Global business environment case study for Starbucks1.docx

1、Global business environment case study for Starbucks1University of BirminghamBirmingham Business SchoolTHE GLOBAL BUSINESS ENVIRONMENT07 15821Title of essayGBE Group Assignment for Starbucks caseLecturerDr Lisa De ProprisStudent IDs128609412498981231372Word count1455From a Seattle-based coffee shop,

2、 Starbucks Company expanded at its fastest speed to 17000 stores in 55 countries by the ending of 2011. The first foreign investment happened in 1996 when Starbucks established joint venture in Japan. In the following 16 years, variety strategies are used in expanding international market: licensing

3、, joint venture, wholly-owned subsidiary. China, as Starbucks next target, will be triple sized the scale in next three years. This essay analyses and illustrates Starbucks expansion activities and strategic decision-making based on Dunnings Eclectic theory (1980) and Friedmans nine questions.Dunnin

4、gs Eclectic theory (1980)Dunnings Eclectic theory is a fruitful theory that helps firms to determine FDI activities and choose the correct mode to enter international market, which stands for ownership, location and internalization. Ownership advantage refers to the superior assets and skills that a

5、 firm possesses, which are inaccessible by rivals in the host market. Being the leading coffee retailer and roaster for more than 40 years, Starbucks has its most significant invisible advantage-brand and reputation. The good reputation was built up by its excellent quality coffee and good customer

6、experience that is beneficial for company long-term development. Moreover, Starbucks has efficient coffee bean supply chain, combining with quick R&D, distribution channels, which highly add value in its value chain. Additionally, Starbucks builds a perfect social image, with contribution in many ar

7、eas: community, ethical sourcing, environment, wellness etc, which attracts customers with environmental and social awareness. Location advantages are advantages for firms to exploit its assets in foreign countries or regions rather than domestic places. It usually includes existence of raw material

8、, low wages, special taxes or tariffs. (Gray.H.P, 2003)They can be divided into two aspects: market advantages and government support. According to the data from China Coffee Association, the annual growth of coffee consumption is around 15%, while the world coffee consumption increases only by 2% e

9、ach year. Attracted by the Chinas low cost and soar demand of most potential market, Starbucks planned triple sized the scale in next three years, and the most net stores opened in China at the number of 58 (Annual Report, 2005). Furthermore, Chinese government set up several beneficial regulations

10、to attract investments: low tax, large invest area, free land, financial support.Internalization advantage gives the reason why the firm has willingness to internalize cross-border structure. (Dunning,J.H.,&Lundan,S.M.2008)From the initial purpose of selling the finest whole bean coffees and coffee

11、beverages, Starbucks controls coffee purchasing, roasting and packaging, and the global distribution of coffee to ensure what it sells is compliance with the rigorous coffee standards. Moreover, Starbucks operates Farmer Support Centers, which are staffed with agronomists and sustainability experts

12、to work with coffee farming communities in order to promote best practices in coffee production designed and improve both coffee quality and yields. This action not only helps ensure sustainability and future supply of high-quality green coffees, but also reinforces the leadership role in the coffee

13、 industry.Friedman 9 QuestionsHow Fast Is Your Country or Company?The Fast of Starbucks will be recognized as three following parts: 1) Fast in R&D new generation of products; 2) Fast distribution business to the world as well as fast in destroying inefficient business; 3) Fast in responding to cust

14、omers comments and ideas.1.Starbucks is always seeking to develop market share and underpin its customers loyalty. It puts enormous energy in R&D and launches new products to meet the expectations of customers. For instance, in the first half year of 2010, Starbucks launched three new products to sa

15、tisfy customers in accordance with specific seasonal requirement and healthy issue. Compared with quick-service restaurants and specialty coffee shops, Starbucks product development is far quicker than competitors.(Starbucks Press, 2010)2.Starbucks had a rapid growth from 2000 to 2008; it almost tri

16、pled the numbers of stores internationally. Starbucks executed managers strategies well to expand worldwide massively in such a short term. However, problems came with over-expanding. In 2008, it closed down 600 stores in the US due to cannibalizing effects and strong competition from McDonalds and

