starbucks mba case study

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Starbucks International Strategy - A Case Study for Global Success

Ever since Starbucks opened its first store outside North America in Tokyo in 1996, the coffee giant has relentlessly pursued global expansion . Today, Starbucks has over 32,000 stores spanning more than 80 countries worldwide, successfully spreading its coffee culture on a global scale. At the heart of Starbucks' phenomenal international business success lies a strategic multi-domestic approach that balances maintaining a consistent global brand with adeptly adapting to local cultures.

Through rigorous market research, cultural sensitivity, strategic partnerships, and premium positioning, Starbucks has seamlessly integrated into diverse international markets while retaining its core identity. This case study examines the key components of Starbucks international strategy, including cultural adaptation, strategic expansion phases, partnership models, and lessons that can be drawn from its international success. The systematic and thoughtful approach demonstrates how consistent brand execution combined with local customization can pave the way for global triumph.

Starbucks' Multidomestic Strategy

The framework that best describes Starbucks' internationalization approach is the multi-domestic strategy. As per this strategy, companies focus on individual foreign markets, treating each market as a separately competitive arena. It emphasizes low integration and high responsiveness.

For Starbucks, this has meant tailoring its products, marketing campaigns, store designs and operations to suit the unique preferences and customs of each local market. While maintaining consistency in quality, branding and customer experience core, it delegates decision-making powers to local franchisees. This allows them to adapt menus, aesthetic elements and promotional activities to match the local customer psyche.

Market Entry Strategies

When entering new markets, Starbucks uses three broad strategies - wholly-owned subsidiaries, joint ventures and licensing. Wholly owned stores give it full control in developed markets with sufficient market understanding like the US, and Canada.

Joint ventures allow leveraging local partner's networks and expertise to establish a foothold in relatively new markets. A prominent case is its joint venture with a Chinese company for China operations.

Licensing is used for quick expansion by granting local partners rights to use the Starbucks brand and set up stores as franchisees. Royalty and fee-based models require low investment while increasing footprint. These tailored entry modes have supported Starbucks' phased globalization process.

Cultural Sensitivity and Customization

Upon entering new markets, Starbucks conducts extensive research to gain cultural insights before store operations even begin. The brand meticulously analyzes local coffee drinking habits, social norms, and economic conditions to understand nuanced preferences. This data-driven approach informs strategic decisions on store layouts, menu customization, and marketing tactics tailored to the host country.

For example, in Japan, Starbucks offers matcha-infused beverages and traditional Japanese decor derived from research revealing local tea-drinking traditions. In China, Starbucks embraces the "ganbei" culture by creating a welcoming environment for social gatherings aligned with drinking customs. Regional preferences are also respected through customized food items—China sees xiaolongbao dumplings while India indulges in masala chai lattes.

By thoughtfully integrating localized flavors, Starbucks seamlessly blends into diverse coffee cultures while maintaining the consistent quality expected of the premium brand. This cultural sensitivity enables the establishment of an authentic local presence, resonating deeply with consumers and expediting market penetration. International success is founded upon such adaptive strategies embracing rather than confronting local identities.

Strategic Partnerships and Co-Owned Stores

Strategic partnerships with local enterprises are another cornerstone of Starbucks' international growth model. Such alliances confer several advantages—joint ventures leverage local expertise, gain government approvals rapidly, and share risks associated with new markets.

Notable examples include the 1998 partnership with Sazaby Café in Japan granting entry into a market protective of domestic firms. In China, collaborations with Kong Group and Maxim's Caterers facilitated swift expansion capitalizing on local supply chains. Most recently, Starbucks joined hands with Tata Group to spearhead robust growth across India leveraging the conglomerate's operational experience.

Co-owned stores following the joint venture model account for one-third of Starbucks' international presence. Local partners provide in-depth cultural understanding while Starbucks delivers consistent brand qualities. Such symbiotic relationships accelerate internationalization by overcoming regulatory hurdles through political familiarity and minimizing liability in uncertain environments. Successful partnerships exemplify mutual growth stemming from shared knowledge and aspirations.

