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Marketing analysis of Starbucks and its globalization

Starbucks Corporation is coffeehouse chain based in Seattle United States. Starbucks is the largest coffeehouse company in the world. Starbucks Coffee Company started his business in 1971 in Seattle's Pike Place Market, USA. Presently Starbucks has more than 17,000 stores out of the world and more than 10,000 stores are only in North America. Star Buck’s aim is providing best and finest quality of coffee to the customers over the world. The Star Buck’s mission statement is that to top seller in finest quality of coffee but keeping in view of uncompromising principles while the company growing and wants more profit. The Star Buck’s have been planed to open 100 new stores in USA and more than 200 new stores over the world at the end of 2010. President and CEO of Star buck’s is Howard Schultz.

Product Lines:

Beverages: Coffee , Tazo Tea, Juices, Soda

Pastries

Whole Coffee Beans

Merchandise: Mugs , CDs

“To be the most recognized and respected brand in the retail world”

Latest Financial Position of Starbucks:

Last Trade

US$ 25.07

Trade Time

September 3

Change

 0.41 (1.66%)

Prev Close

24.66

Open

24.87

Bid

24.44 x 300

Ask

25.37 x 300

1y Target Establish

US $ 30.38

Day's Range

24.72 to 25.19

52wk Range

18.69 to 28.50

Volume

5,888,585/-

Avg Vol (3m)

8,879,910/-

Market Cap

US$18.55 B

P/E

23.43 x

EPS

US$ 1.07

Dividend

US$0.23

Latest report on Coffee Industry:

Change in turnover of the coffee industry due to only change in climate situation said by the International Coffee Organization (ICO). The International Coffee Organization is representing to 77 coffee producing countries. According to (ICO) risen in temperature by half a degree in coffee producing countries is faster than over 25 years past. This change has been created a panic situation in all those countries which are only depends on coffee production. (Ariel Schwartz , 2010)”

“In a meeting of coffee producers in Guatemala, roasters said that all instability in weather condition is only due to limited in Land and Water resources. According to National Coffee Association of Guatemala that production of coffee will be decreased up to 28% in Nine Latin countries in the first three months of 2011. The production of coffee has been already decreased in Columbia up to 30% to 35% which is low as compared to last 33 years. On the other hand ICO anticipated that demand of coffee will be increased from 132 million bags to 134 million bags in 2010 and each bag contain 60kilogram.

What is Globalization?

Globalization means a chain or process of contact and incorporation among the people, different companies or Governments of different countries and this process create by International trade and investment and supported by Informational Technology. This chain or process affected on Political System, Environment and Culture and also on Economic Development and Prosperity of the world and also on human physical well being over the world.

The Globalization is not new concept, from past thousand of the years people are used to do buying and them and big example of that is Silk Road across Central Asia which is connected China to Europe during Middle Ages.

International Trade Theories:

An international Trade Theories can help in measures and address problems in those countries which are weak in their macro economic system, high inflation rate and high unemployment. International level promises can bring prosperity and development in international economy system. Early in the century of 1600 and 1700, Mercantilism worried about that all countries altogether should encourage export and discourage import. In 170 big economists Adam Smith expressed that free trade is very effective and can be fruitful for welfare of the economy of the world. Following theories expresses by different authors in different periods.

Mercantilism Theory:

Absolute Advantage 

Comparative Advantage 

Factor proportion Theory 

International Product Life-Cycle Theory (Verrons) 

New Trade Theory

National competitive Advantage.

Starbucks Globalization:

Basically Starbucks success based on modern Globalizations ideas. Howard Schultz joined Starbuck’s in 1882, after visited to Milan he decided that company not only sell coffee and espresso but also sell beans. Now in these days we are watching everywhere in the shape of Starbuck’s restaurant basically that was the idea of one man who visited the Milan and after that they decided to sell coffee beans because of only one person who took that idea from Italian cafes and implicated in America and in this way starbucks started its Globalization of business. Globalization of Starbucks basically engage in doing FARE TADE coffee in this way countries are developing and Globalization is spreading over the world.

Benefits and Challenges of Globalization Strategies and the supporting theories of Starbucks:

Starbucks always focus on profitability growth of the country and in this way starbucks new cluster stores taking place in aggressive market important places across the world. For this purpose Starbucks use and adopted following strategies for its international growth and maximizing its profit.

License and Joint ventures strategy:

Starbucks in 1995 invested $1.5 Million and established a new company in the name of Starbucks coffee International, only for the expansion of the international business specific in Asian Region. Strategy was licensing to local retailers and stores keepers and sell coffee to them after them they sold to customers in this way starbucks only gained licensing fees and royalties on revenues. Starbucks strictly ensured that all stores following same formula of starbucks.

Starbucks Competitive Advantage strategy:

In this strategy Starbucks Focused on Differentiation .in this way always focused and preferences to on serve niche customers than rivals. Starbucks have very important and unique capabilities to serve target buyers from segmentation. Starbucks very profitable and have very good and extra ordinary resources and capabilities to serve niche buyers.

Starbucks Global Market Mix Strategy:

Retail formula of starbucks is same in all over the world. There is no change in retail system and operates in same way throughout the world where Starbucks have its businesses. Advertisement of Starbucks product play very important role and have strong instrument in the success of business. The important thing of advertisement of starbucks is that that advertisement change by country to country according to their trend, culture, customs etc means there is no standardization of advertisement so in this way starbucks Advertisement is more effective.

