8/6/2019 Starbucks - Copy

1/17

Sukirti Gupta

Sachin Mogha

Wasim Akhtar

StarbucksInternational Operations

Presented by:

8/6/2019 Starbucks - Copy

2/17

Presentation Outline

Introduction to Starbucks

Industry Overview

Problems for Discussion

8/6/2019 Starbucks - Copy

3/17

Introduction to Starbucks

Company started in 1971 in Seattle,Washington

Grew from 55 stores in 1989 to over 17,009stores today

Products sold include:

- Coffee and tea - Beverages-Fresh Food -Coffee beans, tea bags

- Merchandise -Ice creams

8/6/2019 Starbucks - Copy

4/17

Industry Overview

8/6/2019 Starbucks - Copy

5/17

Industry Definition

Specialty Eatery Industry

Fits within the largest segment of disposable

income spending -- food and beverages

Steady growth in this segment in the 1990s has

led to an abundant number of new companies

As demand for convenience has made eatingout a normal routine, the demand for specialty

food services has increased in recent years

8/6/2019 Starbucks - Copy

6/17

Industry and Competitive

Analysis Market Structure

Monopolistic Competition

Competitive Activity Many companies are in the market and competition is fierce

Competitors use location, product mix, and store atmosphere

differentiation to establish market niche

Industry Costs and Capital Structure Low to moderate costs for each location Major start-up expenditures are property and equipment

Major operating costs are labor and cost of sales

8/6/2019 Starbucks - Copy

7/17

Industry PEST Analysis

Political Influences Relationships between coffee producing nations and US

State &L

ocal government controls Economic Influences

Constant demand for food and beverages

Changes in disposable income could influence purchase levels

Social Influences Consumer preferences could shift from coffee to other beverages

Technological Influences Use of technology can improve operational efficiencies

8/6/2019 Starbucks - Copy

8/17

Problems for discussion

8/6/2019 Starbucks - Copy

9/17

Question : Entry strategies

adopted by Starbucks

8/6/2019 Starbucks - Copy

10/17

Initially, to study the conditions for

products in the country.

Local Partners for its business

Without compromising on basic

principles

Entry strategies (Contd.)

8/6/2019 Starbucks - Copy

11/17

To begin with, in 1995, formed

wholly owned subsidiary StarbucksCoffee International.

In 1996, it entered in Japan through

a JV with the Sazabys Inc

By 2003, had stores in South-EastAsia, Europe and Middle East

17,009 stores till January 2, 2011

8/6/2019 Starbucks - Copy

12/17

Question- If Starbucks analyzed

and managed the risks? According to my opinion, Starbucks was

unable to analyze the risks. This is evident

from the fact that the number ofinternational stores targeted by them to be

opened was 10,000 but they could not do

so. Unable to deal with the volatile political

environment in the Middle-East.

8/6/2019 Starbucks - Copy

13/17

Analyzed Risks( Contd.)

Had to shut down 6 stores in Israel which

they didnt expect.

In early 2000s, sales and revenues declined

in Switzerland, Germany and Japan.

Stiff competition from local players in

Europe on the grounds of price.

8/6/2019 Starbucks - Copy

14/17

Question-Risks faced by

Starbucks

8/6/2019 Starbucks - Copy

15/17

Risk avoidance in

International Market Rethink the entry strategy

The taste needs to be altered keeping in

mind the changing tastes of consumers

The complex JVs and licensing agreements

needs to be made simple

Operational costs should be controlled

Work force with proper training should be

recruited

Proper real estate( stores) to be acquired

8/6/2019 Starbucks - Copy

16/17

8/6/2019 Starbucks - Copy

17/17

Questions