The Starbucks Corporation is one of the most successful companies of America. Founded in 1971 as a small Seattle-based coffee bean retailing store, it has grown into a multinational business that has one of the most recognized brands of the world.
When the company had conquered the US market, the growth needs made Starbucks’ management consider a strategic alternative of going abroad, which is always a great challenge. The international nature of the company’s business made the ambitions of conquering the world market quite realistic, but no success is possible without a well-planned and well-performed management of operations.
Aggressive expansion that characterized Starbucks’ business development strategy was successful enough it terms of gaining market shares in the United States and abroad. Going international is a real challenge of any company, especially with regard to cultural differences and overload of expenses connected with growth and development.
Starbucks Coffee International that monitored company’s international expansion had to deal with a multitude of opportunities and innovative activities for the last decade, since Starbucks’ first Canada and Japan entries in 1996. The Corporation had entered different markets using different entry modes: wholly owned subsidiary, joint venture, licensing. This was dictated by different conditions of countries’ political, economic and business environments, but did not really add up to Starbuck’s stability as a company and a brand. Certainly, all types of entry modes have both advantages and disadvantages, some of them do not provide full control on the assets and activities, others – are too time and money consuming. In any case, a company that is in international operations should try to gain more control over its affiliates, their products and the brands overall perception. This is especially significant for a company that brings the US lifestyle and culture into other cultures of the world. Companies like Starbucks, McDonald’s, PepsiCo, and others, should be cautious about their image on the international level, because this is a very sensitive matter, that, unfortunately, greatly depends upon the political occurrences and incidents that inevitably accompany international business.
Although Starbucks is a very successful company, it also did not avoid troubles in international markets. Facing numerous political, social and operational risks did not always end well for the Corporation, e.g. in 2003 it had to close down its operations in Israel, which was, to a great extent, a result of the US political hardships in the Middle East.
The company had also experience troubles with NGOs that required Starbucks to acquire certified coffee beans and quality worsening accusations. The recent price policy made the company’s products less competitive, especially with the existence of a great number of small, but popular businesses that provided the romance of coffee at a more reasonable price.
Taking into consideration these and many other problems the company faced in the recent decade, the strategic management plan of Starbucks Corporation might include several important steps: quality improvement, price reconsideration, unification of international policy and modes of business operation abroad, and building of positive image of the company.
As a successful but aggressively expanding company, Starbucks Corporation must always pay substantial attention to its products: the quantity must not harm the quality. The company’s innovative style (introduction of new products, successful projects and partnership, new principles of activity, etc.) and its youth stylish appeal (in-house music, western world style) add up to the general image, but the “artificial” taste of products and overpricing harms it many times more, because the whole idea of the Starbucks’ successful product – the romance of coffee, the occasion, the community – is destroyed.
Price revision is a painful but essential process, if Starbucks wants to keep being a profitable company. Cost-cutting measures are very risky, but if they are well-planned, the result is rewarding. Closing unprofitable locations that impose a financial burden upon the company and slowing down of pace of growth is reasonable, because, again – quantity sometimes harms the quality. Unification of growth and expansion strategy is a valuable source of future stability and confidence. This will enable the company’s management to develop a certain plan of activities, and keep control over the assets and the brand’s image.
It is very important for a company that is operating internationally to eliminate the influence of the political background, and, if possible, even to except any “country associations” in brand perception. No political, economic or social crises, no upheavals in a mother country will then influence the positive image of the company.
In the case of Starbucks, the image of the United States and its aggressive political games on the international arena has harmed the company’s businesses. Most countries of the Islamic world, for example, express negative attitude towards America, its companies, products and lifestyle. This was, certainly, caused by several conflicts in the Middle East. Such state of matters damages to the very core of any successful business that has US background, and operates in other countries.
Enhancing corporate image might be a really sensible step. This could be done through building a positive perception of the brand. This, in turn, will lead to global respect of customers and the rest of the world that might once become the company’s target audience. Starbucks might also launch more socially active position: health food programs, charity programs, and even more active cooperation with well-known companies around the world. Building a highly recognized and, what is more important, a highly respected brand is what Starbucks Company needs to do in order to prosper on the global market.