Starbucks: A Global Coffeehouse Giant with 10,000 U.S. Stores - Essay Sample

Introduction

Starbucks Corporation is a coffeehouse based in the United States and among the largest coffeehouse company globally. Starbucks started its operation in 1971, at Seattle's in the US and has significantly expanded its stores globally and currently own more than 24,000 stores worldwide in 75 countries with its passion on genuine services, community connection as well as quality coffee (Butler, 2018). However, the United States is predominant, with more than 10,000 stores across America. The first international coffeehouse was opened in 1996 in Tokyo and the response was amazing (Starbucks, 2019). The company aims to provide the best services and the most exceptional quality to its customers to be the top seller globally without compromising the quality of its products. Through a selection of superior products as well as product differentiation, Starbucks was able to create differentiation strategies and expand their stores in North America while determined to attain operative excellence as well as operative excellence in the long run. This created a competitive advantage over other companies and made it harder for other companies in the industry to replicate Starbuck's strategies in the global market approach. Starbuck's competitive advantage gained its position in the ready to drink coffee industry through a unique plan such as appealing stores and ambiance, superior flavors in their coffee drinks and well as convenient stores across countries, they are present.

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Starbucks Globalization

The primary benefit of a company expanding from domestic to international strategies is the increase in return in its investments. Therefore, a company can realize added advantage of its brand compared to its rivals. Because of the saturation of Starbucks shops in the United States, it decided to venture to the global market. The company first ventured in the Japanese market through the establishment of joint ventures with other local retailers. Starbucks had a significant impact, and by 2001, it had about 150 stores and continued capitalizing on joint ventures with local retailers that permitted it to maintain control and benefit from the local operating partner. This enabled Starbucks to embark on an expansion campaign to successfully venture into the foreign market, opening more than 600 stores outside the United States. Its ability to reach the global market enabled it to reach broader markets and attain their growth objectives of establishing more than 200 stores in countries including Kuwait, Japan, New Zealand, Singapore, Taiwan, Japan as well as China.

Globalization strategies entail consideration of opportunities as well as strengths in creating and sustaining a particular competitive strategy. Globalization involves a process of contact among various governments, companies to establish international trade as well as investments. A globalization process is often affected by technological innovation, environment, and culture as well as economic development and prosperity globally. Its modern globalization ideas primarily influence Starbucks success in the global stage. Starbucks is known across the world in producing quality coffee drinks, and they often capitalize on that as its unique selling proposition in the market. Starbucks has spread its shops across North America, Europe, Middle East, Latin America and the Pacific ream with significant growth from a small coffee shop to an iconic international leading brand in coffee beverages and other products. Although Starbucks started in the United States, the real idea originated in Italy. According to the company CEO, Howard Schultz, in 1983, he observed the popularity and success of coffee shops in Millan as well as their ability to serve as a socialization place while on a business trip. Therefore, Starbucks took what was an Italian concept, including cappuccino and espresso, and made it an American culture.

Since the establishment of its first shop in the United States, Starbucks made itself as the leading seller of the world's most excellent coffee. This enabled the company to gain popularity across North America as the most aggressive coffee house retailer, which was a critical point in its growth to develop a niche. Starbucks was able to put shops across the globe and transform coffee as a beverage to be adopted as a lifestyle, making freshly brewed coffee. Starbucks gave top quality products to its customers while maintaining a flat premium price with its competitors, such as Mc Donald and Dunking Donuts, which creates a competitive advantage. Since Starbucks predominantly focuses its business on coffee-related products and retail stores, their strategic approach is more of on a corporate level because it is a single business company.

International Trade Theories

International trade theory is responsible for the rise of Starbucks to venture its business in other countries across the world to increase its market share as well as growth rate. While entering a new market, Starbucks has a competitive advantage since the market is not the solely producing coffee. Comparative advantage theory postulates that when a country has absolute disadvantage regarding production compared to another country with a relative advantage in production that its absolute disadvantage is smaller. There exists challenges when entering a new market including where Starbucks could best locate its stores were there is high demand for their products (Rizqiyanto, 2017). China and India already had existing coffeehouses with regular customers with variety of products that suit their market needs. However, they also encourage foreign investment such as Starbucks to invest in the urban strategic areas and consequently adapt to the consumer needs to deliver quality products and services (Gupta, Nagpal &Malik, 2018).

