This document provides a case analysis of Starbucks' global expansion efforts by a group of students. It includes a case synopsis and answers to various questions. For question 1, the students identify controllable elements like marketing mix and brand equity, and uncontrollable elements like country regulations and economic conditions. For question 2, major risks are identified as saturated markets, global expansion challenges, and competitors. Potential solutions discussed include focusing on quality and new products. Question 3 critiques Starbucks' strategies around real estate, market penetration, and product range. Finally, advice is provided for Africa focusing on affordable pricing, and for China emphasizing the favorable economic environment and need for proliferation.
This document provides a case analysis of Starbucks' global expansion efforts by a group of students. It includes a case synopsis and answers to various questions. For question 1, the students identify controllable elements like marketing mix and brand equity, and uncontrollable elements like country regulations and economic conditions. For question 2, major risks are identified as saturated markets, global expansion challenges, and competitors. Potential solutions discussed include focusing on quality and new products. Question 3 critiques Starbucks' strategies around real estate, market penetration, and product range. Finally, advice is provided for Africa focusing on affordable pricing, and for China emphasizing the favorable economic environment and need for proliferation.
This document provides a case analysis of Starbucks' global expansion efforts by a group of students. It includes a case synopsis and answers to various questions. For question 1, the students identify controllable elements like marketing mix and brand equity, and uncontrollable elements like country regulations and economic conditions. For question 2, major risks are identified as saturated markets, global expansion challenges, and competitors. Potential solutions discussed include focusing on quality and new products. Question 3 critiques Starbucks' strategies around real estate, market penetration, and product range. Finally, advice is provided for Africa focusing on affordable pricing, and for China emphasizing the favorable economic environment and need for proliferation.
This document provides a case analysis of Starbucks' global expansion efforts by a group of students. It includes a case synopsis and answers to various questions. For question 1, the students identify controllable elements like marketing mix and brand equity, and uncontrollable elements like country regulations and economic conditions. For question 2, major risks are identified as saturated markets, global expansion challenges, and competitors. Potential solutions discussed include focusing on quality and new products. Question 3 critiques Starbucks' strategies around real estate, market penetration, and product range. Finally, advice is provided for Africa focusing on affordable pricing, and for China emphasizing the favorable economic environment and need for proliferation.
GLOBAL FAST CASE ANALYSIS BY GROUP 9 AMAN AHUJA | 143063 ARPITA MISHRA | 143065 MAHIMA ATREJA | 143078 JOSE ROYAL | 143074 POOJA KALESH KUMAR | 143087 TABLE OF CONTENTS
CASE SYNOPSIS QUESTION 3
QUESTION 1 QUESTION 4
QUESTION 2 CONCLUSION CASE SYNOPSIS STARBUCKS: HIGH SERVICE
1. Largest Coffee Chain 2. Upscale accessory
● 19,000 stores in 58 countries ● $3 lattes unapproachable ● 12,000 in U.S. alone ● Attracting next NEW ● Leads to Self Cannibalization generation of customers ● Pretentious
3.Maintaining leadership 4. Employee discontent
● “Predatory Real estate” ● Low paid labour ● McCafe and Tully’s Coffee Shop ● Significant time & effort ● Pre-order at some cafes ● Health insurance STARBUCKS: CROSSING BORDERS EUROPE ASIA European coffee culture, preference to own 200,000 coffee bars over “Styrofoam substance” JAPAN Local partnerships Beyond cafes- Convenience stores Customization of stores FRANCE Arcane Regulations & Generous labour benefits CHINA ITALY 1 store every 15 hours Largest Starbucks at Shanghai Serve food at coffee bars, Pushing coffee culture for long Starbucks lacks term rewards QUESTION 1
Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets. CONTROLLABLE ELEMENTS MARKETING MIX Starbucks can control the price, promotion, and placing of its products DELIVERING ON CUSTOMER EXPECTATIONS Starbucks can adjust according to availability, affordability, product type BRAND EQUITY according to customer expectations Starbucks can leverage its globally known brand value
INTERNAL FIT TO COUNTRIES
Starbucks can use market research to ensure its products are a right-fit internationally UNCONTROLLABLE ELEMENTS
COUNTRY-WISE RULES AND
REGULATIONS France → Political and legal bindings (Cumbersome regulations COMPETITORS & generous labour benefits) Italy → Long standing customer loyalty; perceived superiority of Italian coffee; price competitiveness; Europe → Copycats Japan → Rival shops STATE OF NATIONAL ECONOMIES Japan → Economic depression CULTURAL/POLITICAL CLIMATE Israel/Palestine → Geopolitics of a region can affect Starbucks’ market share Vienna → The youth are enthusiastic QUESTION 2
What are the major sources of risk facing the company? Discuss potential solutions. RISKS ATTRACTING NEXT GENERATION SATURATED MARKET CONDITION OF CUSTOMERS ● Upper limit of coffee-shop saturation ● Hostile Reception from Gen X ● High Priced Coffee
GLOBAL EXPANSION COMPETITORS
● Tougher to enter Big ● US Competitors like Markets McDonalds and ● For e.g. In Italy, McCafes Coffee is Cheaper + Options in Food items
LOSING CUSTOMERS ● Fewer options available POTENTIAL SOLUTIONS Focus on International/ Global Strategies Global Marketing ● Keeping SRC & ● Increased quality of Ethnocentrism away in Service & Coffee decision making ● New Products to fulfill ● Researching on the demand Country’s culture
Restructuring the Price Strategy Younger Generation
● Adapt pricing according ● Advanced Technology to the local markets ● Appealing Stores ● Working with local ● Price Restructuring partners- Cheap inputs to ● Reviewing Compensation reduce the pricing Structure of Employees QUESTION 3
Critique Starbucks’ overall corporate strategy
Employee Dissatisfaction ● Excessive cost-cuts ● 20 hours mandatory overtime, without pay ● 32,000$ to a store manager ● Has lead to a lawsuit
Predatory Real-Estate Policy
● Undercuts small players ● Has offered twice the going rate ● Holds onto properties even after vacating them ● Could lead to consumer backlash Excessive market penetration ● One starbucks for every 9.4k people in Seattle ● Clustering strategy ● Stores cannibalize sales from each other ● Does not focus on increasing coverage
Narrow Product Range
● Only coffee available with some eatables ● Unable to compete in countries with a coffee plus restaurant culture, like Italy ● Unable to bring diverse flavors from other cultures to different countries QUESTION 4
What advice would you have for Starbucks in Africa? In China?
STARBUCKS IN AFRICA
Economic factors are the uncontrollable factors and
Starbucks can only adapt to it
Average Per capita income of Africa is $315 which is
less than a dollar a day.
Due to lower GDP per capita majority of the people
cannot afford starbucks current prices.
There is also demand for better alternatives at
affordable costs
Africa has to come up with a price to compete with
local shops. The strategy has to be penetrative pricing. STARBUCKS IN CHINA China has always been a tea drinking country, Coffee was kept only for gifting and as a luxury, it was only available in hotels and big restaurants
China has a lot of leverage and can open a lot of stores as
high demand, low labour wages and low cost of development.
Economic environment is very favorable as the GDP and per
capita income is constantly rising.
Reposition their product for the chinese market serving the
food more in demand
Chinese markets needs maximum proliferation and
densification due to high growth and high profitability due to its coffee culture and perception of being healthy drink. CONCLUSION IN CONCLUSION
Starbucks has done very well in expanding across the globe
