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Background of Starbucks Essay

Managed by the popular management team which is known as H20, Howard Schultz (CEO, Global Strategist), Howard Behar (Head of North America Operations, and Orien Smith (CEO), Starbucks, based in Washington, has grew rapidly since they started the business in the early 80s in Seattle to one of the largest chains of coffee brewer in the world.

Ever since it went public in the 1991, Starbucks has expanded enormously and as for 2012, Starbucks own 12,936 outlets solely in the United State. However, this growth would not be able to last longer if Starbucks do not continue to expend to the other countries to take opportunities for more profit growth for the company.

One of the biggest risk faced by Starbucks in the US, is Cannibalization, the risk faced by its own market dominance. With the market dominance, the sales of existing outlet are cut by another Starbucks due to the law of large numbers. A research conducted by Jim Davenport, University of Washington PHD, he found that almost 80 percent of the total people living in the state would live within 20 miles (23 km) and almost 50 percent within the 5 miles of a Starbucks.

But of course, notwithstanding that, while expanding Starbucks to the other parts of the world; it would definitely face international marketing risk. In order to take advantage of the economic growth in India, Starbucks would be aggressively entering into the India’s market. The analysis of the expansion of Starbucks strategy mainly in Controllable and Uncontrollable environments will also be covered.

Starbucks uses joint venture as an entry mode into India. Working hands in hands with Tata Coffee Limited (originated in India), both companies share the risks and the achievement together.


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