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

Exercise 43

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 Howard Schultz’s (founder and past CEO) return to the company impacted Starbucks’ success?

Step 1 of 2

HS led SB to incredible growth and success, especially after returning as CEO. He returned when the competitors were eating away at sales and profits and the company was drifting from its core competence. There was slumping performance at SB and he made necessary changes to reverse the trend and protected the integrity of the brand.