Prepared By: Mir Hossain Ekram ID # 0030152

  

In 1971, three coffee-lovers named Jerry Baldwin, Zev Siegl, and Gordon Bowker, open a small shop. Sold fresh roasted coffee beans and brewing equipment. 1983, Schultz was testing the idea by selling coffee by the cup. 1987, decided to sell their coffee business, as well as the Starbucks name, to a group of local investors for $3.7 million. Schultz believed that they could open 125 outlets within the following five years.

4,247 stores scattered across the United States and Canada. 1 store/1250 Sq. ft.. Saturation of United States market within 2 years. By going global it reduces the profit to 2050%. Problems of changing generation. Dissatisfaction among Employees on odd hours and low-pay.

Maintaining the growth rate. All company owned outlets. 1% of revenue in Ad. Design and open a store in 16 weeks. Recovering the initial investment in 3 years.

Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets.

Price
 Higher price in Italy.

Product
 Italy serves non-coffee items too.

Promotion
 In local Word of mouth.  1% of revenue on Advertisement of new launches.

 Economic Force. Economy down turn results by 14%.(Japan) Competitive Force. Similar fare by local rivals.(Japan) Imitators Coming in to grab the market share.(England) Cultural Force. The youth is more excited in acceptance new things.(Vienna) Political/legal Force. Secret regulations and Labor Benefits.(France)

What are the major sources of risk facing the company and discuss the potential solutions?

Saturated market condition (USA). Losing customers, because fewer options are available for the customer. The young generation (Generation X) feels uncomfortable. Global expansion creates huge risks for Starbucks Employee s dissatisfaction of odd hours and low-pay.

market saturation can be overcome in focusing on international or global marketing. Offer news products i.e. non-coffee items. For Generation X, they should reposition their product according to customers need. Global expansion problem can be over come through proper adjustment of keeping SRC and ethnocentrism away in decision making. Improve the employee satisfaction. So, the quality of service as well sale of coffee increases.

Critique Starbucks overall corporate strategy.

Eight cities in US and Canada remained untapped. More the outlet = More Sales. Low Ad spending although it is going global. target customers is not Generation X or younger generation

Predatory Real Estate strategy. Low pay to employees.

How might starbucks improve profitability in Japan?

 Reduce Price / Increase Benefits. Online ordering for busy Japanese. introduce various cultural campaign

or entertainment campaign