Starbucks_Going_Global

Starbucks:  -          transformed a pedestrian commodity into an upscale consumer accessory -          designer coffee at $3 a cup -          market is getting saturated: number of stores in US ·self cannibalizing their own stores at a rate of 30% -          choice: export its concept aggressively => global expansion · risk: less money overseas -          nearly debt free, fuels expansion with internal cash flow -          design& open a store in 16 weeks; recouping initial investment in 3 years -          no franchises -          very low marketing cost -          no nationwide competitor   Idea inspired by a Milan coffee bar   -          “ predatory real estate” strategy: paying more than market rate to keep competitors out of location -          Starbucks Express: pre-pay online/phone- no success! -          Challenge: attract the new generation -          Risk: becoming less special place for its employees. Consequence to image and sales. Lawsuit : odd hours, low pay, not paying overtime -          Business model : lots of low-wage workers; with expansion, high-service ends -          Vienna : attracts young people; traditional cafes are old, S is hip -          Japan : localize! Cultural relativism: morality varies from culture to culture and therefore business practices are differentially defined as right or wrong by particular cultures They used to rely on: -          Retail expansion -          Product innovation -          Service innovation   Global awareness came from necessity: saturated US market.  Uncontrollable elements: 1.      Domestic: - Political/legal forces: - Competitive structure - Economic climate: US growth slowed 2.      International: -           Political/legal forces: France- tricky employment laws -          Competitive structure: established markets, price challenge -          Economic climate: world growth slowed (exception: China) -          Level of technology: Japan vs. India -          Structure of distribution: -          Geography and infrastructure: India -          Cultural forces: Italy, France: smoke free environment '!' European reaction: temporary fascination  Strategy: * high- prestige areas, tourists& jeuness * instant coffee new flavors (Nestle Nescafe was first) * going green * aggressive marketing for Via Ethnocentrism: Notion that one’s own culture or company knows best * Muffins vs. pastries in France   Business problem: foreign country cultural traits and norms