Starbucks Case Colombia Group 7

8/3/2019 Starbucks Case Colombia Group 7

1/16

STR-G307 International Strategy and

Leadership

1

Lindsay Shaw

Konrad Tota

Emilie Tregouet

Starbucks Market Entry Startegyfor Colombia

Victor Manuel Amores Nieto

Vanessa Booch

Ankur Saraogi

Group 7


2/16

Colombia

2

GEOGRAPHY

Location: Northern South America

Area: Total: 1,138,910 sq km (slightlyless than twice the size of Texas)

land: 1,038,700 sq km water: 100,210sq km

Climate: tropical along coast andeastern plains; cooler in highlands.

Natural resources: petroleum,

natural gas, coal, iron ore, nickel,gold, copper, emeralds, hydropower.

Source: CIA - The World Fact book

Lindsay Shaw, Konrad Tota, Emilie Tregouet, Victor Manuel Amores Nieto, Vanessa Booch, Ankur Saraogi

Entry Mode

Business

Model

HR & Training

Conclusion

Prod. Portfolio& Price

Suppliers &

Local Partners

Ambience

CSR

Introduction


3/16

Colombia


3

PEOPLE

Population: 45,644,023 (July2009 est.)

Age structure: 0-14 years:28.9% , 5-64 years: 65.4%, 65years and over: 5.6%

Median age: total: 27.1 years Population growth rate: 1.4% Urban population: 74% of

total population Rate of urbanization: 1.7%

annual rate of change (2005-2010)

Literacy: (definition: age 15and over can read and writetotal population) 92.8%

ECONOMY

GDP (purchasing power parity):$407.2 billion

GDP - real growth rate: 3.5% Labor force: 21.3 million Inflation rate : 7.7% Third Largest producer of

Coffee.Source: CIA - The World Fact book

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


4/16

Existing Caf Market


4

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction Colombia is a country with a tremendous coffee culture.

Main Competitor Juan Valdez Caf1 Has 101 stores across Colombia, as well as at outposts in

New York, Seattle, Philadelphia, Santiago, and Spain. It plans to add 500 more shops across the U.S., Latin

America and Europe by 2010. Other Competitors Various family owned coffee shops.

Columbias domestic coffee consumption has beenstagnant at 1.4 million bags since 2002.2

The National Coffee Growers Federation is committed topromoting local consumption and increasing per-capitacoffee consumption, which is around 2 kg per person/year.3


5/16

Entry Mode


5

Recommendation: As a new entrant through Foreign Direct Investment (FDI) Acquisitions of small family owned coffee shops where

necessary

Why? The Colombian caf market is largely unorganized The main competitor Juan Valdez Caf (owned by The

National Federation of Coffee Growers of Colombia) has astrong public image of helping the Colombian CoffeeProduction

Acquisition may be seen as an hostile act Foreign investors have the same rights as local ones (result of

non-discriminatory policy) 4 equality in competition Colombia is a member of various organizations promoting free

trade

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


6/16

Business Model


6

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction Infrastructure

Local suppliers &

own roasting plants

Collaborationwith local

restaurantsCollaboration

with

institutional

purchasers

High quality

coffee &

professional

Baristas

Offer

High quality

coffee

beverages

&

Customized,spezialized

service

Customer

Close

customer

relationship:

Baristas

remember

frequentcustomers

(get usual

drink

immediatly)

Distribution

through Starbucks

shops (new shops

or acquisition)

Target group: people

loving good coffee in

comfortable

atmosphere

FinanceSales revenue

(invested in

service, real

estate & customer

satisfaction)

Costs of raw

material,

employees, etc.

covered by sales

income, ROI,

investor money


7/16

Business Model

Lindsay Shaw, Konrad Tota, Emilie Tregouet, Victor Manuel Amores Nieto, Vanessa Booch, Ankur Saraogi 7

Recommendation: High market penetration: Starbucks stores in proximity to

saturate demand, build brand awareness and prohibit ordefeat competition

Building strong relationships with suppliers (crucial forsuccess) Constant monitoring of whole supply chain to ensure

quality Collaboration with local industries / shops / restaurants

Highly qualified personnel to ensure quality of productsand customer satisfaction

gaining big market share, create brand awarenessand acceptance

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


8/16

Human Resources


Recommendation: Recruit Locals for the job of Baristas

Back office work, maintain a healthy mix of locals andexpatriates (win-win for both sides)

