STARBUCKS' GLOBAL STRATEGY

Starbucks' Global Strategy



Starbucks' Global Strategy

Introduction

To create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition. I would like to precede with my analyses of the global market place, with examination the young but already well recognized brand world wide Starbucks. In my research I will explore on changes in the product, operations, and strategies at Starbucks influenced by the changes in the global marketplace.

Analysis

In order to accomplish this dream, Starbucks appears to be pursuing an international strategy, taking products from their domestic market and selling them internationally with only minimum local customization. Although they do not use a cookie cutter layout in each location, the drinks and gourmet coffees offered are the same from Seattle to Playa del Carmen to Beijing. Often it is pointed out that individual Starbucks carry different food, but its food sales make up only 3% of store sales. In addition, Starbucks R&D is located at its Seattle headquarters. There, employees are taught to taste the product as you would a fine wine and differentiate the coffees from different regions. Testing of new products is also performed by random employees within the company, despite the fact the product will be sold in other countries. The 13 weeks of training for baristas is also conducted at its Seattle headquarters, even for international stores (www.starbucks.com).

Company Culture

Organizationally, power at Starbucks is very centralized beneath Chairman Howard Schultz who still drives the company to stay consistent with his visionary ideals. However, all of the company's international activities are operated by a subsidiary named Starbucks Coffee International Inc. This subsidiary develops all business outside the United States and represents Starbucks' attempt at taking a polycentric approach to staffing. Resentment can grow out of limited opportunities for advancement from the subsidiary to the main entity, ethnocentric policies, and cultural differences between national units (Palmer, 2007).

And although Starbucks Coffee International does not yet exhibit any of these problems, it may become more apparent as the company grows. Especially since their, “approach to international expansion is to focus on the partnership first, country second” (Hall 706.)This “partnership” refers to the method Starbucks Coffee International uses as a strategy of entry into a new country. Namely, their strategy is the use of joint ventures, where by Starbucks enters into a partnership with a local firm that has experience within the region. As opposed to Starbucks' strategy within North America, where all of its stores are wholly owned directly by the company. Joint ventures into new countries (Hill, 2007).

Joint Ventures

First of all, Starbucks looks for partners who have multi-unit restaurant experience, knowledge of real estate and the retail market. Another advantage of these firms is that they know the culture, language, political and business systems within their home country. Additionally when considering the enormous risk when entering a foreign market, Starbucks can spread some of that risk to their partners. Finally, because of local politics, joint ventures may be ...