CA-1

FIN348
TOPIC: International business Environment and Globalization of
STARBUCKS

SUBMITTED TO:

Tanya Malhotra

SUBMITTED BY:

A Sahithya

11902255

KO131

RKO131A23

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 TABLE OF CONTENTS

Topic
Acknowledgement
Introduction
Products
Initiatives
Logo
Global Rankings
Locations
PESTEL analysis
Globalization
Strategies
Effect
Export and Import
Major statistics
Competitors
Competitive advantage
Analysis
Prediction
Recommendations
Conclusion
References

ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher Tanya Malhotra, who
gave me the golden opportunity to do this wonderful report of international business
environment and globalization of Starbucks. Who also help me in completing my report.
I came to know about so many new things I am really thankful to them. Secondly, I would
also like to thank my parents and friends who helped me a lot in finalising this report within
the given time frame.

A Sahithya
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 (11902255)

INRODUCTION

~ The original Starbucks ~

Starbucks Corporation is an American multinational chain of coffeehouses and roastery

reserves headquartered in Seattle, Washington. As the world's largest coffeehouse chain,
Starbucks is seen to be the major representation of the United States' second wave of
coffee culture. Headquartered in the Starbucks Center, the company was founded in 1971
by Jerry Baldwin, Zev Siegl, and Gordon Bowker at Seattle's Pike Place Market. During the
early 1980s, they sold the company to Howard Schultz who – after a business trip to Milan,
Italy – decided to make the coffee bean store a coffeeshop serving espresso-based drinks.
Many stores sell pre-packaged food items, pastries, hot and cold sandwiches, and drinkware
including mugs and tumblers. There are also several select "Starbucks Evenings" locations
which offer beer, wine, and appetizers. Starbucks-brand coffee, ice cream, and bottled cold
coffee drinks are sold at grocery stores in the United States and other countries.
As of September 2020, Starbucks has over 349,000 employees worldwide.
Moto: In everything we do, we are always dedicated to Our Mission: to inspire and nurture
the human spirit – one person, one cup, and one neighbourhood at a time.

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Starbucks Coffee Sizes

From demi to venti, see all the cup sizes Starbucks drinks come in. Plus,
see their new holiday cups for 2020!

STARBUCKS HOLIDAY CUPS 2020

PRODUCTS

1. Low calorie and sugar-free products

2. Non-dairy milk offerings
3. Ethos water
4. Instant coffee and coffee capsules
4.1 Coffee makers and single-use capsules
5. Alcoholic drinks
6. Fruit juices, fruit beverages, and sodas
7. Coffee varieties
INITIATIVES
There are several initiatives taken by the company, of which some are:

Starbucks card and loyalty program

In 2008, the Starbucks Card was introduced to give users free Wi-Fi internet access and other perks
like no charge for soy milk and flavoured syrups, and free refills on brewed drip coffee, iced coffee, or
tea.

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Electricity and Wi-Fi
In 2010, Starbucks started offering free Wi-Fi in the US and Canada. In August 2010, it switched
providers in the US to google. in 2012 the coffee chain and Power mat started a pilot program to
install the letter’s charging surface in select stores in Boston.

Environmental practices
In 1999, Starbucks launched "Grounds for your Garden," which gives customers the
opportunity to recycle their coffee grounds.

 Recycling

 Plastic straw ban

 Reusable cups
 Cage-free eggs
LOGO

1971–1987

1987–1992

1992–2011

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 2011–present

Global Rankings

Starbucks stands at the 125th position in Fortune 500 rankings.

Sector Stores and Distributors
Industry Food Services
Current All-Star Rank 6
Previous All-Star Rank 5
Industry Rank 1
Previous Industry Rank 1
Overall Score 7.92

LOCATION

Countries with Starbucks locations as of June 2019

As of September 2020, Starbucks had 32,660 locations spanning 79 countries and territories
on six continents:

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Africa Europe North America

 Egypt: 32  United Kingdom: 884  United States: 15,041[109]

