Starbucks Global Strategy

Starbucks global strategy

De Wit and Meyer (1998) refer to market tendency towards homogeneous variety and tighter international linkages as globalization. The need for global strategy is outlined by the fact that companies are subject to global forces and consumer demands. As a consequence, firms are faced with a challenge of modifying their existent strategies to gain and sustain their competitive advantage in a rapidly changing environment. A well-designed global strategy can help a firm to gain a competitive advantage, that as identified by Sumantra Ghoshal of INSEAD can arise from Efficiency, Strategy, Risk, Learning and Reputation (Appendix1). Therefore, 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 proceed 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. Due to word limitation on the essay, please refer to Appendixes for more detailed information.

"There is untapped potential to grow our company internationally," Schultz said.

Starbucks is publicly traded -- shares are widely held

150 million shares have been authorized, of which 59.6% are on the market.

Howard Schultz, 42, is the founder of the Company and has been chairman of the board and chief executive officer since its start in 1987. The Company originated with eleven Seattle stores and less than one hundred employees. Since them the company has grown to a half billion-dollar company serving millions of cups of coffee per week in one thousand stores throughout the country, and in 17 countries internationally. Schultz believes his company will succeed well into the twenty-first century. He states, "One of the things that you can't measure on a balance sheet or on a financial statement is the soul of Starbucks."

The Company holds approximately 39 federal trademark registrations in the United States. They have approximately 44 additional applications pending in the U.S. The Company currently owns one patent in the U.S. for its coffee on tap system and has several patent applications pending.

Starbucks prides itself on being a "good citizen" locally and in the various coffee producing countries. They make significant contributions to local charities that focus on children, the environment, the homeless, and AIDS research/support.

The Company is organized into a number of business units.

• The Company ’s North American retail business sells coffee beverages, whole bean coffees and related hardware and equipment through Company-operated retail stores in the United States and Canada.

• The Company ’s international retail business consists of entities that own and operate retail stores abroad. These two retail segments are managed by different presidents within the Company and are measured and evaluated separately by senior management.

• The Company operates through several other business units, each of which is managed and evaluated

independently. These other business units are organized around the strategic relationships that govern the

distribution of products to the customer. These relationships include retail store licensing agreements,

grocery channel licensing agreements, wholesale accounts, joint ventures and direct-to-consume

marketing channels. Revenues from these segments include both sales to unaffiliated customers and

inter-segment sales, which due to annual report are accounted for on a basis consistent with sales to unaffiliated customers.

Starbucks and its subsidiaries ("Starbucks" or the "Company") include Starbucks Corporation and its wholly owned subsidiaries:

• The Coffee Connection, Inc. ("The Coffee Connection"),

• Starbucks New Venture Company ("Starbucks New Venture"),

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