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Starbucks – Going global fast: Case study

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  1. Introduction
  2. Controllable elements
    1. Strong competition
    2. Labor issues
  3. Uncontrollable elements
    1. Volatility of market
    2. Decline consumption of young adults
    3. Rising dairy costs
  4. The major sources of risk facing Starbucks
    1. Reliance on US market
    2. Strong dependence on partnership
    3. Labor disputes
    4. Culture
  5. The potential solutions
    1. International market expansion
    2. Growth in local market
    3. Launch new products
  6. Critique Starbucks' overall corporate strategy
  7. Improving Starbucks' profitability in Japan
  8. Culture
  9. References

The international coffee market is a very competitive market. There are increasing numbers of competitors, such as full service restaurants and other coffee shops, entering the growing specialist coffee market in recent years. Starbucks must be aware of this strong competition all over the world and try to maintain its operational advantages in order to keep its leading position in the future (Datamonitor, 2004).

Starbucks is heavily reliant on the supply and on the prices of coffee. Although Starbucks has supply agreements with suppliers in advance, the company could still face problems due to fluctuating coffee prices. Other factors, such as weather and economic conditions in coffee producing countries, also affect Starbucks' operations (Datamonitor, 2004).

[...] People in Japan are fond of having food and smoke along with coffee, Starbucks should introduce hot serving food and also cigars. Starbucks should introduce a Juke box system for customers to listen to music of their choice. As a part of its medium term strategy: Starbucks should try to increase sales to supermarkets as this would increase the sales and also be convenient to coffee lovers who want to make coffee at home. Starbucks could install vending machines at all busy places in the city so that it is easily available for people anytime, anywhere and in any place. [...]

[...] Culture Starbucks has its strong corporate culture and ways of doing business. Therefore, the company might become complacent, and will not change quickly to suit local culture environments when it enters new markets. Potential Solutions There are several ways in which Starbucks' could handle the above mentioned risk scenarios. Some of these potential solutions are: International market expansion In January 2005, Starbucks had 2,573 outlets in other countries, accounting for about 30% of the total numbers (Starbucks, 2005c). The company will build more outlets outside of the United States in the next few years. [...]

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