 South Africa: 32 [107]  Germany: 161  Canada: 2,359
 Morocco: 9  France: 121  Mexico: 531
 Tunisia: 1[108]  Russia: 112  The Bahamas: 12
Asia  Spain: 107  Costa Rica: 12
 Poland: 72  El Salvador: 11
 China: 3,600  Ireland: 67  Trinidad and Tobago: 11
 Japan: 1,415  Switzerland: 63  Guatemala: 7
 South Korea: 1,080  Netherlands: 59  Jamaica: 7
 Taiwan: 430  Romania: 48  Panama: 5
 Thailand: 410  Greece: 31  Aruba: 3
 Turkey: 408  Czech Republic: 26  Curaçao: 3
 Philippines: 300  Denmark: 21  Barbados: 1
 Indonesia: 249  Austria: 20  Cayman Islands: 1
 Malaysia: 220  Belgium: 19  Dominican Republic: 1
 India: 218  Norway: 17 Oceania
 Hong Kong: 147  Sweden: 17
 United Arab Emirates: 138  Hungary: 16  Australia: 35
 Singapore: 125  Bulgaria: 14  New Zealand: 22
 Saudi Arabia: 92  Italy: 13 South America
 Kuwait: 89  Portugal: 11
 Vietnam: 64  Brazil: 122
 Finland: 9
 Lebanon: 41  Argentina: 100
 Slovakia: 7
 Kazakhstan: 30  Chile: 91
 Malta: 4
 Cambodia: 21  Peru: 81
 Luxembourg: 3
 Bahrain: 19  Colombia: 24
 Serbia: 3
 Qatar: 18  Uruguay: 9
 Andorra: 1
 Jordan: 14  Bolivia: 4
 Monaco: 1
 Cyprus: 11
 Oman: 11
 Azerbaijan: 4
 Brunei: 4

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 PESTEL analysis

Political Factors:

Political factors can affect the expansion of a company in several ways. The political
condition of the countries where a company operates may impact its progress. If the
political condition is stable, the company may get a good environment for business. Several
political conditions can affect the sales of Starbucks:

 The tax policies and employment laws of a company can have a specific impact on its
sales. If the tax policies are fair, the company may earn good revenue from the
business.
 The government of many counties may have some laws which are ideal for
businesses. Starbucks can get a good chance of expansion in those countries.
 The Bureaucratic movements in the developed countries can be a significant threat
to the business of the company.

Economic Factors:

Economic conditions of a country are directly linked to the business of a company. If a

company desire improved sale, it may look for regions with stable market conditions. Here
are some economic issues which can impact the sales of the company:

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  Most of the developing countries are having an emerging economy. It can be a good
sign for the countries that are willing to expand their business.
 The increasing cost of raw materials and labor charges can be a threat concerning
the development of their business.
 There are several alternatives of Starbucks, which are gradually getting hold of the
market. The competitive market scenario can be a threat to the business of the
company.

Social Factors:

Social conditions are key factors that can affect the sales of any business. PESTEL analysis
Starbucks can show how the social conditions of the operating area can impact the sales of
the company:

 The changes in the lifestyle of the people and their choice of food can toll upon the
company's sale. People are more tending to have a healthy, low-calorie diet, which
can decrease the sales of their sugary beverages.
 The food items offered by the company are expensive considering their alternatives.
It is the reason they are losing customers from lower and middle-income groups.
 As the coffee culture is getting new meaning worldwide, the cafe chain can utilize it.
It will help to expand its business.

Technological Factors:

Though technological conditions may not be a direct threat to the company's growth. In the
long run, they may affect the business. The Pestel analysis Starbucks can show how
technology can work in hindering or catalyzing the expansion of Starbucks:

 The increasing technological aid can make the journey of coffee from the farm to the
mug smoother and faster. The easy transport and high-tech coffee machine both can
contribute to this.
 As smartphone purchases have increased, more people can access the delivery
service to get their coffee from home.
 The company may see a drop in their sales because of the easy availability of good
quality coffee machines in the market.

Ecological Factors:

Ecological factors may not impact the business of a company directly. However, they can
influence its progress indirectly. Here are some environmental issues that can affect the
business of Starbucks:

 The company's business can get affected if the growth of coffee suffers from insects,
diseases, climate, or natural disasters.
 The company can concentrate on following the business sustainability trend, which
can make the customers support the company for their policies, and this can earn
more environment-conscious customers.
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  The company can work on recyclable packaging which can be environment-friendly.
They can support social and environment-related campaigns, which can be a fair
opportunity to promote their business.

