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    Key Term: Activity 7.2

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    Lissa Montiel
    1. The document discusses Starbucks' rapid growth strategy of opening at least 10,000 new cafes over the next four years through internal growth, mainly focusing on China. 2. Starbucks sees China as a key growth area due to its fast-growing economy, lack of strong local competitors, and large population. 3. The company also plans to expand in Russia and Brazil and increase sales of non-coffee products to reduce reliance solely on coffee sales.

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    Key Term: Activity 7.2

    Uploaded by

    Lissa Montiel
    98 views1 page
    1. The document discusses Starbucks' rapid growth strategy of opening at least 10,000 new cafes over the next four years through internal growth, mainly focusing on China. 2. Starbucks sees China as a key growth area due to its fast-growing economy, lack of strong local competitors, and large population. 3. The company also plans to expand in Russia and Brazil and increase sales of non-coffee products to reduce reliance solely on coffee sales.

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    1. The document discusses Starbucks' rapid growth strategy of opening at least 10,000 new cafes over the next four years through internal growth, mainly focusing on China. 2. Starbucks sees China as a key growth area due to its fast-growing economy, lack of strong local competitors, and large population. 3. The company also plans to expand in Russia and Brazil and increase sales of non-coffee products to reduce reliance solely on coffee sales.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    98 views1 page

    Key Term: Activity 7.2

    Uploaded by

    Lissa Montiel
    1. The document discusses Starbucks' rapid growth strategy of opening at least 10,000 new cafes over the next four years through internal growth, mainly focusing on China. 2. Starbucks sees China as a key growth area due to its fast-growing economy, lack of strong local competitors, and large population. 3. The company also plans to expand in Russia and Brazil and increase sales of non-coffee products to reduce reliance solely on coffee sales.

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    1 BUSINESS ORGANISATION AND ENVIRONMENT

    KEY TERM
    Backward vertical integration –
    internal growth expansion of a business by means of opening same industry, towards supplier
    new branches, shops or factories (also known as organic
    growth)

    An example of internal growth would be a retailing busi-


    ness opening more shops in towns and cities where it
    previously had none.
    Horizontal
    integration – same
    EXTERNAL GROWTH industry and same
    Conglomerate stage of production
    KEY TERM diversification –
    different
    external growth business expansion achieved by means of
    industry Forward vertical integration –
    merging with or taking over another business, from either
    same industry, towards
    the same or a different industry customer

    The different forms of external growth are shown in


    Figure 7.3 Forms of external growth
    Figure 7.3.

    ACTIVITY 7.2

    Starbucks confirms rapid growth strategy


    Howard Schultz, the chairman of Starbucks, confirmed
    growth plans for the world’s largest chain of coffee shops.
    The business will open at least 10 000 new cafes over the
    next four years by using internal growth. Schultz said that he
    planned to double the size of the business in five years. At
    the end of 2009, there were over 16 600 stores worldwide.
    China will be the main focus of this growth strategy. The
    US giant opened its first Chinese branch in 1999 and now has
    over 200 branches. ‘No market potentially has the opportu-
    nities for us as China hopefully will,’ said Schultz. Like many
    western retailers, Starbucks sees China as its key growth
    area due to its fast-growing economy, lack of strong local
    competitors and sheer size of population. The business is also
    30 marks, 52 minutes
    expanding its network of branches in Russia and Brazil.
    There are plans to increase sales of non-coffee products to
    1 Why would you describe Starbuck’s growth strategy
    reduce reliance on hot drinks. It has expanded its sale of audio
    as being an example of ‘internal growth’? [2]
    books and music, and Sir Paul McCartney will be the first artist
    to release an album on Starbucks’ ‘Hear Music’ label. 2 Suggest two reasons why Starbucks has adopted
    This rapid internal expansion has not been without a rapid expansion strategy. [6]
    problems. Consumer Reports magazine recently ranked
    3 Analyse the possible advantages of focusing growth
    McDonald’s coffee ahead of Starbucks saying it tasted
    in China. [8]
    better and costs less. This could be due to the time-saving
    equipment that has been added to new Starbucks branches 4 Explain why Starbucks is planning to reduce its
    that use automatic espresso machines instead of extracting reliance on just selling coffee. [4]
    espresso shots in the traditional way. The chairman has
    5 Discuss the potential economies and diseconomies
    also criticised the time-saving policy of designing stores
    of scale that Starbucks might experience from
    uniformly rather than with some local decoration.
    further expansion. [10]
    Source: www.iht.com and www.bbc.co.uk

    73

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