1. RESUMING
INTERNATIONALIZATION AT
STARBUCKS
Group:2
Aravind Uppala 122
Dasari Pradeep 126
Sangam Lalsiva Raju
138
Rajesh Mishra 151

2. PACE α 1/PERFORMANCE
Year
Pace
Performance
Reason
1993
Moderate
Low
Increase of
assets 115%
led to second
roasting plant
estb’
1997&98
High
Moderate
Acquisition of
Seattle, added
65 stores
2001
High
10.85%
75% Of pace
from Europe
2008
Low
Low
Global
recession &
Increase in
price of coffee

3. REGULARITY α PERFORMANCE
Year
Rhythm
Performance
Reason
2006-09
More regular
than 2002-05
Lesser than
Global
ROA of 2002-05 economic
recession &
Competition

4. SCOPE α 1/PERFORMANCE
Year
Scope
Performance
Reason
1998
High
Moderate
Acquisition of
Setattle coffee
2008&09
Low
Low
Global
economic
recession
THREE MOTIVES TO GO ABROAD
•Industry-based view: increase profitability, and the target countries
chosen usually have real potential in size of population and with high
disposable income
(western nations had great impact on
Americanization)

5.  Resource based view: purchasing only the highest quality of coffee
beans from ideal coffee- producing climates. ( upgrading its SCM) it
makes starbucks price and quality more competitive ( differentiation
strategy) in the new markets and world wide coffee industry.
 Unique strategy of key locations helps to attract foreigners. This
promotes starbucks brand image and raises prominence.
Institution bases view: shareholders expectations for high returns, as
domestic market is saturated , the managers are pressurized by the
shareholders to internationalize thus analyzing coffee industry in order
to leveraging their core competence.
MAIN REASONS:
 reaching saturation point in U.S
 High potential of new emerging markets
 Brand recognition in many countries
 Customer loyalty and security in the SCM

6. STARBUCKS- TOO AGGRESSIVE ????
 One of the best ways to increase market share is to internationalize (
started doing when the home market become saturated in 1996)
 Lots of countries lots of shops
lots of countries many shopsless countries less shops
But, after fast internationalization starbucks always back off to slow the
pace, rhythm and scope to do its market penetration in existing markets
and market development in new markets.
Localizing starbucks provides new products to cater different cultures of
countries by product development strategy.
But, strabucks is criticized for growing too fast which led to decrease in
product quality and company image, cannibalizing turnover in closely
located stores, driving out small independent competitors
International
Strategy
Global
standardization
strategy
Localization
Strategy

7. How should Starbucks approach
internationalization going forward ?
 Mergers and collaboration for expansion proved beneficial in the
past. We recommend that Starbucks continue to work with
McDonald’s to prevent cannibalization. Improve the service and
experience within each existing store instead of focusing on
geographic spread.
 Need to explore countries with the highest per capita coffee
consumption.
 Consider penetrating the hospitality markets globally through hotel
chains (Marriot, Hilton) which offer in room brewing as well as
hospitality counters in the main foyers. Already have a presence in
many airport terminal locations and could continue to expand in this
way.
 When entering a foreign market, Starbucks' strategy was to retain its
core service and product offering as much as possible, while
adapting to local demands in the host country. I think this is a good
way to survive in foreign markets. They have to follow this policy.