As seen in the article, in order to expand into China, a wide distribution of network is essential. However a lot of investments and time would be needed. In addition, Starbucks would face challenges from the external factors in China such as economic, political and culture issues. Hence, it would be better to establish a joint venture with a reputable and accomplished local firm. As such, Starbucks has established a joint venture with Taiwanese drinks maker Tingyi, with the brand name Master Kong, the largest firm in China that specialises in manufacturing and distributing instant noodles, beverages, baked goods and soft drinks.
“Starbucks Global Take-Over of China” Starbucks changed the concept of drinking coffee; no longer is coffee just a product it is a lifestyle. Through making coffee drinking an experience Starbucks was able to move a domestic product from a simple coffee shop in Seattle Washington to a renowned product globally. Starbucks has come a long way since its first beginnings in 1971. Today, it’s the world’s largest coffee retailer, with over 19,000 locations in more than 60 countries. What sets Starbucks a part within in the company is that the staff, which are known as partners, are responsible for the sale of over 2 billion cups of coffee every year and create what is known as, “the Starbucks Experience”(Krikorian).
The Industry demand has changed due to a shift in consumers’ attitudes towards healthier products. This placed Starbucks’ coffee culture at risk and threatened the company’s future. Starbucks has tailored their menu to include more organic and healthy product mixes, venturing into tea, bread and fresh juice products (Geereddy, n.d). Starbucks’ cornerstone product differentiation strategies and Human Resource Management are the main impacts to strategy formulation. Starbucks’ is a premium valued brand; costly to imitate.
The aggressive growth rate of stores across the world had a ripple effect which led to Starbucks undergoing multiple changes: a. Globalization – The number of retail stores were 5000 and counting. It also started experimenting with new retail formats such as ‘drive-throughs’. Around 15% of its revenue came from non-company operated retails channels, known as ‘Specialty Operations’ which included international licensed stores, grocery stores, warehouse clubs and online mail-order sales. The goal was simple – reach customers where they work, travel, shop and
• In 1987 the original owners of Starbucks sold the company to Howard Schultz who rebranded his own coffee stores to Starbucks and as a result Starbucks began to expand. • In 1987 Starbucks opened stores in Vancouver, British Colombia and Chicago. By 1989 there were 46 outlets and nearly 1 million kilograms of coffee were being brewed per year. • By 1992, they were listed on the stock market and had grown to 140 outlets with an income of $74 million. • Today Starbucks sells Coffee, Smoothies, Tea, Baked goods and Sandwiches.
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.
Strong brand identification or high capital requirements can minimize the threat for competitors. As a brand Starbucks holds very strong reputation in the market. For people Starbucks is like second home as when they get tired of being home or workplace they can sip a coffee there and feel relaxed, which can relate in a bad manner for the new entrants. For Starbucks the threat of new entrants is modest as they have their own standards that are very high to compete with by the other firm. Locally there are many other coffee shops that are developing.
Starbucks has success to operate in CSR. There are various factors to affect the company succeeds of Starbucks in CSR. First of all, A company need development of a good brand image and responsibility into society. Company builds conscience of brand image is the most important in business. Starbucks is demand to provide high-quality
The threats in the operating environment can also be overcome by differentiating products offered at Starbucks from those of the competition in terms of better quality, impeccable service delivery, and augmenting customer service and quick response to queries. Developing a huge social media presence and offering product information and pricing through social media is the other strategic recommendation for Starbucks aimed at accessing a large audience and meeting the needs of technology-savvy generation that forms a huge bulk of Starbucks clientele (Hajli, p. 112). This will allow Starbucks to increase its physical and online market reach and expand the information on the company overcoming challenges on physical
STARBUCKS SINGAPORE 1.0 INTRODUCTION Originated in United States (US), Starbucks selected Singapore as the third international market to expand its business in 1996. It offers all-embracing products of coffee, handcrafted beverages, light food, merchandise and consumer products as well as an exclusive Starbucks experience to the customers. Starbucks Singapore prides itself on the 100th store expansion in 2014 (Priscilla, 2014). The company is staying ahead in the Singapore coffee chain industry, yet it is facing numerous emerging challenges in the global competitive environment. 2.0 PESTEL ANALYSIS A PESTEL Analysis is a marketing framework to analyse how an organisation is being impacted by a wide range of external imperatives.