Friday, September 28, 2012

Chapter 5: Developing a Global Vision

In order for a company to be successful and fulfill their mission, a vision for the company must be made.  Specifically, a global vision is ideal because the company will recognize and react to international marketing opportunities, use effective global marketing strategies, and become aware of threats from foreign competitors in all markets.  Starbucks utilizes great global marketing strategies, which is why their global vision is successful.

Starbucks uses the same retailing formula worldwide but product offerings may differ depending on the "local tastes."  The advertising strategies within the company are more local and differentiate rather than are standard throughout the world.  Starbucks focuses on profitable growth.  When opening a new location/s, the company will generally open in important locations where it incorporates fastest growing economies.

Starbucks did begin in North America but needed to globalize.  According to, "with just 20% of the world's coffee consumed in North America, Starbucks had to aggressively sell its offerings in countries that already have dedicated coffee or tea drinkers."  Starbucks first foreign expansion occurred in 1996 and developed their first market with Japan, with the help of SAZABY Inc., a Japanese retailer and restaurateur.  Their initial strategies in expanding was buying out competitors' leases, operating at a loss, and opening several locations in a small geographical area.

After their expansion in Japan, Starbucks began globalizing into the U.K.  The company bought out Seattle Coffee Company and with that capital obtained, used it to take over prime locations.  Some did operate at a loss, but mistakes are to be learned from.

Of course with any vision certain risks need to be taken and issues have to be faced.  In Japan, Starbucks faced possible ridicule of their product seeing how the Japanese claimed they would never buy take-out coffee in paper cups.  This was proven wrong by Starbucks; about 30% of its customers drink take-out coffee in the throwaway cups.  In France, many older, traditional people looked down upon the American culture of this coffee franchise.  The French are used to their caf√©s.  Fortunately for Starbucks' benefit, younger French people joined many American tourists in the Starbucks locations and have added to the company's progress.  

In China, there is some difficulty in moving coffee since so many people prefer tea.  Starbucks' locations in China are coffee houses, which empower the Chinese middle class to openly display their new lifestyles and maintain Starbucks' beverages as affordable luxuries.  These are just a few issues this company must face when expanding globally (there's also Italy and England as a few more examples).

With Starbucks merging and acquiring new prospects came benefits.  The company expanded into different countries around the world and took over companies, which helped their success.  Even in September 2006, their rival Diedrich Coffee sold most of its company-owned retail stores to Starbucks.  This shows their strive and strength to overcome the competitors.  Starbucks realized that committed and motivated human resources were the key to leading a successful business.

In regards to the employees and job outsourcing, where a company sends U.S. jobs abroad, Starbucks and CEO Howard Schultz, believes even though it is more expensive to have the jobs in America, he'd rather that then have the tasks taken on from someone in another country.

A quote from Schultz shows a perfect example on the views of globalizing and what his people mean to him and the company: "We remain highly respectful of the culture and traditions of the countries in which we do business.  We recognize that our success is not an entitlement, and we must continue to earn the trust and respect of customers every day."  He also states, "The relationship we have with our people and the culture of our company is our most sustainable competitive advantage."

Slides on Starbucks Marketing Strategies (Source)

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