Premium Positioning and Consistent Quality

Despite localized adaptations, Starbucks retains a notable premium positioning worldwide through the consistent execution of its brand. Stores exude sleek minimalism broadcast globally through meticulous design standards. Barista training manuals impart uniform customer service skills across borders to complement the quality drinking experience.

Most distinctively, product sourcing ensures coffee excellence irrespective of location. Green coffee beans are sourced sustainably from over 30 countries and then roasted in seven global processing plants to an identical profile. This commitment to quality justifies slightly higher prices while differentiating the Starbucks experience. Loyal patrons trust consistent flavors upon each international visit, reinforced by a premium brand image.

Globally standardized processes streamline operations for multinational firms yet risk cultural insensitivity. Starbucks balances such trade-offs through its multi-domestic approach—autonomous subsidiaries complement centralized quality controls yielding localization without compromising integrity. Premium branding and attention to detail regardless of borders bolster brand equity on a global scale .

Strategic Expansion Stages

Starbucks' international growth has unfolded strategically in stages, continually adapting its model to diverse conditions in new frontiers. Initial steps focused on contiguous expansion throughout North America and Europe utilizing company-operated stores. Entry into more complex Asian markets saw the rise of adaptive joint ventures and strategic local partnerships.

Most recently, emerging economies present immense opportunities alongside challenges requiring inventive solutions. India saw customized training programs while China leveraged mobile and delivery services to accommodate urbanization. Lessons from each phase cultivate more sophisticated strategies, preserving Starbucks' competitive advantage amidst disruptive global dynamics.

The multi-phased journey reflects an evolutionary approach, not passive diffusion. Careful strategic planning and experimentation have accelerated learning curves, solving problems before widespread proliferation. Cohesive long-term visions balance short-term wins, prioritizing sustainable partnerships over rapid numbers. Starbucks embraces diverse conditions rather than imposing standard blueprints, catalyzing tailored prosperity in every market.

Keys to International Success

Starbucks' case provides valuable insights for brands venturing overseas. Internationalization demands considering local markets as unique rather than homogeneous replicas—deep cultural understanding precedes standardized systems. Strategic alliances confer benefits unavailable to independent operations such as local relationships increasing trust from skeptical markets.

Consistency distinguishes premium brands yet risks cultural detachment—the delicate balance respects local identities amid consistent qualities. Thoughtful long-term visions navigate complexity better than imitations focusing on short-term gains. Success stems from integrating rather than confronting foreign environments by capitalizing on diverse contributions. International growth necessitates agility, learning evolving alongside expanding frontiers.

Current Positioning and Future Outlook

Today Starbucks is a globally recognized brand with a respected image of consistent quality and feel-good customer experience across 80+ nations. However, constantly shifting competitive dynamics and evolving consumer preferences pose new tests.

While Starbucks is well-poised to capture opportunities in still untapped developing geographies leveraging its learnings, local economic volatilities and rising indie cafe trends can impede future plans. Developing new service formats like drive-thrus, mobile ordering, and expanded delivery also becomes critical.

Sustaining differentiation through the premiumization of beverages, newer format stores, innovative loyalty programs and deeper forays in coffee education will determine Starbucks' longevity. Overall, its consistent strategy of blending global vision with local insights wields it an advantage for continued worldwide growth.

In conclusion, Starbucks provides an exemplary case study on designing and implementing a successful international strategy. The keys to its global dominance have been its multi-domestic approach balancing standardization with localisation, research-backed cultural sensitivity, strategic partnerships , consistent branding and marketing effectiveness.

Most significantly, its ability to thoughtfully adapt products, menus, designs, and communications as per every unique market setting while staying true to quality and experience mantras, earned it loyal customer communities worldwide. If replicated judiciously, such well-rounded strategies can become globally replicable models for other aspiring brands.