17、Dunkin Donuts. Although it was a dilemma for Starbucks at that time, it made timely decisions to shut inefficient stores. 3.Starbucks concentrates on marketing communication strategies, which help customers to be able to outpour their suggestions and share experiences with each other via all kinds o

18、f possible channels. One of Starbucks member has summarized 6 reasons to prove why Starbucks has been doing so well in marketing communication. Starbucks is keeping doing its best to respond customers as fast as possible, so that it makes customers feel like that Starbucks is with them anywhere anyt

19、ime, like mobile phones.Is Your Country or Company Harvesting Its Knowledge?The competition for the best information has replaced the competition for the best location and manager for companies now. Information networks are extremely crucial to Starbucks. Procurement team works well in gathering inf

20、ormation from suppliers worldwide to ensure the quality of coffee beans. Starbucks only purchase coffee beans from reliable suppliers and well manage the inventory level in order to hand the best coffee to customers. Moreover, as we mentioned above, the marketing team has a tremendous wide-range com

21、munication network with customers. They take feedbacks from customers seriously via any possible channel, comparing information with competitors in the market, and finally make decisions of marketing strategies. Starbucks do benefit a lot from managing good networks of information. How Much Does You

22、r Country or Company Weigh?Starbucks is a light company rather than a heavy one, because it controls intensive inventory levels of coffee beans and foodstuff in order to guarantee the best quality offer to customers.Does Your Country or Company Dare to Be Open on the Outside?Starbucks is more than h

23、appy to open on the outside; they are pleased to receive criticism from customers who will help them to think about how to produce better products or how to change current products to meet customers expectations.Does Your Country or Company Dare to Be Open on the Inside?Inside generally means how tr

24、ansparent the business is from inside of the company. According to the research by GoodGuide, see below:ENVIRONMENTALPERFORMANCESOCIAL PERFORMANCETransparency7.3Transparency6.9EnvironmentalManagement6Management6.2Governance6.7Governance6.7Policies6Policies6Reporting7Reporting7Supply Chain7Supply Cha

25、in7Compliance and Controversies4Leading Edge Practices10Leading Edge Practices8Compliance and Controversies3Resource Use6.8Workers5.2General Resource Management7General4Materials6.5Occupation Health and Safety6Water7Diversity and Equal Opportunity5.2Energy6.8Human Rights5.5Environmental Impacts6.1Ge

26、neral Human Rights5Biodiversity6Freedom of Assoc. & Collect. Bargaining4.5Emissions6.1Child Labor6General Emissions7Forced and Compulsory Labor6Greenhouse Gases7.5Indigenous Rights6Criteria and Hazardous Air Pollutants6Community6.7Water Pollution4Public Policy6Waste6Stakeholder Engagement6Community

27、Relationships8Consumers5.3Product and Service Labeling7Starbucks transparency is rated relatively higher than average in both environmental and social aspect. Does Your Countrys or Companys Management Get It and Can You Change Management If They Dont?This is about the very internal information that

28、we do not know from the general channels. Thus, we have no comments on this question.Is Your Country or Company Willing to Shoot Its Wounded and Suckle the Survivors?After 2008, the Starbucks seemed to struggle to deal with its decreasing business performances. Starbucks has been hurt by rising cost

29、s, the cannibalizing effects of years of over-expansion, and stiff competition in espresso drinks from McDonalds and Dunkin Donuts.(11/11/2008, New York Times) They had to decide to close down 600 stores in the US in 2008. The Starbucks CEO Howard Schults said: We had to admit to ourselves and to th

30、e people of this company that we owned the mistakes that were made. Starbucks have the spirits to encourage the destruction of established business. As well as they also aim to a new market for future development in China. Starbucks posted a significant growth in China of fiscal fourth quarter in 20

31、12. Its revenue rose 11 percent meanwhile the profit increased 24 percent.(Strom, S. 2012)How Good Is Your Country or Company at Making Friends?There is no doubt that Starbucks is good at making friends. There are thousands of stores open worldwide selling Starbucks coffees. These stores are mainly either licensed or joint venture. Starbucks has alliances all over the world supporting its fast expanding internationally.How Good Is Your Countrys or Companys Brand?Starbucks has a brand personality that deep-rooted in customers minds. Starbucks all over the worlds have the similar elegant s