Starbucks Case Study

Entry strategy

Among 30 years, Starbucks asserts that it will not accept franchised stores all over the world. There are four types of structures which Starbucks uses to enter oversea markets. The difference of these structures mainly depends on the percentage of StarbucksЎЇ stake in the local Starbucks Company.

The first type is that Starbucks hold one hundred percent of the oversea Starbucks companyЎЇs stake, such as in the UK, Thailand and Australia. The second type is that more than fifty percent of the oversea companyЎЇs stake is hold by Starbucks, such as in Japan and Korea. The third type is Starbucks owns a minority stake, like account for five percent of the sum. The final type is using licensing, such as in Beijing(China) and Philippines.(Strehle, 2004)

Licensing or join venture by holding a minority stake is an effective way when first stepping into a new market because it lower the investment and risk (LU, 2006). However, such strategy is not always effective. If Starbucks wants to enhance the control of management and the cash flow, it must own majority shares of its oversea join ventures. Starbucks did realized the point, and then began to purchase shares from its oversea partners. When Starbucks enter Shanghai(China) in 1999, it held only five percent of the whole stake. After a few year, the stake of Starbucks increased to fifty percent.

Market strategy

As one of the best well-known brand of the world, StarbucksЎЇ success is not through the high advertising contribution. Moreover, it is rarely to find StarbucksЎЇ commercial from public media. Ў°Starbucks spends just $30 million annually on advertising, or roughly 1% of revenues, usually just for new flavors of coffee drinks in the summer and product launches Ў°(Homles, 2002) Instead, Starbucks has its own ways to establish its brilliant image in domestic and oversea markets. Firstly, Starbucks believes that it can rely on word-of-mouth and its unique orientation to attract consumers, whether the consumer like coffee or not. Secondly, Starbucks locates different target consumer groups in different countries. In Vienna, the target group is young people