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Published byClement Reed Modified over 9 years ago
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Maria Risholm, Salomon Sacal, Kamel Ait El Hadj, Geraldo Carvalho & Yanee Zhang
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Starbucks Mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time Who? Seattle 1971 1984 coffehouse consept IPO in 1992 Market Capitalization: US $18.6Bn Where? More than 50 countries and 16,700 stores Source: www.starbucks.com, http://finance.yahoo.com/www.starbucks.comhttp://finance.yahoo.com/
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Starbucks’ Success Formula Motivated employees = superior customer service Focus on recruiting & developing Attractive compensation policies ○ Stock options ○ Medical benefits
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Internationalization Licensing Lack of control Strategy Alternatives Local Joint-Venture (licensed format) Acquisition (Wholly owned) Greenfield investment (Wholly owned) Local joint venture = Preferred Strategy
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Local Joint-Venture Advantages Control A facility entry into foreign market Shared fixed costs & associate risks Local partner’s knowledge Competitive conditions, Culture, Political system, etc.
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Approaches and Acquisitions in Countries such as : (EMEA) Japan – “ スターバックス (transliteration: sutābakkusu), and the abbreviation スタバ is also used as slang” Thailand – ” สตาร์บัคส์ pronounced [satā ː bāk ʰ ]” Europe - Joint Ventures and Parameters Source: http://news.starbucks.com/article_display.cfm?article_id=378 “International operating margin improved to 7.7%, from 1.4% in Q2 FY09 ”
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Starbucks in China: Objective: Develop the largest overseas market in China Current Situation: 700 coffee stores in Greater China(PRChina, HK, Macau, Taiwan), including over 360 in mainland China (2009) 10% of Starbucks’ US$ 6.4 global sales (2005) A growth of 30% in Beijing recent years and in Shanghai, less than 2 years, net profit reached 4 million dollars
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Licensing and Joint Venture Ownership Structure: Beijing Meida Coffee Co Ltd Shanghai Uni-President Starbucks Coffee Ltd Maxim's Caterers Ltd
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Licensing: Unable to regulate the cash flow Joint Venture: Lack of controlling stakes results in the weak management control The three individual companies work independently within their own regions. Unable to help to achieve Starbucks' national expansion plans. Problems:
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Solutions: Whole ownership: Changzhou, Chengdu, Chongqing, Dalian, Dongguan, Foshan, Hangzhou, Kunshan, Nanjing, Ningbo, Qingdao, Shaoxin, Shenyang, Shenzhen, Suzhou, Tianjin, Wuxi, Wuhan and Xi’an. Starbucks Greater China Support Center in Shanghai (2005)
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Other advice for the expansion: Develop new products Tea drinks Social responsibilities: Starbucks China Education Project (US$5 million) China Soong Ching Ling Foundation China Women Development Foundation Chengdu Education Foundation 2008 Sichuan Earthquake relief ($100,000)
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Theoretical patterns Internalization/market imperfections theory Licensing system is flawed: (1) limited or no control over the licensee and (2) Starbucks’ specific culture cannot be licensed Greenfield investments Dunning’s Eclectic paradigm Source: International Business, Charles W.L. Hill, McGraw-Hill 7th ed.
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Conclusion No strategy fits all models Main factors to take into consideration when selecting a course of action: (1) immaterial elements (2) level of control
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