.1. Introduction1.1 Distinctive Growth Tale of Starbucks 1.2 Strategic Deportment1.3 Starbuck as a Global Corporation 1.4 Impact on the international economy| 2. International Marketing Strategies of Starbucks Corporation2.1 Marketing Mix 2.2 SWOT Analysis 2.2.1 Internal Environment 2.2.2 External Environment2.3 International Marketing Strategies 2.4 Implication of marketing strategies On Starbucks Global success| 3. Role as a CEO of Starbucks 3.1 Problem identification 3.2 Solution to the problem| 4. Conclusion|
1.1 Distinctive Growth Tale of Starbucks
Starbucks the known name in the world of coffee business had started off with little company which now has transformed in a successful corporation. This brand has gained remarkable success over period of time and has proved itself as a reputable coffee provider in term of taste and quality. The major contribution in this success was their aggressive expansions strategies. These strategies have enabled them to develop a dense chain of stores not only in America but all over the world. Their strategic approach towards the business has enabled them to gain value of $12 billion in 2008 from $2.9 billion in 1998 (Higbee, Liaw, Ting, Tjho, ton, 2008). Starbucks unique selling proposition was their brand image. They have always placed itself as an exclusive brand and have enabled their customers to experience a rich taste in comfortable environment.
They have emerged as a leading global company with the perspective of making difference in people’s life by delivering quality based product all around the globe. Presently the company is working at their best in Bahrain, Canada, Hong Kong, Israel, Japan, Kuwait, Egypt, Switzerland, Taiwan, Thailand, United Kingdom, United States, South Korea, Singapore, China, Philippines, Australia, Oman, Malaysia, Qatar and Saudi Arabia (Taghred, Ehab Aziz, Bassem Naguib, 2008) This growth tale of Starbucks is full of the experiences which has enabled the company to grow and inculcate all the required changes which were demanded by the customers or were the need of the time. Their consistency and strategic approach towards the business has enabled them to gain this kind of the substantial success and build their brand as a leading name. 1.2 Strategic Deportment
* Mission Statement
“To inspire and nurture the human spirit— one person, one cup, and one neighborhood at a time” At very beginning of the journey the management has cleared the reason for the existence of the business and then they got stick to it. The mission statement strongly reflects their aim of becoming upscale purveyors in coffee retailer business. Along with the defined path they have formulated the basic principles for running their business. These golden principles of the Starbucks are stated as (Starbucks, 2011). 1. Diversification
2. friendly working environment
3. superior customer satisfaction
4. strong check and balance over supply network
5. fresh coffee deliverance on a daily basis
6. being socially responsible corporate
All these principles formulated by the company further strengthen their courage to work with diligence and passion. These are the driving force for the employees who keep them on the right route towards progress and development. * Objectives
The objectives of the companies have always reflected the thoughtful approach of the company. As they have been always very promising and dedicated coffee sellers and have proved so far with the progress they have shown. They believed in delivering the product which is refreshing and fills the customer heart with the satisfaction. The company views its employees not as a working force bust in fact the partners. Along with this dignified approach their stores have been always the mark of enjoyment and relaxation.
1.3 Starbuck as a Global Corporation
After gaining the success in the domestic market, the next venture in which the company stepped in was to go global. As they have reached the boom in domestic market so it was an ideal situation to go and expand the business to the international level. The international consumer was given the chance to taste and experience the true essence of coffee. 1.4 Rational for going Global
The plan of expanding the business and take it to international level was very ideal situation for the Starbucks because the company has gained the substantial growth in a very short period of time. Beside that the commodity they were selling is rated as highly consumed product on daily basis not only in America but all around the globe. The scope to get notify within the international market was not the subject to be considered by the leading company like Starbucks (Gibson, 2007). So keeping these all consideration in the mind the first international Starbucks store was inaugurated in 1996-Tokyo, Japan. This was their first of experience of going global and it has brought success for the company and further paved the way to launch more stores in all around the world. 1.4 Impact on the international economy
The decision to go global has actually impacted the life of many people around the globe. Every new store launched brought lot of employment opportunities for the people of that country and beside that it emerged as a positive hope for the coffee farmers. The people out there got the chance to experience the real essence of coffee and the charm of the brand which is known as Starbucks (Aigerim, 2010). The plan of going international had for sure positively impacted the international economy because it emerged as a tool to generate the job opportunities for many people around the globe, which will eventually enable them to experience the satisfaction of living a quality based life.
