Starbucks Corporation
Revised April 7, 2003
Starbucks Corporation:
Competing in a Global Market
Starbucks Corporation is a Seattle, Washington-based coffee company. It buys, roasts, and sells whole bean specialty coffees and coffee drinks through an international chain of retail outlets. From its beginnings as a seller of packaged, premium specialty coffees, Starbucks has evolved into a firm known for its coffeehouses, where people can purchase beverages and food items as well as packaged whole bean and ground coffee. Starbucks is credited with changing the way Americans--and people around the world--view and consume coffee, and its success has attracted global attention.
Starbucks has consistently been one of the fastest growing companies in the United States. Over a 10-year period starting in 1992, the company’s net revenues increased at a compounded annual growth rate of 20%, to $3.3 billion in fiscal 2002. Net earnings have grown at an annual compounded growth rate of 30% to $218 million in fiscal 2002, which is the highest reported net earnings figure in the company 's history (See Exhibit 1). As Business Week tells it:
On Wall Street, Starbucks is the last great growth story. Its stock, including four splits, has soared more than
2,200% over the past decade, surpassing Wal-Mart, General Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total return. Now at $21 [September 2002], it is hovering near its all-time high of $23 in July [2002], before the overall market drop.1
To continue this rapid pace of growth, the firm’s senior executives are looking to expand internationally. Specifically, they are interested in further expansion in Europe (including the Middle East), Asia Pacific (including Australia and
New Zealand) and Latin America. Expanding in these three continents represents both a challenge and an opportunity to Starbucks. While the opportunity of increased revenues from further expansion is readily apparent to the company’s top management, what is not clear is how to
Starbucks Corporation:
Competing in a Global Market
Starbucks Corporation is a Seattle, Washington-based coffee company. It buys, roasts, and sells whole bean specialty coffees and coffee drinks through an international chain of retail outlets. From its beginnings as a seller of packaged, premium specialty coffees, Starbucks has evolved into a firm known for its coffeehouses, where people can purchase beverages and food items as well as packaged whole bean and ground coffee. Starbucks is credited with changing the way Americans--and people around the world--view and consume coffee, and its success has attracted global attention.
Starbucks has consistently been one of the fastest growing companies in the United States. Over a 10-year period starting in 1992, the company’s net revenues increased at a compounded annual growth rate of 20%, to $3.3 billion in fiscal 2002. Net earnings have grown at an annual compounded growth rate of 30% to $218 million in fiscal 2002, which is the highest reported net earnings figure in the company 's history (See Exhibit 1). As Business Week tells it:
On Wall Street, Starbucks is the last great growth story. Its stock, including four splits, has soared more than
2,200% over the past decade, surpassing Wal-Mart, General Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total return. Now at $21 [September 2002], it is hovering near its all-time high of $23 in July [2002], before the overall market drop.1
To continue this rapid pace of growth, the firm’s senior executives are looking to expand internationally. Specifically, they are interested in further expansion in Europe (including the Middle East), Asia Pacific (including Australia and
New Zealand) and Latin America. Expanding in these three continents represents both a challenge and an opportunity to Starbucks. While the opportunity of increased revenues from further expansion is readily apparent to the company’s top management, what is not clear is how to