STARBUCKS IMPROVES PERFORMANCE

A few years ago, Starbucks’ sales in the United States began falling. Howard Schultz came out of
retirement to resume the role of CEO and turn around the coffee chain. Schultz refocused the
stores on the coffee, closed poorly performing outlets, renegotiated to get lower prices on
pastries, and searched for ways to improve efficiency. Not only did those lessons help Starbucks
improve in the United States, but they provided a foundation of knowledge when, more
recently, sales in Europe began to slide. The company took its efficiency lessons and renewed
focus on coffee brewing across the Atlantic to improve performance there.
At the same time, when it comes to menu and store atmosphere, Starbucks caters to
consumers’ tastes in different locales. Stores are being redecorated with local flair, which is
especially important in countries such as France, where customers want to relax over their
drinks, not rush off. Drink recipes are tweaked to local preferences—more choices in France
and extra-strong drinks in Britain, for example. In a nod to the German consumer’s passion for
value, Starbucks accelerated its plan to introduce rewards cards in Germany.
In Asia, local adaptations are even more pronounced. Whereas coffee drinking in the United
States is often a grab-and-go morning routine, Chinese consumers are more likely to gather in
the afternoon with friends or colleagues for an exotic Western-style experience, so Starbucks is
setting up comfortable group seating with couches. But many Chinese people don’t actually
care for coffee, so Starbucks is preparing sweet drinks with locally familiar flavors and creating
Chinese-style sandwiches.
• How well does Starbucks fit the definition of a transnational company? Why?
Starbucks’ is a transnational company because it has the combination of both Global
corporation and Multinational corporation. As global organization have its stores in different
countries so Starbucks’ maintains its operations in different countries like United States,
Canada, Germany, China and may more. Starbucks’ is Multinational corporation because it has
decentralized its system means giving the decision making power to the respective country
store/outlet manager because as the live there and know the customer preferences so they
operate their business accordingly and innovatively to attract as much customers as they can
like in Germany they give reward card, décor and ambiance of store matters in France so they
gave importance to that and renovate their store. In China they are trying to give the
preference to sweet drinks as they have less tradition or practice to coffee so through sweet
drinks, Chinese style sandwiches they are trying to be the first choice of their customers as they
successful in other countries.