International Business Strategy
Group Report (Starbucks)
Date of Submission: 18-Feb-2011
FINAL YEAR REPORT (MIDDLESEX UNIVERSITY)
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CHAPTER 1–EXECUTIVE SUMMARY
This report aims to evaluate Starbucks’ past and present performance in order to most importantly stipulate the future position of this largely successful company. Being that the company’s objective centers around expansion, this report tries to identify a likely attractive target country (India) for such plans. The analysis uses SWOT, PESTEL, Industry Based View, Market Entry Mode and other similar evaluative tools to reach an understandable and valid conclusion that India provides varied opportunities for expansion that can be exploited by Starbucks. CHAPTER 2–COMPANY PROFILE
The current mission statement of Starbucks is “to inspire and nurture the human spirit by one person, one cup and one neighbourhood at a time” (Starbucks.com).
The first Starbucks store was opened in Seattle on March 30th 1971 by three partners and the name of the store originated from the novel Moby Dick. The firm believes in supplying and serving the best coffee possible by using the highest standards of quality whilst adhering to ethical trading and responsible growing practices at the same time. In 1987 the first stores were opened outside of Seattle, in Vancouver and Chicago and in the subsequent years stores followed the expansion were much more extensive across North America.
Starbucks sells a variety of products which include high-quality whole bean coffees along with fresh rich-brewed coffees, Italian-style espresso beverages and cold blended beverages, a collection of complementary food items and also a selection of premium teas and beverage-related accessories and equipment (starbucks.com).
There are conflicting reports on the overall market segment that Starbucks possesses, although according to Mintel a global consumer research firm Starbucks had a 73% market share of U.S. coffeehouse sales in 2005, (usatoday.com) and this is significant because the majority of its revenue comes from their home market which is $2.1 Billion compared to an overseas share of just $640 Million (marketingmagazine.co.uk).
Amongst Starbucks’ many achievements is its spot of being #1 best coffee in the fast food and quick refreshment categories and one of the “world’s most ethical companies” (starbucks.com). Its performance as a multinational firm has increased over time and as such led to expansion in global operations. The recession was a major factor that impacted the company’s position because prior to that, Starbucks was known for having a café around every street corner (msnbc.com). However prior to the recession in 2007, their share price traded at $38.41 and a mere two years later the price had fallen to a measly $9.91, “profits were down for the last three months of the year from an astronomical $158.5 million to $5.4 million” (business.timesonline.co.uk).
The turnaround for Starbucks started with the restructuring of management where the former chief executive Howard Schultz took back the role and set the company’s focus on core markets and utilizing technological breakthrough to introduce Starbucks coffee in an instant form (pr-inside.com). Starbucks went back to its roots by focusing on customer service that was neglected during rapid expansion (Guardian.co.uk). All these decisions helped contribute to the sales flourishing and “profits rising” to high levels once again (bbc.co.uk).
The first location outside of north America was in Japan in 1996 which was followed by an impressive $83 million acquisition of the UK based “Seattle coffee company” of which there were 60 outlets at the time, all of which were then re-branded under the Starbucks name. The global expansion continued into the Latin American, Asian...
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