Have employees as partners and make them stakeholdersin the business (identification with Starbucks)

Why? Fluent in the language of the country concerned +

transition of cultural gap Conversant with local business and selling practices +

consumer behavior

Create and maintain employee enthusiasm (identificationwith Starbucks)

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


9/16

Training & Development


Recommendation: Provide training with respect to Colombian cultures and

consumer behavior (Starbucks professionalism integratedin Colombian culture)

Have a very clearly defined career path & careeropportunities

Never miss an opportunity to reward and respect theemployees

Executive Level well-trained Colombian Baristas who empathize with

customers

Several trainings and providing career opportunities e.g.becoming store manager

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


10/16

Training & Development


Management level

Trained in USA through Starbucks programs

Close collaboration with Starbucks managers

Open career path (senior management)

Expatriates as helping hand to ensure Starbucksstandard

Expatriates with latin-american background for

better communication and understanding

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


11/16

Issues Concerning Expatriates


Recommendation: Minimize expatriate staff

A plan for reabsorbing the expatriates to home countryoffice on completion of the period abroad

Prior training in the Colombian business methods andcultures

Why? Limited effectiveness with regard to cultural, linguistic

and legal factors Failure of expatriates to settle into foreign environments

is common

Expensive to maintain only foreign staff

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


12/16

Product Portfolio & Price


Recommendation: Focus on Authentic Colombian Coffee Beans

Develop a couple of variants according to local taste andpreference

The price range should be $2 and upwards

Why? Focus on authentic Colombian coffee beans will help to

project the idea that a local product is being popularized

and marketed Locals will not see Starbucks as a foreign agent de-

popularizing local coffee

$2 will be a competitive price considering the Colombianeconomy and competitors

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


13/16

Environment / Ambience


Recommendation:

Purpose designed stores with relaxing music,comfortable furniture and roasting scent

WIFI, newspapers / books, table games, CD offerings

Why?

Customers experience fresh brewed specialty coffeein a comfortable atmosphere

Make it a place where people love to come andspend some time with friends, loved ones and familyand want to return

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


14/16

Corporate Social Responsibility


Recommendation: Help Colombian Coffee growers develop agricultural

expertise Technical support to improve coffee cultivation on

organic basis Improve their living conditions by paying fair prices Promote Colombian Coffee to the world

Why? Build confidence and goodwill with stakeholders

(especially local farmers) Strategic Branding

Starbucks connected with fair trade,sustainability, environment protection

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


15/16

Conclusion


Colombia has a big, well-developed coffee marketwithlong and sustainable tradition

Competition is hardbecause of many family owned,traditional coffee shops + Juan Valdez Caf with

biggest market share Entering through new shops (FDI) or acquisition Local suppliers + local employees ensure acceptance and

bridging the cultural gap Comfortable atmosphere + individual service + highly

trained & qualified staff + constant supply chain controlensures high quality & customer satisfaction Support of locals through employment, technical and

professional help reflects social responsibility

Entry Mode

Business

Model

HR & Training

Conclusion


Suppliers &

Local Partners

Ambience

CSR

Introduction


16/16

References

1. http://www.msnbc.msn.com/id/27226772

2. http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/

3. http://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.html

4.http://www.colombianembassy.co.uk/en/about/econom

y.html

http://www.msnbc.msn.com/id/27226772http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.colombianembassy.co.uk/en/about/economy.htmlhttp://www.colombianembassy.co.uk/en/about/economy.htmlhttp://www.colombianembassy.co.uk/en/about/economy.htmlhttp://www.colombianembassy.co.uk/en/about/economy.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.flex-news-food.com/pages/17034/Coffee/Colombia/colombia-coffee-annual-2008.htmlhttp://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.financialexpress.com/news/india-to-pip-columbia-in-domestic-coffee-consumption/228753/http://www.msnbc.msn.com/id/27226772

Starbucks Case Colombia Group 7

Documents

Transcript of Starbucks Case Colombia Group 7