2. International Marketing Strategies of Starbucks Corporation
The marketing strategy plays very critical role in determining the position of the company. The Starbucks global growth is relevant to the successful implementation of its international marketing strategies. The firm has grown so well on international level because of its well-executed strategic marketing plans. The fame they got was possible because of their influential and convincing style which compelled the customers to believe that Starbucks is about more than having a coffee cup. In fact it is a delightful experience of having a coffee with the aspect of socializing in a calm and relaxed atmosphere. They exactly knew that what their customers are expecting from their and the have maintained to deliver that premium services with dedication and consistency. The international marketing strategy of Starbucks basically comprised of forming alliances or joint ventures. This strategy has enabled them to grasp the international customer and serve them with their products (Boscheratto P, Chitaraju B, Toth M, 2008). Before going to the strategies, let’s explain the marketing mix and SWOT analysis of the corporation.
2.1 Marketing Mix
The marketing mix enables the firm to identify their goals and objectives more distinctively. The Starbucks have also formulated integrated marketing plan, in order to reach their clients with more objectivity. Starbucks had formulated this marketing mix plan (Product, place, price promotion) in a way that through which they can provide maximum satisfaction to the customers.
* Product: As Starbucks is known for selling coffee products. The product is clearly identified by the company and is well known all around the globe for their specialty. The stores in all around the globe serving the range of coffee products varying from coffee beans to exotic coffee drinks. The have also range of breakfast deals including different pastries and oatmeal (Tewell, Odom, Snider, 2006). Their product has meet all the standards of quality assurance and it success can be judged by the number of stores which are globally operating under the name of Starbucks. The strength of the company is lying in the fact that they are the leading brand of coffee retail on both domestic and international level. * Price: The Starbucks as a brand always presented itself as a premium brand and it has also charged premium price for its product. The placement of the Starbucks as upscale brand has always enabled them to charge higher prices. The Starbucks is always known for its quality based products and they have given a new experience to the customer. So for all these reasons they have been charging
bit higher prices for their products.
The have wisely inculcated the belief in the mind of target customers that they are not selling the expensive coffee but giving out a chance to be a part of high quality living. * Place: The international placement strategy of the firm varies from a place to place. They have different placement deals around the globe. They have always been an attraction for the people who want to relax there selves by music or have great literary taste. The Starbucks stores are designed with the feel through which it can comfort customers * Promotion: Since the time it had established and till today it has opted for unconventional promotional tactics. They all aiming at forming interactive relationship with the customers rather than opting for advertising measures. One of the major promotional tools used by the firm was to be part of community programs. The firm had been always very active as a socially responsible corporate, which have won it heavy rating from all around the globe. The marketing mix of Starbucks have always complemented its mission statement and reason for it existence. The clarity in objectives and well-crafted plan has helped Starbucks to practically implement the ways through which superior product and services can be delivered to the customers. This has eventually helped the company to attain the brand loyalty and brand recognition from the consumers. 2.2 SWOT Analysis
The SWOT analysis of Starbucks will enable to examine that with international perspective of business, what kind of strengths, weaknesses, opportunities and threats are there for the company. This analysis will further help to understand the rational of the strategies implemented by the Starbucks for the global expansion.
2.2.1 Internal Environment
1. The corporate structure of the firm is not dependent on any kind of hierarchal structure or strict chain of command. The organizational structure of Starbucks comprised of different department working together. The employees are trusted and part of decision making (Larson 2009). This kind of healthy environment is a complete strength of the company because the working force is not been dictated in fact mutual cooperation is key element of the corporation 2. The Starbucks has emerged out of very healthy corporate culture, which has also strengthened the company. Shultz believes in treating the employees as a family and in return employees try to give best out of them and enthusiastically participate in progress of company. 3. The Starbucks have always enjoyed the financial stability which has given the firm the courage to take innovative decisions. The innovative skills have ended at giving Starbucks the credit of introducing wide range of coffee products, which is strength of the company.
