health insurances and even offered stock options to part-time employees. So it was no surprise that Starbucks had the lowest fluctuation rate among the restaurant and fast food business sector. But today also some ex-employees mention that the good and social image of Starbucks is a fallacy, as there are long working hours and not many chances to be promoted. In 2001 managers from about 700 stores sue Starbucks for unpaid forced overtimes. Starbucks finally agreed to pay US-$ 18 million. Howard Schultz’ strategy was to found as many stores as possible and also as fast as possible. He even paid up to twice of the local rents to get some good places for his stores and to beat Starbucks – the World in a Cup 2 the competition. Also he completely acquired already established coffee chains and stores. For instance, he spent US-$ 23 million for the COFFEE CONNECTION which owned 25 stores in Boston. Coffee consumption is not very high in the USA. For instance, the consumption in Scandinavia is twice as high as in the USA. But since the 1990s it started to recover the peak from the ‘60s and ‘70s. As Starbucks was able to reserve this trend they had great success in the USA and the number of stores increased rapidly. Nowadays they have even more stores in the United States than McDonald’s. Worldwide Starbucks employs about...
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