Starbucks Corporate Strategy Overview:

Starbucks corporate strategy play vital role in the success of starbucks business and also expansion across the world. Starbucks provide maximum market penetration. Always provide very relax and attractive atmosphere for it’s business .Starbucks environment is very attractive and very good for its business. Always offer great and high quality products which are really become success of the starbucks and in this way starbucks earned maximum profit on its products.

Rapid store Expansion strategy:

Starbucks is expending their domestic and international stores over the world. Starbucks expansion on the base of approach is “Starbucks everywhere”

Coffee Purchasing strategy:

Starbucks coffee purchasing strategy is very important play role in the globalization of starbucks in this way starbucks strong relation with their suppliers and also strong commitments with their suppliers.

International store Expansion Strategy:

International store expansion also part of the rapid store expansion of starbucks across the world .Starbucks rapid growth and expansion play vital role in the success of its international operations. In this way company owned and licensing for open new store of Starbucks.

Employee Training and Recognition Strategy:

Starbucks ha very attractive and potential way to hire new employee and after that proper training them and make them assets for the company after spending lot of money on their training .Well trained employee play its very important role in the success of the business of the company. Starbucks have also special arrangement for training for its Managers and for top level management. Starbucks have very attractive salary packages and rewards programme for their employees. So in this way employees always motivated and do full attention in the success of the business of the company.

Real Estate, Store Design, Planning and Construction Strategy:

Starbucks have broad range of store formats, Very good store locations, best visibility of stores, Control on average cost of the store and good Wi-Fi system.

Challenges faced and tackled in different countries:

At the time of globalization, Starbucks faced different issues in different countries and also resolved them.

Japan:

The Japanese noted that they are adopting American products and trends for example blue jeans and coca cola etc. They warned they never buy coffee in paper cups and or accept interior non smoking environment. But starbucks proved them wrong.

France:

Initially in France, Starbucks also faced the problem of acceptance of disposable cup due to old and strong tradition in France and also other was point of political hate to American company. But on the other hand many youngsters start accept this paper cups and also they give their acceptance in caramel coffee and joined American tourist in Paris.

China:

Starbucks was aggressively expanding in china where the nation prefers tea. The basic reason of success in china only giving concept of better lifestyle and to middle class nation just only keeping Starbucks beverages and affordable other things.

England:

England is the 2nd biggest market of Starbucks. Here big issues is decreasing market share of the Starbucks or creating limitation on starbucks market shares.

Italy:

There was big challenge of low prices in whole country and also famous of local products. There is culture to serving food with coffee so starbucks address the demand of Coffee.

Effectiveness and efficiency of existing operations of starbucks:

Starbucks business plans and business strategies are very successful. A Company creates strategies and maintain their operations only for success of the company and compete the competitors of the company in this way Starbucks also formulate many plans and create operations strategies for only how to compete the competitors in local and international market.

In the latest conference of Analyst of the starbucks, the latest operations announced are enhanced and improve stores and operations efficiency and reduction in extra cost and delivering perpetual growth of the company. According to the chairman presently every retail business spends very tough time but in this time starbucks still doing good and satisfied so for maintaining this standard. In this way maximum generate “Cash lows” enhanced the liquidity of the company ,control the extra cost or reduction in cost .starbucks will continue to improve their great potential USA market for taking more advantage for market growth and development of the business.

The major international operations of starbucks are issuing licensing of new stores and get them into joint ventures but mostly they focus on the quality of coffee. Starbucks deals with international suppliers and fix the prices of the coffee and give preference to fix price rather than fair trade coffee.

Starbucks Alternatives Strategies for achieving organizational goals

Vertically growth in low cost countries:

Coffee industry is growing and there is lot of opportunities entering in new market with low cost. Starbucks has high brand so starbucks should expand its business and grow its profit through vertically growth in other low cost countries by introducing very strong and high quality and standard brand in those countries.

Use Experienced Employees:

There is lot of opportunities in food and non food items at the movement. It’s very easy to diversification to food and non food items .Starbucks should use experienced staff for diversification in other relative business of the company. This is very important strategy for achieving goals of the company.

Differentiate and use high brand:

Presently domestic competition on peak level and also financial crises are going on over the world. Starbucks should differentiate use high brand and high quality products to prevent and compete domestic competition and for keep remain market leader in coffee.

Diversification to related business:

Starbucks products are highly cost and Starbucks Company only based on coffee related items business. Starbucks should divert its business to other related business which will be benefit for it’s and in future in this way it will decrease dependency on coffee products.

Reduce cost and also reduce prices of the products:

Starbucks should control cost and try to decrease it and also decreased the prices of the products of the company and introduce them in low investment markets and should gain benefits from growing markets. In this way starbucks can easily survive and can keep leading position in coffee market.

Depend on International Alliances:

Increasing in the domestic competition and volatile in dairy and coffee products and Starbucks should depend on international. Starbuck mostly focus on expansion rather than internal system and strategies of the company. Starbucks should depend on international Alliances stores only avoiding the domestic competition of the companies as we know any domestic market is the main source of revenue generation.

Evaluate Consolidation and product market development alternatives:

Product Market Alternatives:

The product market alternatives means “diversification” this term use basically changing in the characteristics’ in the product line and the market structure .The product line alternatives which are represents the other changing in the market structure or product line. The product line strategy develops the product structure and make that more effective in this way the improve mission of the company. The product Market development is the very important strategy to modification in the structure of the product through changing colour, weight, size etc.


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