1. The aggressive expansion strategy of the Starbucks have surely brought lot of success for the company and brought it in to the lime light of international market. The growing size is a weakness in a sense because lot of dedication and hard work is required to maintain standardized operations all around the globe. This is bit difficult to manage for the company because of the size. 2. The company has grown by focusing more on the external expansion. They believed in growth with understanding of opening stores both on domestic and international level. This has for sure given lots of boom to the company and this is why Starbucks is doing so well as global brand. In this struggle they have ignored the need for internal expansion ( Herve,R 2004) 3. The self-cannibalization has been also a weakness for the firm because there many products are appreciated against their own other products. 4. Their premium pricing is another hurdle for them because in this way they have been ignoring the major cult of society. They lost their many customer because of the recessions hitting the international and national both markets. This loss was suffered by Starbucks just because of their premium pricing strategy. 2.2.1 Internal Environment
1. The major opportunity grasped by the company was the time when they have decided to launch their brand in international market. At this time they have further given their business a golden chance to keep availing different opportunities through stepping in to such ventures. 2. Technological advancement in the world of business is an opportunity for every one out there, so it was for the Starbucks. Installation of new programs and machines based on latest technology has always helped the Starbucks to reduce their operational and input cost. This reduction brought the element of success for the firm. 3. The new markets where the low economic conditions were prevalent have always helped the Starbucks to establish a working force with low budget planning.
Such channels are source of opportunity for the Starbucks. 4. As the world has changed so the preferences of the people so there are many countries where trend of drinking tea is replaced by coffee. This has emerged out as an ideal opportunity for the Starbucks because through this they have chance to access new markets. In fact they have already done that by jumping in to the Asians countries. These were the countries where people preferences have changed and have given out the chance to the companies like Starbucks to establish their footsteps in these regions and further enhance their image of high quality brand. 5. They can further expand their product line and can offer more innovative products through that they can carter the needs of potential customer. * Weaknesses
1. The success of Starbucks has attracted others to step in to this business. Now over a period of time they have strong line of competitors both on national and international level. The competitors of Starbucks have grown considerably well over period of time. They have managed to attract their client through offering them low prices. The international competitors of Starbucks are Dunkin Donuts, Peet’s, coffee bean and tea leaf, costa coffee, and Caribou’s cafes (Fligh, 2007). The competitors are always threatening for the company and so they are for Starbucks, The Company needs to get consistent with the strategies and live up to the expectations of their clients. 2. The Starbucks business is all dependent on coffee farmers, so for this reason they have to establish good relationship with the farmers. Any unfavorable situation can put them in danger. 3. The economic instability can always bring down the revenues of the company. This is a situation in which Starbucks can suffer.
The company has established itself very well as a global brand and its SWOT analysis has enabled to understand about the implication of their strategic approach, which has given them strength and opportunities. On same side we have an overview of the short comings of the company in term of their weaknesses and threats. They all together make helped us to understand about their struggle ranging from a single store to multinational brand. 2.3 International Marketing strategies of Starbucks
This part of the report will look in to the ways through which Starbucks have grown to international level. The ways through which the firm has established itself as strong and influential global brand will be discussed and their implication will also be analyzed. The main strategy to enter in to global business of starbucks revolves around establishing the alliances and partnership. This had helped the Starbucks to establish their selves with ease as it has both pros and cons (Beatriz, Shuang Ni 2008). The biggest advantage of forming alliance was that starbucks reduces it chance of complete failure. After the establishment the marketing strategies executed by starbucks vary from country to country. So here is a glimpse of marketing strategies executed by the corporation to establish their selves among the leading global brand in coffee retail business. * Diversity management is the key factor for the global brands. They have to launch the product while keeping in consideration all the customer preferences of that particular place. Like as when the launched the store in china, they give them the place where they can actually meditate.
This practice was contrary to this tactic in US. Most regions of US starbucks are giving take away facility but in China they adopted different tactic because of its cultural change. The Research and development of starbucks is well equipped with the tools to assess the trends prevalent in any respective region. * The product innovation is another exciting feature of the Starbucks Corporation which helps them to keep attracting the present and the potential customers. The company is serving great range of drinks all around the globe. As high quality and good taste is there trademark so the variety in the drinks have always warmly taken by the customers in every global store of starbucks. * The starbucks as a company is also known as a great promoter of music. This feature of the company has kept the youngsters as their one of loyal customers. They initiated it in 1995 and then in 1999 it has gained tremendous popularity and year 2005 gave them 35% of the revenues from their music sale (Nancy F.Kohen, Marya Besharov, and Katherine Miller 2008). Beside this there stores also offer great collection of books and movies, which again attracted people towards their store, all around the globe.
