Free Essay on Starbucks International Expansion Strategy
Starbucks is an international and the largest coffeehouse chain based company in the world located in Seattle – United States of America. It’s product lines includes Beverages, Pastries, Whole coffee beans and Merchandise (Mugs, CDs). To date, Starbucks has expanded into a diverse range of international markets and business partners that have fulfilled the following criterion: shared values and corporate culture, strong multi-unit retail/restaurant experience, dedicated human resources, commitment to customer service, quality image, local knowledge, brand-building skills and strong financial resources.
Starbucks currently uses three business strategies: joint ventures, licences and company owned operations to develop local strategies (Starbucks, 2007). It operates 16,635 stores in 50 countries (Australia, Austria, Bahrain, Canada, Germany, Hawaii, Hong Kong S. A. R., Israel, Japan, Kuwait, Lebanon, Malaysia, New Zealand, Oman, Beijing, Shanghai, Philippines, Qatar, Saudi Arabia, Singapore, South Korea, Spain, Switzerland, Taiwan, Thailand, United Arab Emirates, United Kingdom and the US) in order to maximize market penetration, provide a relaxing and attractive social atmosphere and offer high quality products.
Its three largest overseas markets are Japan having more than 480 stores, England having more than 370 stores, China and Taiwan with each having about 120 stores. Starbucks entered the international marketplace for three primary reasons: 1) To prevent competitors from getting a head start; 2) To build upon the growing desire for Western brands; 3) To take advantage of higher coffee consumption rates in different regions of the world.
Along with its strong brand image, Starbucks has been known as a place that provides high quality coffee with knowledgeable service staffs. Americans enjoy Starbucks specialty coffee and the trend is expected to double, thus, the company need keep on expanding both in domestically and internally. Expansion and acquisition made Starbucks take advantage of
Starbucks International Expansion Strategy
market trends and receive the largest share. In addition, Starbucks could expand into tea beverages in international locations where Teahouse is more popular than specialty coffee.
One of the major drawbacks that Starbucks faced was being boycotted by anti-war protestors in Lebanon and civilized by New Zealand advocates seeking higher coffee prices for farmers. The company thus pulled out of Israel because of being faced with the possibility of terrorist attacks. In addition, Starbucks also has internal issues, not least the fact that its prices are often too high for regular consumers. Although its price rate increases have been slowing, it is still considered a “luxury” by many middle-class Chinese lowering the market levels in China.
Therefore, taking into account all above mentioned, it is possible to conclude that Starbucks is a leader of the national market but, in recent years, the company has started to implement new strategy of the international market expansion targeting at international, global market However, certain risks may be accompanied by the strategy made. For instance, the company may face serious problems in the result of its aggressive policy of expansion, such as the opposition of the local rivals as well as local population that can reject the new company, its product and services.
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