M: Business 3rd Edition by O. C. Ferrell, Geoffrey Hirt, Linda Ferrell

Exercise 39

After years of large-scale expansion, Howard Schultz returned as Starbucks’ CEO to energize and grow the company. The plan involved closing nearly 1,000 stores and other aggressive costcutting. Realizing that the United States has become a saturated market, Starbucks is now focusing more on international growth.

One lucrative market is Japan. Japan is the largest coffee consuming country globally. Starbucks has been involved in Japan since 1995 and now runs close to 900 stores throughout the country. Starbucks has succeeded in part by adapting its products to Japanese tastes. For example, the Japanese tend to drink less coffee per sitting, so serving sizes have been reduced.

However, not all countries are as accepting as Japan. For example, when Starbucks first entered Great Britain, it moved quickly— perhaps too quickly. British consumers did not take to Starbucks’ signature stores or its premium high-priced coffee, especially since Great Britain was more of a tea-driven market. Starbucks has therefore begun renovating its stores, creating a unique look for each that fits the local culture. With over 600 stores in Britain, Starbucks is currently making a profit.

Starbucks is now turning its attention toward expansion in China. Starbucks first entered China in 1999 and now operates 700 stores. Finding the right approach in China is difficult, and reaching profitability may take years of trial and error. The company has recently entered into the Chinese tea market to respond to local consumer demand. Starbucks is ready to grow in a healthier fashion by remodeling its current stores and modifying its products to local tastes. It continues to be ranked among the world’s most ethical companies, which helps boost Starbucks’ reputation. The company hopes that its emphasis on individuality and global expansion will become additional drivers for further success.

How has Starbucks been able to be successful outside the United States?

Step 1 of 2

SB has been the world leader in coffee business. Expansion is the key of its success in the global market. Operations in the saturated market of U.S, was limiting the growth potential and profit making capacity of the company. The company took rapid strides in implementing its expansion strategy globally; SB converted its products into a symbol of productivity and became an integral part of modern lifestyle.