* Firms which are customer oriented tend to prosper more rapidly. The starbucks phenomenal growth is subjected to the fact that they focus was and is superior customer satisfaction, so they have also line up the product list which offers different breakfast meal. This was designed to attract the working class of the society. * Their desire to expand was supported by their every marketing plan and tactic. In 1990 they made an agreement with the Pepsi-Cola. This agreement allowed them to sell bottle coffee drinks. This is how they have also tried to go global by making their product available to the grocery store in different part of the world. * Productive workforce was their power tool which has always enables the Starbucks Corporation to execute their plans effectively and reach to the utmost progress. They introduced informal way of interacting with their employees. They believed that they are the partners because they been actively participating in all the procedures. This kind of culture enabled the work force to enjoy working in healthy environment and be a part of attaining every mile stone set by the company.
The core values incorporated in the company has enabled it to attain successful position in the world. * Another source of attraction in starbucks for the customers was there philanthropic activities. They have always managed to maintain their image highly responsible corporate. Philanthropy is a smart marketing tool because it holds great deal of sympathy and attracts the customers towards the business so convincingly and effortlessly. * They started attracting the world since from 1991. In this year they started working with the non-profit organization known as CARE. This venture was embarked to fight a war against poverty and eliminate social differences. Later this journey was continued with the efforts to keep the environment healthy and taking care of the poor farmers involved in the cultivation process of coffee beans. There are series of ventures joined by the corporation to build and maintain their image as highly socially responsible corporate. 2.4 Implication of marketing strategies On Starbucks Global success The marketing strategies of starbucks for entering in to the global business were very persuasive and were customer oriented.
The company has attained the global success first of all because of their clarity in the objectives. As all the practices reflects the focused approach of the firm toward the business. They have a purposeful vision and mission behind their existence, Rest it was complemented by their strategic business plans. Like there all efforts and practices are centered to deliver quality based product and image their selves as high quality brand. Like as there marketing strategies have backed up the desire to expand their business globally and become successful. Each marketing strategy adopted by the company was wisely crafted to full fill the expectations of their customers. Their objective to grow big and stay small was smartly crafted. This have always enabled the firm to expand their growth and simultaneously remain intimate to their clients and working place. The idea of keeping friendly interaction with the customers has enabled the firm to win customer loyalty. This customer loyalty has developed the brand image and recognition.
The advertising budget of the firm has always been low as compare to its competitor just because of this objective. They were able to spread their magic among the masses through words of mouth. They have been interactive with their client on every stage and involved them in the physical processes to give them the ultimate chance to experience something different and unique. At Global level their successes have been possible for the facts that it has managed the cultural differences so innovatively that the people have associated their selves to the brand from all around the globe. The diversity management within the Starbucks corporate in all the global ventures included marketing techniques that have fit in to the culture of that respective country. Along with all this, there effort to emerge as socially responsible corporate has won them high rating and lasting customer loyalty. This tool has played great role in retaining the customers and attracting the potential clients.
3. Role as a CEO of Starbucks
This part of the report has given me the chance to review the current strategies and make the desirable changes through which starbucks can do better. I have examined their current strategies and have identified some problems. 3.1 Problem identification
After the careful examination and analysis, the problem areas assessed are following * High prices
* variation in product line
3.2 Solution to the problem
Inn 2008 the starbucks share value was declined because of the economic recession. At this time not only America but all over the world went under the influence of recession. So the high quality brand at that time couldn’t do well because they were charging premium prices and because of inflation people were struggling to fulfill their basic needs. So as a CEO of the starbucks I will try to minimize the cost. This will look into the ways through which company can reduce its operational cost so then the prices can be cut down. This will attract more customers from all around the globe and will give the chance to starbucks to enter in to third world countries and continue expanding the size of business and keep enjoying the high profits. There is too much variation in product line offered by the starbucks. As they have started and build their name as a coffee specialist so they should primarily keep their focus on that area. As a CEO I will customize the product line, just offering the products which are worldwide appreciated by the customers. This will keep the firm focused and enable them to keep their monopoly in business world of coffee specialty. They should stick to their core and continue supplying the world the true coffee taste. This will always keep them on the path to serve the customer with the urge to experience the rich taste of coffee. This will further enhance the profits margin of the Starbucks.
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