PowerPoint Presentation

Background about Starbucks in the case:Number 1 specialty coffee retailer.2006:11,000 Stores in 36 countries10,000+ Employees. 40 million customers/week.

The initial years

About Howard SchultzBorn in 1953,Joined Starbucks in 1982He started his own Italian style coffee bar.

The New Starbucks1987 Schultz bought Starbucks1987 Chicago1991 LA1993 Washington1994 New York and BostonThey wanted to recreate Italian coffee cultureNo franchisingFirst strategic allianceNo smoking

The New Starbucks ContdVision statement:To establish Starbucks as the most recognized and respected brand in the world and become a national company with values and guiding principles that employee could be proud of.Objectives of Starbucks:Is to grow by making employees feel valued.Use the pays, benefits and opportunities for personal development to help gain employee loyalty and become difficult to imitate.Mission statement:To inspire and nurture the human spirit One person, one cup and one neighborhood at a time.No smoking

Starbucks International1994; Howard became the CEOINTERNATIONAL EXPANSIONThree objectivesPrevent Competitions from getting a head-startTo build upon the growing desire for Western BrandsTo take advantage of higher coffee consumption rates in different companies

Starbucks Intl contdEntering markets through:LicensingJoint-VenturesCompany Owned Operations

Important Dates:1996- Japan, Hawaii, Singapore1998- Taiwan, Thailand, New Zealand, Malaysia1999- Kuwait, Korea, Lebanon, China

JapanTea country that consumed coffeein 1965 (300 grams/year/capita) to more than 3 Kgs in the 1990s1996 joint venture2002, it had 360 stores in japanWhy were there losses faced by the company?Store locationsFood menuNo smoking policies

Japan contdChallenges:High rentHigh cost of laborNo roasting facility in JapanSolutionCost cuttingIntroduction of new productsAdaptionIn 2006, it reached 600 retail locations in Japan

ChinaHong Kong:Joint venture with Maxims Caterer: 46 year of experience in china.Beijing:In 1999, Joint venture Mei Da Coffee.Stores opening.In 2003, raised its stake in its joint ventures.In 2005, 10% of the global sales.In 2008, expected to be raised to 20%.

China ContdWhat were the difficulties?Many were opposed to the opening of a western coffee chain.Dominance of instant coffee among coffee drinkers.Many domestic and foreign competitors.

Brief about India:India, officially the Republic of India, is a country in South Asia. It is the seventh-largest country by area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world. Population:1.52 BillionCapital: New Delhi

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SWOT

StrengthsDiversity of stores and the countries they're present in.Unique strategyFinancial Stabilityunique experiences to employees and customersCultural DiversityAbility to enter different countriesStrong brand imageLoyal motivated employees

Weaknesses:Prices are considered to be highOpening stores close to one anotherThe menu isn't adapatable everywhereNo smoking policies

WeaknessesPrices are considered to be highOpeneing stores close to one anotherThe menu isn't adapatable everywhereNo smoking policiesOpportunitiesTax rates are low in IndiaLow labor costsLow number of competitorsIncrease in import of coffeeHigher technology growthForeign Investments are allowed#1 for the GRDI#4 for purchasing powerIncrease in the middle classReal-estate is boomingOutsourcing companies in Mumbai

ThreatsHigh government involvement Complex political systemsHigh entry barriersThe market is very messyHighly BureaucraticGlobal Economy recessionLow average ageThreat of new Entrants Fiscal deficitInvestment and Regulation controlsThe infrastructure isn't strongThreat of substitutesStarbucks drinks are high in fatsBargaining Power of suppliers.

Japan( Tea Drinking Country)Japan had high rent payments for lands and high cost of laborThreats of substitutes (Qwicky, Barista, CCD)Health Concern (increasing obesity rate in India)China had inadequate infrastructure, bureaucracy, regulatory and foreign investment controls

PESTEL:

Environmental Protection LawsPolitical Instability in IndiaTAX lawsAnti-trust regulationsEconomic11.000 stores in 36 countries.40 millions of customer by week.The financial Stability of Starbucksprices are considered as higher than those of the competitionSelf-cannibalismGlobal Economy RecessionPurchasing Power#1 for GRDIFiscal DeficitCapita Income

Political/ Legal

Technological

Socio-CulturalConsumer health associationInternal food diversification(Diversity of Regions and religions)A low average age (29 years old).LanguageHigh Obesity RateIncrease in the middle class

TechnologicalExtensive emergent of social media(essential & important) for any corporation.

Helped in achieving desired target audience through different mediums

Helped in delivering the fresh roasted beans.

EnvironmentalIndia has fertile lands and farms which could help Starbucks produce Arabica coffee beansStarbucks is an environmentally friendly company.

Porter 6 Forces Model: (Task Environment)Other StakeholdersHigh Degree of RivalryLow Bargaining of Buyers High Threat of New EntrantsBargaining Power of SuppliersSubstitute Effects

2. Internal Analysis of Starbucks

Core Competence

Strategy FormulationStrategies:

DifferentiationGrowth StrategiesMergers and AcquisitionsVertical Integration

Strategic DecisionsAlternative 1:They should have entered the market at 2004 with TATA to fully utilize the relatively untapped market, with little to no competition. Alternative 2:Entering the market in 2006, utilizing the merger with TATA. Competing with the current competition, open stores in Metropolitan areas such as Mumbai, New Delhi. Alternative 3:Employ a Pause and Then Proceed stability strategy for an opportunity to rest, digest, and consolidate after growth or some turbulent events - before continuing a growth strategyThey will be able to utilize the strategic alliance and still open stores in the same areas as mentioned before.

ImplementationCurrent Situation:2011 announcement of openingOctober 19th, 2012 opening of the first store.Joint venture with TATA, 50:5067 Stores, 1000+ Employees

Current Starbucks worldwide:21,536 stores, 64 countries.182,000 employees.60 million customers/week.

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