Case Study Solution

QUESTION-1 Identify the controllable and uncontrollable elements that
Starbucks has encountered in entering global markets
Controllable
Product
-Hot and Cold beverages, pastries, snacks, etc
Price
- Starbucks charges a premium prices for their products
Promotion
-The Company has controlled its promotional strategy and has saved a lot of
marketing cost by mainly relying on worth of mouth and the company has good
brand name in national market as well as in overseas market.
Channel of distribution
- Starbucks have 20,891 outlets in 62 countries which shows that the

company has good controlled over the channel of distribution
Research and development
-The Company has also controlled over its research and development process
such as in 800 locations it has installed automatic espresso machines to
increase the speed of service and it has also offered the prepaid card which
clerks swipe through a reader to deduct a sale, thus the company cuts
transaction times in half.
- Starbucks launched Starbucks Express its boldest experiment yet, it blended java,
Web technology, and faster service, At about 60 stores in the Denver area,
customers can pre-order and prepay for beverages and pastries via phone
or on the Starbucks Express Web site.
-They just make the call or click the mouse before arriving at the store, and
their beverage will be waiting.
-Starbucks continues to try other fundamental store changes. It announced
expansion of a high-speed wireless Internet service to about 1,200 Starbucks
locations in North America and Europe.
Uncontrollable
Economic Forces.
-Economic conditions.
-localprice range of commodities
Competitive Force.
-Local competitors.
-Imitators Coming in to grab the market share.
-Coffee is a beverage that has a worldwide appeal. Starbucks entering the
global market might face stiff competition from local coffee brands in
different countries. While Starbucks may hold an advantage in terms of
brand recognition worldwide, local brands can hold an advantage in terms
of local appeal and cultural familiarity.
Cultural Force.
-Different cultures.
-Capturing the local cultural appeal of different countries may prove to be
challenging especially to a brand going global. There has to be a certain amount of
standardization while applying the right localization.
-The solution is to overcome cultural challenges by studying
And researching on coffee consumptions habits of locals.
Political/legal Force.
-Different laws and regulations in different countries.
-Starbucks had a lot of issues regarding overworked but underpaid employees

as it continues its growth globally and dealing with local rules and regulations.
-For example, France has very generous labor benefits as opposed to what
Starbucks is currently implementing.
QUESTION 2 -What are the major sources of risk facing the company and
discuss the potential solutions?
Risks
Saturation of United States market.

-There are still eight states in the United States with no Starbucks stores.
-Prevent Self-Cannibalism----Stores must be strategically located.
-Starbucks have to Offer new food and other non-coffee items
-Market research should be carried out before investing a new store and
realize the fact that the market can become saturated.
-Go global. it will have to depend on overseas growth to maintain growth
rate.
-Licensing and franchising for foreign investors.
ANSOFF MATRIX
Problems of changing generation.

-Consumers 35 years and older tend to consumer coffee more often than the
18 - 25 age group
-Market research should be carried out to study consumptions habits for

younger consumers.
-Starbucks should offer innovations such as wireless networks to its
customers to overcome challenge in order to attract the next generation of
customers.
Dissatisfaction of odd hours and low-pay.

-Positive reinforcement which leads to higher feelings of job satisfaction
- Improve the employee satisfaction. So, the quality of service as well coffee
increases
QUESTION-3 Critique Starbucks overall corporate strategy.

Faults
Eight cities in U.S. remained untapped.
Relying on word of mouth, Starbucks spends just 1% of revenues on

advertising.
Low payment to employees.
predatory real estate strategypaying more than market-rate rents to keep

competitors out of a location.
-Not only it is claimed as an unfair attempt to drive out small, independent

competitors who could not afford to pay inflated prices for premium real estate, this
also leads to monopoly and then leaves customers annoyed with fewer choices.
Stores Expansion in the U.S.
-Growing continuously rapidly, Starbucks has done clustering several

locations in a small geographical area. Doing so eventually will inevitably act to
cannibalize existing locations same store sales.
Stores Expansion Globally
-Stores expansion in other countries too rapid to concern the real preferences
and habits of local consumers and competitors.
Predatory real estate strategy

-Buying out competitors' leases
-Not only it is claimed as an unfair attempt to drive out small, independent

competitors who could not afford to pay inflated prices for premium real estate, this
also leads to monopoly and then leaves customers annoyed with fewer choices.
Labor Disputes & Involvement in Lawsuit.
-Because of Starbucks payment and policies toward its part-time and fulltime employees do not compatible with working hours and duties.
- 470 Frustrated store managers sued Starbucks in 2001 for allegedly refusing
to pay legally mandated overtime.

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QUESTION-1 Identify the controllable and uncontrollable elements that

Starbucks has encountered in entering global markets

- Starbucks have 20,891 outlets in 62 countries which shows that the

Research and development

And researching on coffee consumptions habits of locals.

-Starbucks had a lot of issues regarding overworked but underpaid employees

Saturation of United States market.

Problems of changing generation.

-Market research should be carried out to study consumptions habits for

Dissatisfaction of odd hours and low-pay.

QUESTION-3 Critique Starbucks overall corporate strategy.

Eight cities in U.S. remained untapped.

Relying on word of mouth, Starbucks spends just 1% of revenues on

Low payment to employees.

predatory real estate strategypaying more than market-rate rents to keep

-Not only it is claimed as an unfair attempt to drive out small, independent

Stores Expansion in the U.S.

-Growing continuously rapidly, Starbucks has done clustering several

Stores Expansion Globally

Predatory real estate strategy

-Not only it is claimed as an unfair attempt to drive out small, independent

Labor Disputes & Involvement in Lawsuit.

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