International Strategy - Starbucks
03/09/2008
Tambria De Corse
BUS401- International Business
Starbucks – An Inspired Idea
Today, Starbucks is the world’s largest multinational chain of coffee shops, with over 7,000 company-operated outlets worldwide. In addition, the company has more than 5,000 joint-venture and licensed outlets, with approximately 3,000 plus of that number within the United States and U.S. Territories. The name “Starbucks” originates from the character name of the first mate in Herman Melville’s Moby Dick, and was the inspired idea of the three partners who opened the first Starbucks in Seattle, Washington, in 1971. Howard Schultz acquired the drip brewed coffee and espresso beverage powerhouse in 1987 and under his tutelage Starbucks has gained both national and international success, with a Starbucks on nearly every corner, at least in the United States, for now. The company’s 25-year goal is to “become an enduring, great company with the most recognized and respected brand in the world, known for inspiring and nurturing the human spirit.” Starbucks Chairman, Howard Schultz, appears to have a simple strategy; build a starbucks on every corner of the every street, and they will come. If Starbucks apparent worldwide success is an indicator, they do come, whether they drink coffee or not.
“Clustering Stores increases total revenue and market share,” CEO Orin Smith Argues, “even when individual stores poach on each other’s sales.” The strategy works, he says, because of Starbucks size. It is large enough to absorb losses at existing stores as new ones open up, and soon overall sales grow beyond what they would have with just one store. And by clustering, Starbucks can quickly dominate a local market. The Starbucks-everywhere approach cuts down on delivery and managements costs, shortens customer lines at individual stores, and increases foot traffic for all the stores in an area. A typical customer stops by 18 times a...