Starbucks Case Study

Starbucks

Transnational corporations have had a tremendous impact on the interconnectivity that between countries, corporations, and people on a global landscape. Fueled by capitalistic ideals of increasing profits numerous corporations have expanded there operations into the global marketplace, some with much more success than others. One such transnational corporation that has embodied this pursuit of expansion in domestic and foreign markets for profit is the Starbucks Coffee Company. This company, which finds its roots in the opening of a single retail location in Pike place Market of Downtown Seattle in 1971, has been able to infiltrate into countless foreign domains and grow into a global powerhouse of the food and beverage industry with over nine thousand stores across the globe today in thirty-four countries outside of the Unites States.(Business Wire, 2005) Starbucks serves is an excellent specimen of a company that follows continual patterns of expansion directly correlating to increased access to foreign markets, and also the ability to nurture growth within these markets as well as gain access to new markets through the Market merging.

In my research of this company and its path to globalization, I found that information about certain aspects of the company were more readily available than others. For example, I found that I had more difficulty finding scholarly articles that dealt with the distinct business strategies that Starbuck’s employed in order to globalize, in that it became apparent that much of the information about the terms of their mergers and acquisitions were not released or that the companies and business groups that they did so with had websites that contained no information in English. Interestingly enough, I found more of an abundance of scholarly material on the homogeneous cultural impacts that Starbucks has had and how the spread of the company’s locations worldwide has been received by some cultures as the spread of American values. A bulk of my research findings came from business reports and releases about the company, which were useful in keeping accounts of how the company was able to infiltrate global markets and expand. The Website was a good starting point for my research in that it provided points of interest about the company that I could research into greater detail in order to root out the bigger picture.

In order for one to have a more complete understanding of how this company operates and how it has come to succeed at a global level, I will outline the company’s geographic expansion in terms of its operations and production; second, I will explain the company’s main motivation for global expansion as well as factors that had an effect on the expansion; lastly I will detail the methods of expansion and production employed by the company. These will all be discussed within the time frame from present day back to 1996, when Starbucks first became a global corporation. (Starbucks.com)

Of the nine thousand locations Starbucks has worldwide, over two thousand of those are outside of the United States in thirty four different countries.(Sowa, June 2004) The expansion of retail stores into foreign countries began with a joint venture with Sazabay Inc. in Japan in 1995, and then the eventual opening of retail locations within the country during the following year.(starbucks.com) This was the first time Starbucks ever set up operations outside of the US, and it was in the form of construction of the Starbuck brand retail store locations operated by a foreign company. Starbucks entered the East Asian Market first, in countries such as Japan, Korea, Taiwan, the Philippines, and China, and concentrated on growth in these markets mainly for the first few years of entering the foreign market. Eventually, Starbucks was able to break into other markets as well, such as Australia, London, and New Zealand amongst others year after year until its present standing of 34 countries in North America, Latin America, Europe, the Middle East and the Pacific Rim with retail locations that exists today in 2005.(Business Wire, Feb 2005) Within these countries, retail operations were set up at first just primarily in areas with the densest population. (Ramsey, Mar. 1997) However, as the market for the Starbuck’s Brand continually increased, the locations throughout the countries would increase and fan out from the city centers. This can be seen in the example of Japan, whom after 5 years operations had opened 300 stores by the year 2000. (starbucks.com)

The primary raw material that Starbucks purchases and uses in terms of production is coffee beans. Coffee beans grow in regions near the equator, where the climate is suitable to sustain their growth. It follows that Starbucks purchases all of its beans from countries in South America, Africa, and Asia. Coffee beans that Starbucks import come from regions