Starbucks Business Strategy

Introduction:

Today Starbucks is considered as one of the most loved brands in the world. The first Starbucks store was opened by three friends: Jerry Baldwin, Zev Siegl and Gordon Bowker on march 30th,1971 in Seattle. In 1982 however Howard Schultz has joined the company, which had brought enormous ideas for the success of the company such as community gathering places like coffee houses in Italy and selling espresso by the cup. However, due to conflicts, in 1985 Schultz has left the company and established his own coffee house named II Giornale or The Daily, which became a huge success. But in 1987, the owners of Starbucks decided to sell their business for $3.7 million, and Schultz took advantage of it, and bought the company with the

When Starbucks decides whether to license or franchise their product, the extent to which they can monitor the quality of their products or operations of coffee shops that use their brand name is a lot lower than in the case of joint ventures or wholly-owned subsidiaries for example. Joint ventures are often necessary due to political reasons, as is the case with some Middle Eastern countries where partnering with a citizen is necessary in order to do business. Also sharing the risk and costs with a partner in a local region can be advantageous for the company that extends their operations in a foreign market, due to lower capital investments. However, there are also disadvantages to be taken into account when going for a joint venture, as for example sharing the technology with a potential competitor in the industry can lead to a conflict of interests and a potential loss of competitive advantage. Although wholly-owned subsidiaries eliminate the risks associated with other entry modes, offering exclusivity over the profits and technology control, a company creates a risk of misunderstanding the cultural aspects of the country operated in and decreases its chances to succeed in a new market. Big and successful corporations, such as Starbucks, are able to determine the best mix of entry modes specific to the

By 1991, Starbucks had 105 stores, and with the help of the money raised from trading the company publicly in 1992 as I have mentioned above, Starbucks could be found in 725 U.S./Canadian locations by 1995. From 1996-2008, the U.S./Canadian company operated Starbucks stores grew from 926 to 7969 stores, while its licensed U.S./Canadian stores grew from 75 to 4560 stores.

In Japan, Starbucks used the joint venture strategy. Japan was Starbucks first international expansion. With an attractive market and a pre-existing taste for coffee, Japan was a perfect entry point in the region with them being the second-largest economy in the world and consistently among the top five importers of coffee in the world. Starbucks entered the Japanese market by entering into a 50-50 joint venture agreement with Sazaby Inc, operators of upscale retail and restaurant chains who had already have sufficient interest in Starbucks, and they have already approached them. As soon as the Starbucks stores in Japan were launched it created the single largest number of Starbucks stores outside North