Globalization Strategies

License and Joint Ventures Strategy

Joint venture gives a strategy towards managerial liabilities where a new business in a different country involves sharing of ownership between two or more firms based on an agreement. The primary aim of a joint venture is for short time partnership, and Starbucks has over time utilized this strategy in venturing in new countries globally. Starbucks uses a licensing strategy to local retailers and coffeehouses to sell its coffee to customers. Thus, Starbucks gains through licensing fees as well as royalties on revenues. Joint Ventures play a critical role in familiarizing with the country's culture, language political as well as business systems. It is already holding Joint Ventures in various countries with established strategic alliance globally, primarily focusing on brand image and service delivery. Joint ventures have assisted Starbucks to get support from different countries such as India by understanding people's needs, which shows a good strategy since coffee consumption is a lifestyle. Concerning the current market situation, the consumption of coffee in Europe is about 50% while in Asia is about 15%. However, a higher market is impending.

Joint venture significantly played a critical role in the expansion of Starbuck and McDonald's stores in China. Starbucks knows that Joint Venture in China works differently for various businesses at different times and often alter the partnership following the business contract. Starbucks presented valuable opportunities in China while reducing its costs during periods of accelerated or slow growth that greatly assisted it to access new markets as well as the existing distribution networks. After an establishment of the foothold with the Chinese market and culture, Starbucks aimed to capitalize on its profits and opted to buy its Joint Venture partners in China including Uni-President Enterprises Corp and President Chain Store Corp. With the huge market share in China, Starbucks aimed to establish its profits in China with the growing coffee culture to counter its slow growth in sales in the United States. Joint ventures strategies are essential for Starbucks in running their business in different countries globally with effectiveness. This assists the company in establishing new business locations in various countries and creating a competitive edge in the market. Moreover, keeping compliance with regulations in a foreign country is paramount; therefore, joint ventures play a critical role in reducing the burden and cost of the fluid regulatory changes in maintaining a business in the countries (Han & Zhang, 2009). Therefore, the local partnership can significantly assist with best practices in the management of compliance in the countries. It is often a concern for intellectual property rights infringement among foreign companies entering a market for their first time, which is a costly share and Joint Venture in China has assisted Starbucks to monitor the Chinese market for any probable infringements, significantly saving the costs (Han & Zhang, 2009).

Global Marketing Mix Strategy

Advertisementand Marketing

Similar to McDonald's and other multinational corporations, Starbucks rarely advertises its products through newspapers, posters, or ad spaces. However, advertisement is critical and has a strong influence on the success of the company, Starbucks is not as aggressive in marketing compared to companies such as McDonald's and Coca Cola. An important element is Starbucks is that the media and form of advertisement changes between countries depending on the trends, culture as well as laws, hence, the advertisement are more effective since there are no standardizations. Starbucks markets itself through the unique design of its stores and distinctive culture, however, its website and social media sites are sufficient to reach millions across the world (Shirdastian, Laroche & Richard, 2017). Starbucks is a great product, and it can build strong recognition easily, primarily targeting premium customers.

Starbucks has built its brand over a long time, and a strong identity is often based on stronger values that include integrity, quality, transparency, as well as accountability. The primary focus of quality, as well as customer service, has put Starbucks on a global map since its foundation, creating a competitive edge with other coffeehouses (Marques, Camillo & Holt, 2015). Starbucks has a distinct branding strategy that creates a lasting impression on its customers through different flavors, service, and quality.

Starbucks employed a marketing mix strategy in different countries according to the culture and preference of people in the country to attract a significant amount of individuals to their stores. Concerning the company statement, "to inspire and nurture the human spirit, one cup, and one neighborhood at a time," it indicates the amount of disposable income that a person may have (Starbucks Corporation, 2018). Changes in the social, as well as economic structures in a country, often results to increase in disposable income, thus and grown interested in Starbucks products. There is no significant difference between the quality of products that competitors sell and what Starbucks sells, however, the ubiquitous cup of Starbucks's coffee is support for various individuals (Gonzalez, 2015; Cheng, 2015.).

Innovation Their Business Processes

Starbucks uses perfect and innovative coffee cups to depict the quality that the company places on its products. Their coffee is famous for satisfying the thirst of a client with a pleasant scent and appealing cup that adds value to their product. Addition of different aromas in their coffee as well as additional foodstuffs in their menu, blending with the culture of the people in the country makes Starbucks stand out separate as well as offering fr...