__星巴克案例分析

星巴克案例分析

营销1101班

小组成员：马志萍 蒋雯 卢玉楠 李雪清 常利蓉

联系方式：************************

2014年10月22日

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Project: Starbucks—Going Global Fast

1. Identify the controllable and uncontrollable elements that

Starbucks has encountered in entering global markets.

When the Starbucks encountered in entering global markets ,the controllable elements included the product,the price,the firm characteristics and the promotion.while the main uncontrollable elements it faced included the political forces,the cultural forces,the competitive forces and the level of technology.

The main controllable an uncontrollable elements are as follows:

Chart1 the main controllable elements Controllable elements product Example Schultz thought that offering 8 dollars sandwiches, desserts, and CDs in his stores and selling packaged coffee in supermarkets would significantly boost sales in the late 1990s. In Italian coffee is cheaper than U.S. java and, say Italian purists, much better. Americans pay about $1.50 for an espresso. in the aspect of cash, Starbucks is nearly free of debt, it fuels expansion with internal cash flow. In the aspect of place, the firm’s 12,000 locations in the united States are mostly in big cities, affluent suburb and shopping malls. Starbucks is so smart that it promotes itself by relying on mystique and word-of-mouth. Therefore, it can save much money on advertising. As the case mentions, Starbucks spends only 1 percent of revenues on advertising . price firm characteristics promotion Source of data:the authors to sort out

Chart2 the main uncontrollable elements Uncontrollable elements Example the arcane regulations and generous labor benefits In France, Starbucks should follow them and meet the labor’s needs. Only by doing this can Starbucks gain the popularity and enhance its sales in France. French seem to be ready for sweeter taste. And in Italy, the coffee bars provides coffee as well as food. It is a kind of food culture. In Japan , Starbucks has successfully developed a broader menu for its stores .But McDonald’s also is attacking the Japanese market with the introduction of its McCafe’ coffee shops . political forces cultural forces 2

Project: Starbucks—Going Global Fast

Uncontrollable elements the level of technology Example 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. Source of data:the authors to sort out 2. What the major sources of risk facing the company is and discusses potential solutions.

Chart3 the risk and solution Risk Global expansion Predictable challenges Staff’s quality Cultural challenges Source of data:the authors to sort out

Solution Fully select of strategy and way of expansion;Clear the development direction after the company’s expansion. Efforts to improve the brand value;Create the unique consumption atmosphere. Improve the staff’s allowance;Be equipped with talent; Restriction of contract. Cultural integration;Cross-cultural training; Build a shared vision. 2.1 Global expansion

Global expansion poses huge risks for Starbucks. For one thing, it makes less money on each overseas store because most of them are operated with local partners. While that makes it easier to start up on foreign turf, it reduces the company's share of the profits to only 20 percent to 50 percent.

The solutions to this problem are: fully select of strategy and way of expansion; Clear the development direction after the company’s expansion. 2.2 Predictable challenges

Starbucks must cope with some predictable challenges of becoming a mature company in the United States. Not only are the activists among them turned off by the power and image of the well-known brand, but many others say that Starbucks' latte-sipping sophisticates and piped-in Kenny G music are a real turnoff. They don't feel wanted in a place that sells designer coffee at $3 a cup.

The solutions to this problem are: Efforts to improve the brand value; create the unique consumption atmosphere. 2.3 Staff’s quality

As it expands, Starbucks faces another big risk: that of becoming a far less special place for its employees. For a company modeled around enthusiastic service, that could have direct consequences for both image and sales. Its perks are no longer enough to keep all the workers happy. Starbucks' pay doesn't come close to matching

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Project: Starbucks—Going Global Fast

the workload it requires, complain some staff.

The solutions to this problem are: Improve the staff’s allowance; be equipped with talent; Restriction of contract. 2.4 Cultural challenges

As Starbucks spreads out, Schultz will have to be increasingly sensitive to those cultural challenges. Now, Starbucks is waking up to the grande challenges faced by any corporation bent on becoming a global powerhouse.

The solutions to this problem are: Cultural integration; Cross-cultural training; Build a shared vision.

