Skip to main content

15 - Starbucks International Strategy

Starbucks mostly wants to own its own stores for best experience and it has done that successfully in US. Although drinking coffee in bar was not famous when Starbucks was started in 1970's. Howard Schultz inspired from this idea in Italy, started serving brewed coffee in US. He was an American Businessman and understood the economics, work, and local cultures of US, so was likely aware of the risks and opportunities of the time. He made Starbucks a success story in US and now we can find Starbucks stores in almost all the major and even small US cities. 

But replicating same success would not that be easy. It would need lot of capital, cultural experiences, macro and micro economic indicators, and specifically language and accent. Some of these things can be replicated using the local hires, but creating a success at the level Starbucks would want to would not be easy without local partnerships and alliances. Starbucks heavily relied on license model for half of its stores and also partnered with local companies to for expansion. By using these alliances and partnerships Starbucks managed to reduce the local risks and leverage the brand value it earned in US.

Starbucks has some big alliance are with Tata Coffee to expand business in India, and Alibaba in China and leverage its ecosystem for collaborative marketing, online presence, and payment processing. It partnered with Sequoia in China for investment capital it would need to expand in China. Starbucks also opened a new roasting facility in China to serve almost 6000 stores. 

In order to navigate social complexities and diversities in China, Starbucks made joint ventures or alliances with Beijing Mei Da coffee company in Northern China, Uni-President in Eastern China, and Maxim’s Caterers in Hong Kong for Southern China. Although now Starbucks is buying those stores back since Starbucks loves to control to provide best experience to its customers.  

Starbucks also has alliances and contracts with farmers all over the world for getting coffee beans. This strategy helps minimize the supply risk and also helps in supply chain for keeping beans close to final location.    


Comments

Post a Comment

Popular posts from this blog

3 - Mr. Porter Coffee Please

1. Threat of Entry             a. Economies of Scale: Starbucks currently have 5 roasting facilities and opening a new one in China, which will be biggest so far and will serve approx. 6000 Starbucks in China itself. At this scale, it is very hard for any new entrant to compete with Starbucks on cost. https://u.osu.edu/commoditychaincoffee/manufacturing-page/ https://stories.starbucks.com/stories/2020/starbucks-announces-new-roasting-facility-in-china-extending-its-global-roasting-network/             b. Product Differentiation: Starbucks not only buys best coffee beans out there but also help them grow. They always use Arabic Coffee beans, which are considered best in quality for dark roasting and never mixed them any other type to cut down the cost and increase profit. “Starbucks Arabica beans are different from regular Arabica beans. At every step, we go to grea...
Post a Comment
Read more

13 - Starbucks Strategic Alliances

Starbucks has strategic alliances with many companies to expand into different markets, segments, and improve brand value. Most of its alliances are Nonequity Alliances. It has alliances with consumer product companies such as  Kraft Food, PepsiCo, and Nestle. They help Starbucks in different packaged and take-home products. From these alliances Starbucks gets the Economies of Scale, which would be harder to achieve if it would be doing these operations in its own. Apart from that, Starbucks has alliances with Target Stores, United Airlines, and Barnes & Noble for offering Starbucks brand coffee in the stores and on airplane. This helps Starbucks to be perceived as high-end brand. It has alliances with under the Seattle Coffee Co. with Subway, Burger King, and AMC to offer low cost coffee and compete with McDonalds & Dunkin without affecting the its main top of line expensive Starbucks brand. Starbucks has some international alliances to capture the markets such as it has a...
Post a Comment
Read more