Starbucks' International Operations
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Case Code : BSTR058
Case Length : 12 Pages
Period : 1982 - 2003
Organization : Starbucks' International
Pub Date : 2003
Teaching Note : Available
Countries : USA
Industry : Food and Beverage
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
International Expansion Strategies
Starbucks decided to enter the Asia Pacific rim markets first. Growing consumerism in the Asia Pacific countries and eagerness among the younger generation to imitate western lifestyles made these countries attractive markets for Starbucks.
Starbucks decided to enter international markets by using a three pronged strategy - joint ventures, licensing and wholly owned subsidiaries (Refer Exhibit I for the modes of entry in international markets). Prior to entering a foreign market, Starbucks focused on studying the market conditions for its products in the country. It then decided on the local partner for its business. Initially Starbucks test marketed with a few stores that were opened in trendy places, and the company's experienced managers from Seattle handled the operations. After successful test marketing, local baristas (brew masters) were given training for 13 weeks in Seattle. Starbucks did not compromise on its basic principles...
Problems in International Markets
In the early 2000s, Starbucks faced many problems in its international operations (Refer Exhibit II for risks in international markets). The volatile political environment in the Middle East created serious problems for Starbucks.
In July 2002, Arab students gave a call for a boycott of American goods and services, due to the alleged close relationship between the US and Israel. The boycott targeted US companies including Starbucks, Burger King, Coca Cola and Estée Lauder. Starbucks topped the list of companies to be boycotted due to Schultz's alleged closeness to the Jewish community. The problem was aggravated when it was reported that, in one of his lectures to students at the University of Washington, Schultz had said, "one of my missions is to sensitize you; you should not be immune to what is happening in the world. I travel a great deal and one of the things that I see is the rise of anti-Semitism in Europe, especially France and England."
Excerpts Contd... >>