3. Critique Starbucks' overall corporate strategy

Starbucks' overall business strategy is primarily to Centralized expansion strategy.Starbucks not only expanding in the local market, but also in cooperation with local manufacturers in overseas market to expand.

Chart3 the advantage and disadvantage of strategy Advantage Economies of scale Disadvantage Lower profit margin Cultural conflict Domination of market The decrease of the quality of products and services Worsening competitive relationship Source of data:the authors to sort out

3.1 advantages

3.1.1 Economies of scale

Rapid expansion in a particular area makes Starbucks coffee shop together, though sales will influence each other, but it will increase the overall revenue, expand market share. Due to the large size of Starbucks, the scale effect makes delivery and management costs lower. 3.1.2 Domination of market

By focusing on some stores, Starbucks can speed up to control the local market. Starbucks take full use of the strategy of \"predatory real estatehe whole market to get his opponent out of the coffee market. They would rather idle the shops than give competitor’s opportunity to enter the market. 3.2 disadvantages 3.2.1 Lower profit margin

As for the local expansion, most of the overseas stores must cooperate with local partners. So relative to domestic shop, the profit margin of each shop will be lower .even give up a 20% - 50% of the profits. However, every new branch will

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Project: Starbucks—Going Global Fast

affect the existing store sales, so as to lower the overall profit margins. Thus, while chain Starbucks in global has more than one player, but its share of profit is only a small part at the top of the pyramid. 3.2.2 Cultural conflict

The culture of each country is different; Starbucks inevitably encountered cultural conflict in the process of overseas expansion. For example, although French prefer sweet coffee taste of Starbucks, but French regulation is strict and the welfare of workers is high, in this way, Starbucks' profit will be shocked to a large degree. In Europe's coffee culture, firstly, Italian coffee shops' profit not only deprive from selling coffee, but also selling food, but Starbucks do bad in this aspect. Secondly, Italian coffee is much cheaper than American coffee and those who like to drink black coffee prefer Italian coffee. Facing the competitive disadvantage produced by cultural conflict, it's a huge challenge for Starbucks to expand overseas. 3.2.3 The decrease of the quality of products and services

Firstly, once employee’s advantage is one of the advantages which Starbucks proud of, but with the increase of the Starbucks stores across the country, the branch managers and employees' morale problem is more and more serious. For a company based on rich enthusiasm, both for its image or sales, it can have bad effects. Employees of dissatisfaction can affect quality of service, and far from the image that Starbucks employees produce cappuccino happily, which you want to delivered to customers. Secondly, expansion means companies cash flow is insufficient, which makes the enterprise product quality gradually decline, decline in quality is reflected in the use of raw materials and products packing and so on various aspects. 3.2.4 Worsening competitive relationship

The strategy of \"predatory property\" Starbucks adopted makes neighborhood activists and local enterprises more and more disgust. What’s more, customer feel annoyed because their choose leeway decrease.

4. Starbucks’ strategy to improve profitability in Japan

4.1 Expand the overall market

Starbucks can make more convenience for consumers to get products by increasing product sales channels, thereby increasing consumers use to expand the market as a whole. Such as through grocery stores or other retail outlets to sell canned

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Project: Starbucks—Going Global Fast

coffee .because Starbucks coffee with other ready-to-drink beverages in Japan's market share is still small. 4.2 cost leadership strategy

Japan's economy right now is weak, thus on the basis of using the price advantage, competitors in providing similar services gradually eroded the market share of Starbucks. Therefore, Starbucks should try to lower the product cost to create the advantage and then retake the market by providing price lower than competitors. 4.3 Product differentiation strategy

Japan was a success when they first opened new stores. New shops attracted large crowds, but the effect wore off as the market became saturated. Gradually, competitors imitate Starbucks product and service.

Starbucks need to research their customers and market to find out the sudden change. By being more aware of their customers and their likes and dislikes. They will be able to find out what adjustments are needed to become more successful. Combined with Japanese culture, such as the cheery blossom Starbucks can rod back the market and find the new profit growth point.

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