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Starbucks Coffee Company: Transformation and Renewal

• Format: Print
• | Language: English
• | Pages: 71

Starbucks Coffee Company: Transformation and Renewal analyzes the turnaround and reconstruction of Starbucks Coffee Company from 2008 to 2014 as led by CEO and co-founder Howard Schultz. The case offers executives and students an opportunity to examine in depth how Schultz and his team saved Starbucks from near-collapse, by both executing a deep, comprehensive return to its core values and, at the same time, investing in a range of new products, customer experiences and organizational capabilities designed to make the company fit for enduring success in a turbulent global economy. Set against the backdrop of the Great Recession, the case also considers the impact of unprecedented important shifts in consumer spending and confidence as well as new competitive forces on Starbucks' transformation. The case concludes by examining Schultz's own leadership journey, the lessons he learned personally during Starbucks transformation, and how he is using these lessons—within Starbucks and on the national stage—to redefine the roles and responsibilities of a public corporation in the 21st century.

Based on extensive interviews conducted with Schultz and other Starbucks executives from 2011 to 2014, the case offers a range of vital lessons on leadership, organizational transformation, restructuring, strategy, innovation, entrepreneurial vision, and customer service.

About The Author

Nancy F. Koehn

Related work.

• June 2014 (Revised March 2016)
• Faculty Research
• Starbucks Coffee Company: Transformation and Renewal  By: Nancy F. Koehn

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Starbucks Coffee Company: Transformation and Renewal

By: Nancy F. Koehn, Kelly McNamara, Nora N. Khan, Elizabeth Legris

Starbucks Coffee Company: Transformation and Renewal analyzes the turnaround and reconstruction of Starbucks Coffee Company from 2008 to 2014 as led by CEO and co-founder Howard Schultz. The case…

• Length: 71 page(s)
• Publication Date: Jun 2, 2014
• Discipline: Entrepreneurship
• Product #: 314068-PDF-ENG

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Starbucks Coffee Company: Transformation and Renewal analyzes the turnaround and reconstruction of Starbucks Coffee Company from 2008 to 2014 as led by CEO and co-founder Howard Schultz. The case offers executives and students an opportunity to examine in depth how Schultz and his team saved Starbucks from near-collapse, by both executing a deep, comprehensive return to its core values and, at the same time, investing in a range of new products, customer experiences and organizational capabilities designed to make the company fit for enduring success in a turbulent global economy. Set against the backdrop of the Great Recession, the case also considers the impact of unprecedented important shifts in consumer spending and confidence as well as new competitive forces on Starbucks' transformation. The case concludes by examining Schultz's own leadership journey, the lessons he learned personally during Starbucks transformation, and how he is using these lessons-within Starbucks and on the national stage-to redefine the roles and responsibilities of a public corporation in the 21st century.

Based on extensive interviews conducted with Schultz and other Starbucks executives conducted from 2011 to 2014, the case offers a range of vital lessons on leadership, organizational transformation, restructuring, strategy, innovation, entrepreneurial vision, and customer service.

Learning Objectives

Learning Objective is to help executives and students analyze and understand in depth how Howard Schultz and his team saved and transformed Starbucks Coffee Company from 2008-2014 by both executing a deep, comprehensive return to its core values and, at the same time, investing in a range of new products, customer experiences and organizational capabilities designed to make the company fit for enduring success in a turbulent global economy. The powerful lessons from this study apply to a wide range of leaders and organizations in the turbulent global economy of the 21st century.

Jun 2, 2014

Discipline:

Entrepreneurship

Geographies:

United States

Industries:

Beverage industry, Retail and consumer goods, Retail trade

Harvard Business School

314068-PDF-ENG

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Starbucks: global brand in emerging markets

Learning outcomes Students after reading the case will learn about the issues and challenges of expansion in emerging markets. Global expansion versus multinational expansion. Stardardization versus localization. Socio-cultural aspects in international marketing. Leadership succession in multinational companies. Case overview/synopsis The case is about Starbucks’ journey of global expansion. It focuses on challenges in emerging markets. It also talks about the challenges to new CEO Kevin Johnson post stepping down of iconic leader Howard Schultz. Complexity academic level MBA Executive MBA Specialisation in Strategy, International Marketing. Supplementary materials Teaching Note are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 5: International Business.

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