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Starbucks International Operations Case Study

Starbucks uses three strategies for international expansion: joint ventures, licensing, and wholly-owned subsidiaries. It tailors its strategy to each market to respect local cultures. Originally Starbucks expanded rapidly through new stores to reduce customer wait times and boost revenue. It now sells coffee, tea, food and merchandise. Starbucks also partners with other companies. Its success comes from aggressive growth and product innovation like seasonal items and Frappuccino. To maintain growth, Starbucks expanded internationally starting in Japan via joint venture and then other regions using the three strategies.

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294 views

Starbucks International Operations Case Study

Starbucks uses three strategies for international expansion: joint ventures, licensing, and wholly-owned subsidiaries. It tailors its strategy to each market to respect local cultures. Originally Starbucks expanded rapidly through new stores to reduce customer wait times and boost revenue. It now sells coffee, tea, food and merchandise. Starbucks also partners with other companies. Its success comes from aggressive growth and product innovation like seasonal items and Frappuccino. To maintain growth, Starbucks expanded internationally starting in Japan via joint venture and then other regions using the three strategies.

Uploaded by

Nirvana Shrestha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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STARBUCKS INTERNATIONAL OPERATIONS CASE STUDY

1. Analysts felt that MNCs can mitigate some of the risks in international markets by deciding on
a suitable mode of entry into these markets. Analyze the entry strategies adopted by Starbucks
for its international expansion.

Starbucks is the largest coffee house in the world. Starbucks adapts its international strategy in
order to satisfy the needs and requirements of every market, seeking to respect its cultures and
traditions. At present, the company uses three different strategies: joint venture, licenses and
wholly–owned subsidiaries. The strategy adopted by Starbucks was to blanket a region with it
new stores. By doing it so it can reduce the customer’s rush in one store and also help to boost
the revenue through the new stores also reduce the distribution cost and waiting time for
customer in the store so in other words it will increase number of customers.

Other than serving a coffee, Starbucks also have the products line including beverages- Coffee,
Tazo, Tea, Soda, Juices, pastries, whole coffee beans, and merchandise such as CDs and mugs.
Starbucks also entered into alliances with Canadian Airlines, United Airlines, Starwood Hotel,
and Barnes & Noble Inc., to serve Starbucks coffee. Analysis attributed the success not only to
its aggressive expansion but also to its product innovation. Mostly Starbucks’s products are
seasonal or specific to the locality of the stores in various countries and them also create a new
products, Frappuccino that target the youngsters who in diet. Starbucks continue to grow their
market by launched ice cream and ice cream bars through its subsidiary Starbucks and Dreyer’s
Grand Ice Cream, Inc. and enter into agreement with the cola major PepsiCo to launched bottle
Starbucks Frappuccino.

When the market reaching saturation, Starbucks could no longer depends on the U.S. market for
growth. Analysts expected to maintain growth sales and boost revenues, Starbucks should
venture abroad. In 1995, Starbucks formed Starbucks Coffee International, its wholly owned
subsidiary, to monitor the company international expansion. In 1996 Starbucks entered Japan
through joint venture with the Sazaby’s Inc. (a leading Japanese tea shop and interior-goods
retailer) and over the years it started to expand to the South-East Asia, Europe and Middle East.

Starbucks decide to enter international markets by using three pronged strategy – joint ventures,
licensing and wholly owned subsidiaries. Prior to entering a foreign market, Starbucks focused
on studying the market conditions for its products in the country. It then decided on the local
partner for its business.

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