Legal Factors:

Many legal issues can directly or indirectly impact the growth of a company. If a company
has some legal cases going on, that can create a negative impression. It may destroy its
reputation. PESTEL analysis Starbucks can help to identify those legal factors:

 The company needs to adhere to the employment rules and product safety
regulations proposed by the law of the countries they are serving at that moment.
Failing to do so may cancel their trade license.
 Licensing regulations and collisions with trade laws can hinder the expansion of the
company.
 The company must ensure employee rights and customer safety regulations while
expanding its business in a country. Otherwise, their business may suffer.

Globalisation

The initial success of the franchise proved in America proved potential for global
conquest. They first expanded throughout the United States and then to Canada.
After going public and growing further, they began to explore opportunities outside
of North America. They initially began by “sweeping through Canada, China, Japan,
Taiwan, Britain, and much of continental Europe.” These markets all showed
potential, and Starbucks made sure to always stay ahead with new innovations

Starbucks transformed their stores into places where people can gather and chat. They
started this venture by working with Barnes and Noble to create a place where people can
read and relax.

In just one decade, Starbucks changed the way people think about coffee. It became a place
where they could study, work, and connect with their friends and family. This is what made
them successful globally.

Strategies used

The internationalization strategy of Starbucks involves using three approaches which wholly
owned subsidiaries, joint ventures, and licensing. The licensing procedure is used when
Starbucks wants quick expansion in a particular country. Starbucks uses a joint venture
strategy in order to initiate its business practices to the local market. Wholly owned
subsidiaries technique is used when Starbucks has the market knowledge of the market it’s
operating in, for example, the U.S and Canada market.

Effect

Like any other company, Starbucks also has its pros and cons.
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It’s Not Starbucks Coffee You Are Getting — It’s the Starbucks Experience After Howard
Schultz bought the company from its founding members in 1987, he focused on making
Starbucks the “Third Place”. The idea of the third place is one that exists between work and
home. It’s a space where people want to hang out and relax. There’s just something
comforting about ordering a nice cup of coffee and being encouraged to sit in the shop with
your laptop and work. On top of that, Starbucks also serves as an oasis for meeting up with
friends, having a snack, and relaxing in a comfy chair while listening to the latest Indie
playlists. That’s the type of cultivated experience Starbucks provides: it’s cool, clean,
atmospheric, the baristas are friendly, and the coffees have nice names. Starbucks has had a
hard time adapting to the local culture of the countries they operate in. They have tried to
create new products and services, but all of them failed. This is not good for sustaining local
businesses and culture. They also had racial controversies.

Export and Import

The creation of a single, global logistics system was important for Starbucks because of
its far-flung supply chain. The company generally brings coffee beans from Latin
America, Africa, and Asia to the United States and Europe in ocean containers. From the
port of entry, the "green" (unroasted) beans are trucked to six storage sites, either at a
roasting plant or nearby. After the beans are roasted and packaged, the finished product
is trucked to regional distribution centers, which range from 200,000 to 300,000 square
feet in size. Starbucks runs five regional distribution centers (DCs) in the United States;
two are company-owned and the other three are operated by third-party logistics
companies (3PLs). It also has two distribution centers in Europe and two in Asia, all of
which are managed by 3PLs. Coffee, however, is only one of many products held at
these warehouses. They also handle other items required by Starbucks' retail outlets—
everything from furniture to cappuccino mix.

MAJOR STATISTICS

 US$26.50 billion (2019)
Revenue

Operating income  US$4.07 billion (2019)

Net income  US$3.59 billion (2019)

 US$19.21 billion (2019)
Total assets

 US$1.16 billion (2018)
Total equity

COMPITITORS

The top two competitors of Starbucks are McCafé and Dunkin Donuts.
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McCafé is strongly coming up as one of the Starbucks Competitor which is gaining market
share. This is because of the backing it has with the huge number of McDonald’s stores
across the globe
Dunkin donuts is an American doughnut company and coffeehouse that has spread its
operations globally. It is one of Starbucks key competitors and it is the eighth-largest fast
foods restaurant chain by number of locations in the world
The third largest competitor of Starbucks is CCD, an Indian company which was founded in
1996 and its headquarters is in Bengaluru, Karnataka, India.
COMPITATIVE ADVANTAGE
Starbucks maintain competitive advantage by creating for new ideas. For example, in the
beginning Starbucks didn’t provide free wi-fi facility. But today because of so many coffees
have free wi-fi facility so they make the coffee shop have that facility too, so that the
customers can feel more comfortable. New products. For example, Starbucks make a coffee
sachet. It almost the same like coffee which Nescafe produced. New experiences for guests. 
For example, Starbucks hires its own designers to make artwork for commuter mugs. 

