The case overview “Starbucks – Going Global Fast” examines the expansion of the best chains of coffee shops on the global market and literally invading the globe currently having about 7,000 locations. The authors talk about the obstacles that were faced by the CEO of the company Howard Schultz during the long way of company groth that started from a single coffee shop in Seattle.
The paper will futher provide the answers to the following questions:
1. Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.
Controllable elements include number of coffee shops that could be controlled by Schultz, , while uncontrollable elements comprise the situation on the global market including the world financial crisis of 2009, protests intiated by anarchists and people who voted against market capitalism,
2. What are the major sources of risk facing the company? Discuss potential solutions.
There are several major risks that Starbucks is facing. First of all, by opening so many coffee shops in one area (city or even neighborhood) the corporation is risking to steal their customers from themselves and decrease the overall amount of sales. It has become well-known that only in Manhattan there are 124 Starbucks locations, which has provided a lot of room for jokes. The solution would be better planning of café locations and spreading them more evenly. For example, it could be more profitable to move a couple of coffee shops from Manhattan to Vienna or Zurich where there are not so many Starbucks venues but still a big pool of potential customers of middle and high class. Second of all, it is too risky for Howard Schultz to make an attempt to blanket the market in Italy since this country has a lot of authentic and small locations where coffee of high quality is served and truly Italian atmosphere is maintained. These tiny cafés have high chances of winning a competition with Starbucks. The solution would be to refrain from entering the Italian market or locate a couple of shops with high concentration of tourists who prefer to have a cup of coffee in a familiar location rather than looking for a good place without any knowledge about the area. Finally, Starbucks is posing itself under the risk of losing customers looking for a high quality of service, authentic atmosphere, and lovely talks with baristas. While Schultz focuses on opening new coffee shops, the management often forgets that the soul of the company cannot be tested into so many peaces. As a result, we can see a lot of Starbucks shops in Europe where baristas are just students who don’t really care about your mood or making the customers happy. The solution to this problem would be to shift the focus from cloning the shops to improving the quality of service.
3. Critique Starbucks’ overall corporate strategy.
The corporate strategy adopted by Starbucks has a lot of strong points, such as running a lot of programs on diversity, opening coffee shops around the world, creating the atmosphere of the third place between work and home, and serving revolutionary beverages, such as frappucino. However, the strategy still has room for improvement, such as optimizing the geography of locations, improving the quality of employees and service, and making its brand and style unique, as well as develop several strong competitive advantages. to make it harder to be copied by the competitors.
4. How might Starbucks improve profitability in Japan?
Starbucks can increase sales in Japan by adapting their food and beverages to the local tastes and preferences. It is highly important to find the unique recipe that would combine its original culture, taste, and values with Japanese one’s. In addition, the company should improve its service and brand positioning to fight the companies mocking its logo.