Starbucks in China Case Study
Case - Starbucks in China
Group 11
21-10-2012
Q1) Do you think Starbucks is a global company? Why or why not?
Starbucks is one of the largest coffee shop chains in the world. In 2005 it was the leading coffeehouse retailer in the world with operations in 34 countries outside the US, counting 10.241 coffeehouses. Starbucks began its international expansion with Japan in 1995. We think Starbucks is a global company. Throughout the answer we will use Starbucks’ value chain activities to explain why Starbucks can be considered a global company.
Global companies source their raw materials and outsource manufacturing of their products to many countries to take advantage of lower costs or high quality production, and/or lower costs of transportation. Starbucks’ coffee beans are taken from Central America, Africa and Indonesia where there are high quality coffee beans’ suppliers; subsequently they are roasted at company facilities in the USA and in the Netherlands. The facility in the Netherlands is used for distributing the products to the European Market, due to its strategic location with respect to transportation.
Global companies establish worldwide networks of stores and offices to be near to their customers in foreign markets or locate marketing subsidiaries in order to target their customers effectively. When Schultz purchased Starbucks, the company began its aggressive internationalization strategy in foreign markets mostly with joint ventures and licensing, there were also some directly operated coffee shops. Starbucks demanded local market knowledge from local partners in order to more efficiently market their products in the targeted country.
The sales offering of Starbucks resembles that what someone can expect from a global company. For example, menu offering was standardized although bakeries, sandwiches, and pastries were usually locally adapted. Therefore, Starbucks’ core business – selling coffee products – is standardized. In this way,
Group 11
21-10-2012
Q1) Do you think Starbucks is a global company? Why or why not?
Starbucks is one of the largest coffee shop chains in the world. In 2005 it was the leading coffeehouse retailer in the world with operations in 34 countries outside the US, counting 10.241 coffeehouses. Starbucks began its international expansion with Japan in 1995. We think Starbucks is a global company. Throughout the answer we will use Starbucks’ value chain activities to explain why Starbucks can be considered a global company.
Global companies source their raw materials and outsource manufacturing of their products to many countries to take advantage of lower costs or high quality production, and/or lower costs of transportation. Starbucks’ coffee beans are taken from Central America, Africa and Indonesia where there are high quality coffee beans’ suppliers; subsequently they are roasted at company facilities in the USA and in the Netherlands. The facility in the Netherlands is used for distributing the products to the European Market, due to its strategic location with respect to transportation.
Global companies establish worldwide networks of stores and offices to be near to their customers in foreign markets or locate marketing subsidiaries in order to target their customers effectively. When Schultz purchased Starbucks, the company began its aggressive internationalization strategy in foreign markets mostly with joint ventures and licensing, there were also some directly operated coffee shops. Starbucks demanded local market knowledge from local partners in order to more efficiently market their products in the targeted country.
The sales offering of Starbucks resembles that what someone can expect from a global company. For example, menu offering was standardized although bakeries, sandwiches, and pastries were usually locally adapted. Therefore, Starbucks’ core business – selling coffee products – is standardized. In this way,