Analysis
Starbucks is a globally recognized coffee and beverages brand that has rapidly made strides into all
major markets of the world. The company has a lead over its nearest competitors including Barista
and other emerging competitors. Indeed, Starbucks is so well known throughout the western
hemisphere that it has become a household name for coffee.

Predictions
As it is the worlds most admired company and after personally tasting the coffee, I think it will
continue to grow further as long as it follows new trends and continue to satisfy the customer needs.
RECCOMENDATIONS
 Starbucks should be creating partnership with the automotive manufacturers and
should give license them in the name of Starbucks.
 Starbucks should create partnership with cafeterias of the well repute’s colleges,
schools and universities and give them license in the name of Starbucks.
 Advertisement and Promotion

 Product differentiation

 Control of coffee quality and variety

 Privilege Cards

 Drive through Coffee

 Always focus on Economy

 Strategies towards Growth.

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  Expansions should be in new corporate markets.

Conclusion
In conclusion, Overall Starbucks has maintained a competitive advantage. Starbucks is truly
an exemplary company. Their strong social and environmental commitments have set high
standards. They promote the message of moral responsibility to the planet and people of
other countries. It has altered the rules of the game in the USA coffee industry from strictly
commodity to a third-place experience.
In order to stay current, it will need to focus on its goal competencies and avoid spreading
themselves to thin. The management strategic is influenced and impacted by a few
components which can be separated into internal and external factors. We have discovered
the two group are important in the choices made by Starbucks. However, the level of
impact is distinctive for each situation. It is possible that some influential factors in the
choice of entry mode can differ by case. 1As a “fine line”, Starbucks don’t want to start
making decisions that are based on a stock price. However, when a stock price gets to a
certain point, they begin to believe that the organization and the enterprise is worth that.
In conclusion, Overall Starbucks has maintained a competitive advantage. In order to stay
current, it will need to focus on its goal competencies and avoid spreading themselves to
thin.
The management strategic is influenced and impacted by a few components which can be
separated into internal and external factors. We have discovered the two group are
important
in the choices made by Starbucks. However, the level of impact is distinctive for
each
situation. It is possible that some influential factors in the choice of entry mode can differ by
case. 1As a “fine line”, Starbucks don’t want to start making decisions that are based on a
stock price. However, when a stock price gets to a certain point, they begin to believe that
the
organization and the enterprise are worth that. We can see in the 2008 financial crisis
give
impact to Starbucks managerial issues. They will get to a point where to manage either to
uphold it or to increase it. The issue on quality of coffee and the quality of
in-store
experience also give big impact on Starbucks managerial issues. Finally, we have
found
external factors have been critical in affecting Starbucks’ choice of entry modes. Starbucks
has sought to adapt to those external factors and local needs and requirements by
using
different entry modes.
Its continued success depends critically on their consistent ability to interest, understand,
and empathise with customers around the globe.

REFERENCES
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https://en.wikipedia.org/wiki/Starbucks#International_cases
https://www.ukessays.com/essays/marketing/strategy-and-competitive-advantage-of-
starbucks-marketing-essay.php
https://www.starbucks.in/
https://coffeeatthree.com/starbucks-cups-sizes/
https://www.tasteofhome.com/article/starbucks-coffee-sizes/
https://www.edrawmax.com/article/starbucks-pestel-analysis.html
https://prezi.com/p/bnb9wzxwymt6/pestel-analysis-of-starbucks/
https://sites.google.com/a/email.vccs.edu/bus280motta/home/exportimport-practices
https://medium.com/swlh/how-starbucks-became-a-100b-success-story-44762fb95862
https://storymaps.arcgis.com/stories/f7a2773563c94390a228754e57bfe598
https://www.grin.com/document/502243
https://fortune.com/worlds-most-admired-companies/2020/starbucks/

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