Starbucks, Research Paper Example

Under the management of Jerry Baldwin, Zeu Ziegler and Gordon Bowker, Starbucks primarily sold spices, some gourmet kitchen spices, tea and whole bean roasted Arabica coffee. In addition to that, when Howard Schultz acquired Starbucks they added products such as; Italian-style espresso beverages, freshly packaged roasted whole bean coffee, fresh pastry and other food items that included coffee, sodas, juices, tea. In addition, they retailed other related hardware products and equipment. As a result of Starbucks expansion, they extend their food variety. These products included warm breakfast sandwiches, expanded pastries and dessert, as well as, pre-packaged lunch. Starbucks experienced both success and failure, which came about on account of a couple of elements. Product supply was vital in the success of Starbucks because they got their coffee on a negotiated basis, which secured an adequate supply of quality green coffee for their customers. Competition is another element. Unlike most of the competitors, Starbucks believed their customers primarily relied on the basis of quality and convenience, rather than price. The last element is human resource. Starbucks upheld a brand reputation as compared to product reputation that is, all contact they had with the customer was a test of their brand.

Starbucks choice of expansion was the use of a combination of four modes, which are; organic growth, joint venture, acquisition and licensing. The factors that were important to Starbucks international expansion were availability of coffee and a large economy in Japan, which influenced them and the culture, language, legal environment, management practices and labour economics in the United Kingdom. This was similar to those that Starbucks management had already faced in the United States of America, which showed that it could be successfully established from the outset.

The expansion strategy of Starbucks has the following details, and the most profitable mode is also depicted. Organic growth is where Starbucks offered its consumers a new value proposition. This meant that they would get funds through initial public offerings. Joint venture is another mode, and this is where Starbucks entered into an agreement with Sazaby and signed a fifty –fifty joint venture agreement. This enabled Starbucks to enter Japan hence, expanding internationally. Starbucks also used acquisition. Unlike joint ventures where they had to partner with other companies, they settled on acquiring a company. Starbucks entered the United Kingdom by acquiring the Seattle coffee company. Licensing was also a vital mode, and this is where Starbucks entered an international market through a minority share licensing agreement. This meant they had to partner with local companies who would absorb the capital cost of bringing Starbucks’ brand abroad, which in return would minimize market entry risk. Most Starbucks international operations were through joint ventures. This proved to be profitable in the case of Japan because, through joint ventures, it provided a low risk entry into unproven territory.

Starbucks unfair trading with coffee farmers is one of the reasons why protesters of the anti-globalization movement strategically target the company. In addition, it is noted that the entry has made people react against the rising culture of Starbucks consumption, which drained the soul of the company’s past. The other is because competitors are already established, unlike their home town. The intense competition in the international market resulted in less penetration for Starbucks products where it was forced to strive harder to compete with the existing players rather than being a monopoly, which it enjoyed.