RESUMING INTERNATIONALIZATION AT STARBUCKS

Introduction Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world. The first Starbucks store was opened in Seattle in 1971. The current CEO, Howard Schultz, joined the company in 1982 and decided bringing the Italian coffee-drinking culture to the United States. In 1992, the company went public. In 1996, with the home market becoming increasingly saturated, Starbucks opened the first outlet in the Far East. Ever since, the company has pursued a relentless international expansion. By 2012, Starbucks had achieved a global reach of 18,066 stores in 62 countries. With revenues grew on average 30 per cent per year, Starbucks experienced substantial growth from $160 million in 1993 to $10 billion in 2009. In 2007, Starbucks had a presence in 56 countries through approximately 17,000 stores. However, Starbucks’ relentless march had been slowed by increasingly intense competition and rising coffee bean prices between 2007 and 2009. After 2007, demand for Starbucks’ products was badly hit by the global economic recession. At the end of fiscal 2009, nearly all of the approximately 800 US Company-operated stores, 61 stores in Australia and 41 Company-operated stores in other International markets had been closed. Approximately 70 per cent of the stores that were closed had been open for fewer than 3 years. In the third quarter of 2009, The company achieved the first profit since the first quarter of 2008 by the self-save closure. Finally, CEO Schultz made Starbucks backed to the growth trend. But as the criticism the company had received on a number of fronts, he needed to decide again how to approach international markets.

Industry Analysis The 5 forces approach is used in this part and the aim of this analysis is determining the attractiveness of the industry and understanding factors driving past, current and forecast industry profitability. Barriers to Entry: A cup of coffee could be served from many kinds of