International Business Ch07
Hill: International
Business: Competing in the
Global Marketplace,
Seventh Edition
III. The Global Trade and
Investment Environment
7. Foreign Direct
Investment
© The McGraw−Hill
Companies, 2009
Starbucks’ Foreign Direct Investment
Thirty years ago, Starbucks was a single store in Seattle’s
Pike Place Market selling premium roasted coffee. Today it is a global roaster and retailer of coffee with some
13,000 stores, more than 3,750 of which are to be found in
38 foreign countries. Starbucks Corporation set out on its current course in the 1980s when the company’s director of marketing, Howard Schultz, came back from a trip to Italy enchanted with the Italian coffeehouse experience. Schultz, who later became CEO, persuaded the company’s owners to experiment with the coffeehouse format—and the
Starbucks experience was born. The strategy was to sell the company’s own premium roasted coffee and freshly brewed espresso-style coffee beverages, along with a variety of pastries, coffee accessories, teas, and other products, in a tastefully designed coffeehouse setting. The company also focused on providing superior customer service.
Reasoning that motivated employees provide the best customer service, Starbucks’ executives devoted a lot of attention to employee hiring and training programs and progressive compensation policies that gave even part-time employees stock option grants and medical benefits. The formula led to spectacular success in the United States, where Starbucks went from obscurity to one of the bestknown brands in the country in a decade.
In 1995, with 700 stores across the United States,
Starbucks began exploring foreign opportunities. Its first target market was Japan. Although Starbucks had resisted a franchising strategy in North America, where its stores are company owned, Starbucks initially decided to license its format in Japan. However, the company also realized that a pure licensing agreement would not give it the control needed to ensure
Business: Competing in the
Global Marketplace,
Seventh Edition
III. The Global Trade and
Investment Environment
7. Foreign Direct
Investment
© The McGraw−Hill
Companies, 2009
Starbucks’ Foreign Direct Investment
Thirty years ago, Starbucks was a single store in Seattle’s
Pike Place Market selling premium roasted coffee. Today it is a global roaster and retailer of coffee with some
13,000 stores, more than 3,750 of which are to be found in
38 foreign countries. Starbucks Corporation set out on its current course in the 1980s when the company’s director of marketing, Howard Schultz, came back from a trip to Italy enchanted with the Italian coffeehouse experience. Schultz, who later became CEO, persuaded the company’s owners to experiment with the coffeehouse format—and the
Starbucks experience was born. The strategy was to sell the company’s own premium roasted coffee and freshly brewed espresso-style coffee beverages, along with a variety of pastries, coffee accessories, teas, and other products, in a tastefully designed coffeehouse setting. The company also focused on providing superior customer service.
Reasoning that motivated employees provide the best customer service, Starbucks’ executives devoted a lot of attention to employee hiring and training programs and progressive compensation policies that gave even part-time employees stock option grants and medical benefits. The formula led to spectacular success in the United States, where Starbucks went from obscurity to one of the bestknown brands in the country in a decade.
In 1995, with 700 stores across the United States,
Starbucks began exploring foreign opportunities. Its first target market was Japan. Although Starbucks had resisted a franchising strategy in North America, where its stores are company owned, Starbucks initially decided to license its format in Japan. However, the company also realized that a pure licensing agreement would not give it the control needed to ensure